We recently asked Alphonse Bilicic, Director of Physician Recruitment at UHC Solutions what is seeing in his primary care community healthcare market regarding compensation increases. He stated, “the major change has been the increased competitive nature of recruiting primary care physicians. There’s just not enough supply to meet the demand.” Alphonse goes on to say that, “I am not sure if the majority of the clinic cost structures have substantially improved. There is the usual low hanging fruit of expense mitigation of grinding vendors for the last dollar, keeping non-provider salaries in check and wringing more productivity out of the back office. However, these improvements have not been enough to offset the increasing provider compensation plans where base pay has seen the highest percentage increase. Most healthcare clinics and practices seem to be taking a margin hit reducing profitability.
Bilicic goes on to talk about seeing more aggressive base compensation plans, increased signing bonuses and more robust relocation allowances. He cites one high priced Northern California community where they are offering a $100K, 5 year amortized housing advance. It is forgiven at a rate of 20% per year and then the loan is forgiven in its entirety after this time period. Offering housing assistance and other similar bonuses tend to make a very effective retention program. Expect even more compensation pressure in the next few years as the demand for solid primary care physicians is only expected to increase.