Breaking Down the Expense: The True Cost of Physician Vacancies

By Beth Dery  |  |  216-286-2302

Every day a physician position remains vacant costs practices money in lost revenue from physician billings, tests, and other downstream revenue as well as up-ended referral patterns that can have implications for years to come.

Lost revenue for specialty physicians can rapidly snowball. According to the Association for Advancing Physician and Provider Recruitment (AAPPR) 2023 Benchmarking Report, fewer than 35% of specialty physician searches for neurosurgery, neurology, gastroenterology, and urology were able to be filled by in-house recruiters. 

Neurology saw 30% of searches filled in 2022. In Gastroenterology, 35% of searches were filled. Even when filled, many positions faced protracted time-to-fill (TTF): for example, Neurological Surgery TTF was 254 days, while Urology TTF was 344 days. The combination of long TTF and a great percentage of roles remaining unfilled creates a challenging hiring landscape.

The investment in recruiting agencies, particularly retained firms, might seem substantial. However, the financial repercussions of not filling physician vacancies can be even more significant.

In reality, it can cost significantly more to leave a position unfilled, even temporarily. The cost of vacancy for an unstaffed healthcare position averages $8,000 per day—if left unfilled for weeks or months, an open role can quickly become a significant expense.

What is Lost When Physician Vacancies Remain

The struggle to fill FTE and temporary physician positions shows little signs of easing.

The Bureau of Health Workforce findings show, “The projected supply of physicians…is expected to be inadequate to meet 2025 demand, including shortages in cardiologists (by 7,080 FTEs), gastroenterologists (by 1,630 FTEs), and hematologists/oncologists (by 1,400 FTEs).”

When positions remain vacant, even for a short time, the cost of the loss can quickly add up.

Specialty1 Cost per week
Neurosurgery $66,000
Neurology $39,000
Urology $42,000
Gastroenterology $57,000
1Merritt Hawkins. 2019. "2019 Physician Inpatient/Outpatient Revenue Survey." Merritt Hawkins.

Lost Physician Revenue for Neurosurgery, Neurology, Urology and Gastroenterology

In a recent Medical Group Management Association webinar, it was highlighted that “The estimated lost revenue for a noninvasive cardiologist opening that sits vacant for six months is about $1.15 million, $1.4 million for gastroenterology, and $1.6 million for ophthalmology.”

As lost momentum from canceled or postponed pandemic procedures continues, making up those margins remains a significant challenge—one that consistent understaffing only worsens.

Lost Reimbursement

In addition to direct revenue from patient care, physicians also contribute to an organization's income through Medicare reimbursements and commercial insurance plans.

Given that Medicare physician payments have greatly declined (26%) from 2001 to 2023, every reimbursement dollar becomes that much more important.

According to Fierce Healthcare, the following specialties generate 120%-330% higher payments from commercial plans: Gastroenterology 120%; General surgery 140%; Neurosurgery 220%. That could mean thousands lost for one canceled surgery, making even a week-long physician vacancy an expensive one.

Lost Reputation

Harder to quantify, but no less important, is the impact that vacant roles have on a healthcare organization’s reputation. Today’s patients are empowered to be selective about where they receive care, and patient perception is reality.

If word gets out that ER times are excessive due to a staffing shortage, patients will naturally assume that shortage extends to other areas within the healthcare organization. By extension, patients will be more likely to seek treatment elsewhere, where they feel doctors can devote time to ensuring quality care.

Likewise, suppose patient satisfaction scores decline due to overworked, understaffed conditions. In that case, reimbursements decrease, and the resulting negative ratings impact where future patients decide to receive healthcare, amplifying the potential negative impact of your unfilled role.

A Recruiting Firm Can Balance Costs

For certain roles, a short-term vacancy will not greatly impact a hospital or health system’s bottom line. For other roles, the financial impact is immediate.

It’s important for healthcare organizations to weigh the cost of a physician vacancy against the cost of retaining a recruiting firm to staff core specialist roles. Many times, turning to an agency pays for itself in the revenue accrued from a position that’s filled sooner, and helps better preserve continuity of care.

When the annual revenue brought in by certain physician specialties—up to $66K per week, in some cases—far offsets the $45K-$50K one-time cost of working with a retained search firm. If a retained search firm can help fill your vacancy even one week faster than you can on your own, the search will have paid for itself. The alternative, if you go for months at a time without qualified candidates, is millions of dollars in revenue missing from the bottom line.

In addition to financial impacts, there are additional vacancy-related costs we haven’t touched on: the most significant being the price of burnout and turnover for physicians forced to pick up the slack created by understaffing.

Find out more

Underperformance due to fatigue and stress can negatively impact patients and result in litigation-worthy errors. High turnover increases the odds that patient care will be curtailed, or paused, creating an even greater income desert. While the resulting administrative costs of yet another job search increase incrementally.

If you’re struggling to fill temporary or long-term physician vacancies, time is of the essence. Find out more about how working with a recruiting partner can pay off.

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