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Demonstrating Your Physician Recruitment Department’s Value to Executives: How to Portray Your Department as a “Revenue Generator” vs. “An Expense”

July–August 2009

Source: Shawn Kessler is a recruitment strategist with Zero-In Recruitment Marketing, a division of Aloysius Butler & Clark. Shawn may be reached at (570) 784-9604 or via e-mail at skessler@zeroinrecruitment.com.

Times are tight. Health care executives are curbing expenses and taking extraordinary steps to reduce external spending. Budgets are getting slashed. Nonmedical employees are more and more at risk of becoming casualties of the economy. It’s more important now than ever to speak a language that executives understand and respect. They need a revenue generator that will help their institution stay afloat — an expert they can trust. To become that expert, you need a sound knowledge of physician turnover rates, time-to-fill, and more.

Changing Perceptions

How executives view your physician recruitment department is critical. Physicians make money for health systems. No physicians, no money — and you are the one responsible for bringing in physicians. Kurt Scott, director of VISTA Physician Search and Consulting, said, “Next to actually recruiting physicians, properly reporting success data to senior leadership is the most important aspect of a recruit-ment leader’s job.” Most recruitment departments fall into the trap of reporting how much money they’ve saved rather than how much revenue they’ve generated.

To successfully report your value to executives, you will need to know national benchmarks, be able to track your department’s recruitment efforts, and understand at-risk revenue.

Collecting the Right Data

There are several sources that will be important in reporting your results. If you are an in-house recruiter, make sure to purchase the recent MGMA/ASPR Recruiter Benchmarking Survey. This vital resource will provide you with data on turnover rates, time-to-fill, and total cost of searches, plus information that will enable you to compare your department’s compensation and benefits information to your competition’s. Another valuable resource is the MGMA Cost Survey for Multispecialty Practices: 2008, as well as the 2007 Physician Inpatient/Outpatient Revenue Survey by Merritt Hawkins & Associates. You will need to know how much gross revenue the physicians you are recruiting generate.

Reporting to Senior Leadership

Always focus on the amount of revenue that you are bringing into the health system. Send a monthly report to leadership that includes open positions, the recruitment status of that position, and a list of all candidates, good and bad. This report will be extremely helpful particularly for campaigns being held up by a lack of cooperation from a physician/search director. It will also help to show that there is activity on campaigns. Even if search directors aren’t receiving good applicants, they can see that there is activity. At the end of every fiscal year, you will also need to create a report that includes the bulleted items listed on page 2. Distribute this report to all leadership. It will showcase the value your department brings to the system and the amount of gross revenues associated with your department. Include the following in the report:

• Number of positions filled
• Breakdown of hires (exec/MD/Do)
• New hire profiles
• Primary care vs. specialty open positions/hires
• Average time-to-fill vs. national average (or previous year)
• Hires vs. turnover
• Voluntary turnover vs. involuntary turnover
• Where candidates come from (demographically and practice type)
• Where leads are generated and where hires come from

Developing an “At-Risk Gross Revenue Realized” Report

The following is a list of what you will need to generate the report:

1. A list of tactics used and total expenses involved in recruiting the position (all expenses, including marketing)
2. National average time to fill the position
3. Your time to fill the position
4. Gross yearly revenues generated by the position

Note that the sample in the table below lists all tactics as well as the total expenses for recruiting the position. These include interview expenses, marketing expenses, and more. The national average time-to-fill can be found in the reports listed earlier. To determine your time-to-fill, subtract your time to fill the position from the national average time-to-fill. In this sample, this is 14 minus 4 or 10 months. Mul-tiply the months by the amount of at-risk gross revenue the position brings into the health system per month. In the sample below, the at-risk revenue for an orthopedic surgeon is $188,416 per month. This gives us a total of $1,884,160 of at-risk revenue that the system will realize due to hiring the physician 10 months faster than the national average. Subtract the expenses associated with marketing and other expenses ($13,470), and the at-risk realized revenue that you have helped bring into your institution is $1,870,690.

This is revenue that was previously at-risk and will now be generated by your health system. Rather than reporting the $25,000 that you saved by recruiting this position internally, you can make the statement that you helped bring in more than $1.8 million in gross revenue to your institution. Jonathan Jones, managing partner of PinPoint Strategies, said, “By reporting at-risk revenue realized rather than savings, recruiters can easily justify the expense of needed high-end communications tools.”

This is your first step toward changing the perception of your department from an expense line to a revenue generator.

Proving Your Value

During a down economy, tracking your results and communicating that you are spending your department’s funds wisely isn’t just important — it’s vital. Return-on-investment is something that all executives want to see. Make sure you provide it with data and in a language that resonates with executives. By positioning your department as a “revenue generator” rather than a “cost saver,” you’ll be protecting your budget, as well as justifying your department’s importance and positioning its staff as a critical part of the organization’s overall business strategy.

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