The cost of vacancy (COV) is a measurement of the dollar amount an organization incurs when a position goes unfilled. In addition to direct costs, there are ‘soft’ and knock-on expenses – some examples include negative impacts on culture, employee burnout, and turnover. However, the most significant intangible cost of physician vacancy is the impact on the quality of patient care. A hospital in New Hampshire shared with Medicus, “When our team is short just one physician, the entire team feels that added pressure, and unfortunately, our patients are on the receiving end. It is a ripple effect, and the quicker we can fill that vacancy the better.”

In 2016, it was estimated that for hospital medicine, the overall cost of vacancy was between $400,000 and $600,000 (if not more) per provider. “Our estimates put the direct cost of physician vacancy around half to one and half the annual compensation of the provider. For example, if you have a physician earning $300-400,000 per year, the cost of that vacancy could end up costing a facility between $200-600,000 – and that’s if they are able to find someone quickly,” said Medicus Chief Financial Officer, Steven Armstrong. “Physician vacancy is expensive – from a dollar and cents perspective but also costly to a healthcare facility’s culture. Bottom line, it’s disruptive, and disruption ultimately has a cost associated with it.”

The direct and indirect costs associated with physician vacancies are staggering, and they’re increasing. With more physicians retiring early due to burnout, looking for reduced hours, or alternative working arrangements, facilities are finding it difficult to keep a full schedule.

Physician vacancy, even in sought-after locations, is posing a challenge. A report from the Association of American Medical Colleges projects a shortage of up to 139,000 physicians – many in primary care – by 2033. Not only are there not enough new doctors in the pipeline to meet the growing demand, but doctors are retiring – some simply because they can and others because they are burnt out from the taxing two-plus years since the outbreak of COVID-19. In 2021, it was reported that the healthcare industry had lost half a million workers since 2020.

“The last major disruption we experienced was in 2008-2009. What we saw then was a slowdown in the medical market that directly correlated with the slowdown in the employment market. This is due in large part because the primary source of payment for medical services is through employment benefits; when people aren’t working, they seek less medical attention. Due to the recession and the state of the stock market, fewer providers were retiring because their retirement portfolios were down; simply put, they couldn’t afford to retire. As a result, this was also a downtime for locums,” said Armstrong. “Since then, the Affordable Care Act was introduced; now, more people have access to care. This, coupled with the effects of the employment market, physician burnout, and the strong stock market, one can see the economics behind why we are experiencing a deficit of physicians.”

To counter burnout, retirement, and the turnover trends contributing to the rate of physician vacancy today, many healthcare facilities are turning to the locum tenens population, which is also stretched thin on resources. Staffing Industry Analysts is projecting double-digit growth in locum tenens in 2022.

For help in finding the right mix of physicians and locum tenens, contact Medicus. We specialize in delivering medical staffing services to healthcare facilities while matching providers with the right opportunities that fit their needs.


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