Physician search firm highlights how housing shortages and interest rates complicate provider recruitment; home down payments, customized student loan repayment, and a variety of flexible work models offer creative incentives
by Intelliworx
In a new twist to the shortage of healthcare providers, Jackson Physician Search says that economic uncertainty is “making physicians hesitate to relocate.”
“We are in the business of moving people around,” says Regional Vice President of Recruitment for the Western Division Jeff Foster in the report. “It’s a tough time to get physicians to relocate, but if the conditions are right, they will make an exception.”
His comments were part of an analysis the physician recruitment company published earlier this year called The New Physician Recruitment Reality: Current Trends and the Road Ahead. It draws from research reports the firm has fielded, along with credible third parties and qualitative input from a handful of their own recruiters.
Foster points to the housing shortage, which makes moving all the more challenging, along with higher interest rates that have increased the cost of borrowing, and “instability in financial markets.” Even for physicians who are generally well compensated, the persistent uncertainty is adding to an already complicated problem of recruiting providers.
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The provider shortage in brief
The report cites findings from the Association of American Medical Colleges, which we’ve previously reviewed here, forecasting the U.S. will be short 86,000 physicians by 2036. One “contributing factor” to the shortage is that “one in three physicians [35%] will reach retirement age within five years.”
“Across the country, we simply don’t have enough physicians coming out of training to replace retiring physicians and keep up with demand,” says Regional Vice President of Recruitment for the Southwest Division Tonya Hamlin.
At the same time, the Baby Boomer generation is aging, and older people generally need “more frequent and complex care.” As we pointed out in a piece on rural healthcare a couple of years ago, this segment has 3-4 times the number of visits, along with the tests and other associated procedures.
Rural areas are hit harder by the shortage
The provider shortage hits rural areas harder, primarily because they are already starting at a deficit. Jackson notes in the report, citing data from the National Rural Health Association, “while 20% of the U.S. population resides in rural areas, only 9-10% of physicians practice there, and this percentage continues to decline.”
The problem is compounded by the fact that rural areas are losing many of their independent healthcare providers. A data analysis by the Physicians Advocacy Institute found that rural areas have lost 2,500 independent physicians during a five-year period from 2019 to 2024.
Those that remain are increasingly being acquired by corporations. The Institute’s findings show the number of physician-owned practices in rural areas dropped by 3,300. Citing the Institute’s data, the Jackson report notes, “Corporate entities nearly doubled their rural practice ownership and increased physician employment by 57%.”
While Jackson notes some rural “health systems expanded physician employment by 15% and practice ownership by 11%” – it’s not enough to “offset” the overall loss. Consequently, communities face “higher chronic illness rates, delayed cancer diagnoses, and limited access to care.”
One other major obstacle Jackson notes for rural healthcare is that “Most medical training occurs in urban centers, creating professional networks that discourage rural relocation.” This is a point we’ve made several times over, and it’s a key driver behind our freely available one-page marketing plan for rural healthcare to attract providers.
Demand outpaces supply driving up compensation
“The imbalance of supply and demand results in increasingly competitive compensation and recruitment incentives,” according to the Jackson analysis. The search firm’s data shows that “more than 8 in 10 offers include signing bonuses and/or other recruitment incentives.”
The report elaborates:
“When demand is high and supply is low, the value of the object in question (or in this case, the profession) increases. Thus, it’s not surprising that physicians are increasingly commanding higher compensation, especially in less desirable locations or practice settings. In an effort to be competitive, organizations are offering higher salary guarantees. The challenge arises when employers offer guaranteed base salaries that aren’t justified by the revenue projections. This is especially likely in rural or remote organizations where margins are already thin.”
A study by the Advisory Board, which polled 730 clinicians, substantiates this assessment. It shows compensation alone is not enough to attract and retain healthcare providers to rural locations. The pitch has to be different. Factors such as autonomy, flexibility, and culture may offer rural healthcare employers a competitive advantage over their urban peers.
Creative financial recruiting incentives
Some of the most interesting aspects of the Jackson report are the creative financial incentives it sees healthcare employers embracing. These may be especially appealing for rural health organizations where the business model makes it difficult to match offers by larger urban employers. Some of the creative ideas Jackson writes about that stood out to us are:
- Budget for custom recruiting incentives. Some healthcare organizations are creating budgets “of $150,000–$300,000 that can be allocated to signing bonuses, student loan repayment, moving expenses, residency stipends, and/or down payment assistance [on a home], based on individual candidate needs.”
- Structure hiring bonuses with tax advantages. Offer “upfront bonuses with annual forgiveness,” which Jackson says can be “taxed incrementally rather than as a lump sum.”
- Novel student loan repayment programs. “With some federal loan-forgiveness programs under threat, organizations are creating custom loan-repayment programs modeled on government initiatives.”
- Shared home equity programs. To mitigate the risks of buying and selling a new home to support a move, some healthcare employers are providing down payment assistance. In exchange, “the hospital holds an equity stake, and the physician repays the investment plus a share of appreciation upon sale.”
- Flexible work schedules. The concept of flexible work schedules isn’t new, but the Jackson report shows how widely these can vary. “Most candidates are seeking four-day schedules, preferably with a built-in remote half-day for administrative duties.” Other variations suggested include:
- 7 days on duty followed by 7 days off;
- 14 days on duty followed by 14 days off;
- “six 24-hour shifts per month”; and
- compress “2,000 hours into 26 weeks.”
Retention counts as much as recruiting
The best way to refill a leaky bucket is to plug the holes first. To that end, Jackson spends some ink in their report on retention.
One aspect they highlight is artificial intelligence – particularly ambient listening. “Ambient transcription tools can automate in-room documentation by listening, interpreting, and converting clinical conversations into structured notes, allowing physicians to focus more fully on patient interaction.”
An American Hospital Association webinar we previously covered, which provided several rural hospital ambient listening case studies is consistent with this suggestion. Better still, some technology providers have programs dedicated to helping rural healthcare with ambient listening programs. There may also be some financial assistance for these programs through the Rural Health Transformation (RHT) Program.
Near the end of the report, Jackson’s advice returns to culture. After all, for many providers, medicine is still a calling. As Jackson puts it, “Competitive compensation and flexible schedules may get physicians in the door, but it’s relationships – both with patients and with colleagues – that keep them there.”
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