It’s no secret that physicians are becoming an increasingly scarce resource. As the number of physicians in the United States drops, and the vacant slots in hospital staffing charts rise, the effects of the physician shortage go beyond the realms of healthcare; they ripple out, touching businesses and consumers alike.
Follow along as we shed light on the financial costs associated with this physician shortage and arm healthcare organizations with the understanding they need to strategize and respond effectively in these changing times.
The Financial Implications of Physician Shortages
Increased Operational Expenditure
One of the major financial implications of a physician shortage is the increased operational expenditure for healthcare organizations. This increase occurs for several reasons.
The physician shortage may lead to an increased workload for the remaining healthcare staff, resulting in increased overtime hours and associated costs. This can be particularly significant in healthcare settings that require round-the-clock coverage such as emergency departments and intensive care units. Also, the extra workload can lead to staff burnout, potentially resulting in sick leaves and decreased productivity, further driving up costs.
Additionally, increased pressure on existing staff can result in longer patient wait times, potential inefficiencies, and a decrease in quality of care. Not only are healthcare facilities experiencing physician shortages three times more likely to receive poor patient satisfaction ratings, but this strain can also lead to increased resource utilization - all of which can add to operational costs.
Furthermore, the shortage of physicians and increase in staff burnout could potentially lead to an increase in malpractice claims. Physicians experiencing burnout were twice as likely to be involved in a patient safety incident. These incidents could result in costly litigation and higher insurance premiums, further straining operational budgets.
In the face of these challenges, healthcare organizations must develop robust strategies to manage these increased costs effectively, ensuring they can continue to deliver high-quality patient care in an economically sustainable manner.
Revenue Loss from Decreased Patient Volume
A physician shortage has a direct correlation with a healthcare organization's ability to serve its patient base. When there are fewer physicians, the capacity to see and treat patients diminishes, leading to a reduction in patient volume. This can have a significant impact on the revenue stream of healthcare organizations—an estimated $4.6 billion per year in the US.
The loss in patient volume might be particularly felt in service lines that generate higher revenues. Specialists like cardiologists, orthopedic surgeons, and neurologists bring in substantial revenue for hospitals and clinics. If there's a shortage in these specialty areas and specialty services, it could significantly impact the organization's bottom line.
Additionally, fewer physicians can mean decreased utilization of ancillary services such as lab tests, imaging studies, and surgical procedures. Physicians are typically the ones who facilitate these services; therefore, fewer physicians equate to fewer services being requested, further reducing potential revenue.
To mitigate these potential losses, healthcare organizations need to explore ways to maintain or even increase patient volume in the face of physician shortages. It's a challenging task, but with creativity and strategic planning, it can be accomplished.
Penalties due to Decreased Quality of Care and Patient Satisfaction
Longer waiting times and increased physician workload due to the shortage can negatively impact the quality of care and patient satisfaction levels. In value-based healthcare models, lower patient satisfaction and quality scores can lead to financial penalties, impacting the institution's financial health.
A reduction in quality of care can lead to an increase in preventable readmissions. Not only do these readmissions strain the system and incur additional costs, but under the Hospital Readmissions Reduction Program (HRRP), hospitals with higher-than-expected readmission rates for certain conditions may also face financial penalties from Medicare. As such, a decline in care quality due to understaffing can lead to substantial financial losses.
Patient satisfaction has also become a critical factor in healthcare reimbursement, particularly under value-based care models. Tools like the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey score hospitals based on patient experience and satisfaction. Lower scores can result in reduced Medicare reimbursements under the Hospital Value-Based Purchasing Program (HVBP).
Additionally, in an era where online reviews can significantly influence a person’s decision about where to seek care, negative patient experiences that lead to poor reviews can deter potential patients. This could result in a further reduction in patient volumes and associated revenue, as previously discussed.
To mitigate these potential penalties, healthcare organizations must find ways to maintain high-quality care and patient satisfaction amidst the physician shortage. Ensuring optimal care delivery despite staffing challenges is not just a clinical necessity, but a financial one as well.
Strategies to Mitigate the Cost of Physician Shortages
To mitigate these costs, healthcare facilities need to adopt proactive and strategic measures:
Invest in Telemedicine Services
Amidst physician shortages, telemedicine has become an essential tool for healthcare organizations, demonstrated by a 3,552% rise in telehealth claims from 2018 to 2021. Reason being – telemedicine extends providers' overall reach, alleviating the strain on on-site physicians and offering flexibility for both patients and providers. This technology also reduces overheads associated with physical spaces and decreases patient no-shows, leading to a cost-effective healthcare solution.
Leverage Advanced Practitioners
Integrating advanced practice providers (APPs), like nurse practitioners (NPs) and physician assistants (PAs), into the care team can alleviate the physician workload and reduce operational costs. From added flexibility to cost-effective staffing options, NPs and PAs bring a wealth of benefits that can enhance patient care, optimize resource allocation, and create a sustainable healthcare environment. By harnessing their skills and expertise, hospitals can tap into a valuable resource pool that can help alleviate the strain caused by physician shortages.
Hire Locum Tenens Providers
By partnering with a specialized healthcare recruiting agency, like Curative, your healthcare facility can benefit from employing locum tenens physicians—providing your full-time staff with the opportunity to take breaks, reduce their hours, offer flexible scheduling options, or even take a sabbatical, maintaining a healthier work-life balance and potentially preventing burnout from developing or worsening. In addition, recruiting agencies are experts in sourcing and attracting medical talent, often having an extensive network of professionals seeking new opportunities. This partnership can streamline the hiring process, saving your organization valuable time and resources.
Alleviating the Financial Strain Caused by Staffing Shortages
The physician shortage is a pressing issue with significant financial implications for healthcare organizations. Increased operational expenses, revenue loss from decreased patient volumes, and potential penalties due to decreased quality of care and patient satisfaction are significant challenges that must be addressed strategically and proactively.
However, it is critical to remember that while these challenges are substantial, they are not insurmountable. As we navigate this shifting landscape, healthcare organizations must be prepared to adapt, innovate, and strategize. In doing so, they can ensure not only their financial sustainability but also the continued delivery of high-quality care to their patients.