Do you know where your practice benefit dollars are going? More specifically, are those dollars being spent wisely with regard to recruiting new and retaining current staff?
, MHA, is vice president of business analytics for The Halley Consulting Group. She says that physicians are often unaware of the cost of benefits for their specific practice, and that some health systems do not allocate the benefit expense to the practice income statement.
And competitive benefits, she says, “can absolutely, and should, serve as a recruitment tool for both providers and staff.”
To that end, it’s critical to understand the unique needs of the physicians or staff you are recruiting. Fair is not always equal, Montijo says, as everyone’s needs are different.
What matters to physicians, Montijo explains, “is dependent on the generation of the physician. Experienced physicians who are later in their careers are interested in income security, solid retirement plans, and relinquishing the administrative burden of running a practice and having to meet a payroll. Physicians in the beginning of their career are interested in work-life balance and signing bonuses to assist with medical school loans.
“I’ve even recently had physicians ask about four-day work weeks during the summer and the ability to work from home one day a week,” she says.
Regardless of the generation, most physicians want fair, market-competitive compensation, and market-based pay for market-based work, meaning the compensation is in alignment with the productivity level of the physician. Popular compensation and benefit-related perks include signing and retention bonuses, loan forgiveness, relocation assistance, and paid time off.
But people and their life situations change, so Montijo recommends one-on-one discussions with employees at least once a year during an annual performance review.
“And annually might not be often enough,” she says. “If you’re at risk of losing employees, a once-a-year conversation is honestly not frequent enough.”
Montijo says that effectively using practice benefit dollars can have a positive impact on a practice’s bottom line. While it may not happen often, offering a richer benefits package than what the market demands consumes precious dollars, leaving less financial resources to support other key needs of the practice, such as hiring additional clinical support personnel.
“Why offer a CME allowance of $10,000 annually if the market rate is $5,000?” Montijo asks, rhetorically.
Conversely, and perhaps more realistic, is the impact of skimping on benefits.
“It is critical for practices to have a good sense of their market reality, and to understand salary and benefit structures, both in healthcare and outside of healthcare, to ensure they remain market competitive,” Montijo says. “The cost associated with employee and physician turnover is significant, and avoiding that cost can have a positive impact on the practice bottom line.”
In addition to turnover, position vacancies due to an inability to attract qualified candidates can have a significant impact on patient, employee and provider engagement, negatively affecting the practice bottom line.
That’s where a private practice has an advantage compared to a hospital or health system. The private practice benefits from the flexibility that exists to customize the benefit and compensation packages offered to employees – depending, of course on the size of the practice and any state regulations.
“Smaller practices also have the ability to be more creative in the design of their benefits, such as a practice that takes all employees to a destination for an educational retreat,” Montijo explains. “The employees enjoy the opportunity to learn something new outside of the office setting, and the practice enjoys the tax benefits from the expense.”
Analyze Your Practice
One strategy when it comes to maximizing practice benefit dollars is conducting a cost-benefit analysis. For example, if it costs X-dollars to offer staff a particular benefit or perk, what’s the monetary impact to the practice?
“Some softer things like an impact in patient satisfaction might be harder to quantify,” Montijo says, “but it’s still worth understanding what it will cost versus the cost of not doing something.”
For example, if you lose a nurse because of not offering good benefits, now you have a position to fill. And if you have trouble filling the position and need to employ agency staff, that can get costly.
“That’s a risk that’s easy to quantify,” Montijo says.
Or if patient satisfaction declines, and that comes in the form of losing two patients per month, you can attach a figure that, on average, a patient generates X-amount of revenue. That would give you an idea of the cost of staff turnover. So again, it comes back to talking to and knowing your staff.
“You don’t want to lose a staff member because something has become more important to them and you’re not addressing that need,” Montijo says.