Keep Your Eyes Open to Realities of Saturated Physician Job Markets

David Tiberio/123RF.com

When I was a contingency based physician recruiter, I had the opportunity to personally work with thousands of physicians and hundreds of employers to help match them together into professional marriage. Each candidate and employer was unique, but there were also several common trends for why physicians and employers would require the services of the third party recruiter. A common problem for many of the physician job seekers I worked with was this: they either did not understand, or refused to accept, the realities and challenges of practicing medicine in a saturated market.

A saturated job market for a physician is one in which there are either enough, or more than enough physicians of that same specialty available to meet most of the demands of the population. Many physicians, especially recent grads, often begin their search for a job in an area that should be considered a saturated market.

Potential Locations of Saturated Physician Job Markets - Certain types of places are more likely to become saturated markets. The following is a rundown of the most likely types of places.

• Major Metro Locations - Many new physicians assume that large and sometimes growing populations in major metro locations will ensure that they will have a steady supply of patients to ensure their success. However, they need to keep in mind that they may only draw patients from a small radius to their practice. Also, it’s common in major metros that the more prosperous areas with better payor mixes are already adequately serviced, while the economically unhealthy areas are often in need of more medical care.
• Vacation Destinations - If you’ve loved a vacation spot enough to consider making a permanent move there, you are probably not the first physician to have that idea, and odds are good that local demand is already being met.
• Top Local Areas - An area doesn’t have to be a major metro or a vacation destination to achieve adequate physician coverage. Within any given state there will be top local areas that physicians will seek out for employment. The area could be well known because of excellent economic conditions or top-quality schools. It may be a great university town or popular because of its reputation for supporting the arts. The bottom line here is that some of these types of top local areas will offer the same challenges that major metro and vacation destinations have in terms of being competitive markets for physicians.

Potential Challenges of Saturated Physician Job Markets

•  Adequate Patient Volume - Building up a full patient load takes longer or may be impossible in saturated markets. Patients usually don’t switch physicians just because a new office has opened up. In a saturated market, you may be relying on slow population growth, gradual word of mouth, or extra inpatient work and moonlighting to build up your practice.
• Lower Reimbursements – In less competitive markets, demand for a physician’s services is high, and the physicians, groups, and hospitals in those markets can maintain some leverage when negotiating reimbursement rates with insurance companies. In general, the opposite is true in saturated markets. To simplify the issue, if a competing practice down the street from you is willing to take 5% less from a major insurer in order to keep that insurers patients, you will probably find yourself choosing between accepting the same 5% haircut or losing those patients to your competition.
• Constant Injection of New Physicians/Competition – Whatever forces drove you to start your practice in a saturated market will continue to bring more physicians into the same market and into competition with you.
• Higher Cost of Living and Higher Cost to Run Your Practice – Most areas that are desirable enough to become saturated also require a higher cost of living in exchange for residing there. The rent for your practice, pay for your staff, and costs to advertise may be higher than average, too. Coupled with lower reimbursements, this situation must often be solved by harder work from the physicians
• Splintered Markets – Just as physicians are in stiff competition with each other in saturated markets, the companies that employ them also have to deal with the same pressures on an even larger scale.  Corporate competition impacts physicians during mergers, buy-outs, and bankruptcies far more often in markets where competitive pressures are high than in more stable, low competition markets.   The same issues can certainly affect physicians in any type of job market, but they are just more common within more competitive markets.

With all of the news about current and future shortages of physicians, it’s no wonder that some newer physicians and physicians-in-training don’t stop to consider the challenges of competitive job markets.  Probably most of them still follow their dreams, even if they are aware of these issues, and we don’t blame them; it’s just better to do so fully aware of the conditions they may face. Our intent in this post is not to discourage, but to offer some frank insights that might help someone who is inexperienced with these issues. For those who do practice, or intend to practice, in competitive markets, we advise them to be patient in their practices and not to make the mistake of switching employers too many times, hoping that the grass will be greener when the issues may be pervasive in their area. Most physicians who do find success and become well established in these saturated markets got where they are through being great at what they do, working hard, and longevity in their practices.