There is a physician shortage in the US — but a projected surplus of EM physicians. What are the implications for hospitals?
Greetings from Atlanta everyone!
In this newsletter, I’m finally going to talk about a huge change in physician services that we’ve started to see over the last three years — and I’m actually not talking about COVID.
In my view, the upside-down EM physician job market will fundamentally alter how physician services groups deliver value to hospitals (or fail to). Yet, in my discussions with hospital executives, I have been struck by the fact that they are still largely unaware of the changes to the market or their implications for our business.
So, below I’m going to talk about what has happened, why, and what the implications are for hospital leaders.
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Reasons For The EM Physician Surplus
We started moving toward a surplus of emergency medicine physicians over the past 3 years.
There are three main reasons for this:
Reason #1: Growth in residency programs
There’s an appropriate saying for this inflationary moment: the best cure for high gas prices is high gas prices. The idea being that when oil prices are high, oil companies invest in more production, so eventually, oil supply goes up and prices come down. The catch is that this takes time.
A similar thing happened for the EM job market, except on a more localized basis: there was a chronic shortage of board-certified emergency medicine physicians in many parts of the country, so clinical leaders in those states started residency programs to help alleviate the shortage.
Physician services companies supported this expansion because they viewed recruiting physicians as their primary goal and more residencies meant access to a bigger pool of candidates. They launched new residency programs even though doing so is a very long and difficult process, with high standards and multiple levels of review and approval to get through with ACGME.
Of course, the result is we are now graduating more emergency medicine physicians than ever before.
Reason #2: Higher APP utilization
Another way physician services sought to mitigate the physician shortage was by allowing APPs to see more patients and more higher acuity patients. This is one of the most hotly debated trends in emergency medicine, but there is little doubt that it has been a trend.
A major study on the subject, released in 2017, analyzed the CDC’s NHAMCS survey to track APP utilization. The study found that utilization of nurse practitioners to see patients in the ER spiked in 2016 and 2017, a trend that no doubt continued in 2018 and 2019.
Reason #3: ER Volumes Leveled Out
Finally, in the years immediately preceding the start of the pandemic, ER volumes finally leveled off, breaking a near three-decade steady upward trend. The reasons for this are multifaceted. Everything from cost pressures to regulatory changes, to the growth in alternative care locations, likely contributed.
And then came March 2020. At the start of the pandemic, volumes cratered. The pandemic didn’t cause any of the three above factors, but rather it revealed them in stark terms no one in physician services could possibly miss, especially if you were a new ER physician.
Among the many, many shocks of the early pandemic, one was that so many emergency medicine physicians about to finish residency training suddenly found themselves unable to find jobs. Even those who had already signed contracts had the contracts revoked or postponed.
As volume surges have come and gone over the last two years, it obscured the long-term trends. Since everyone was busy, it could feel like the job market was back to something more “normal” — but the fact of all these trends remains, and it’s clear there is still a surplus.
ACEP’s Emergency Medicine Workforce Study
It’s difficult to overstate how much of a shock this is, even though the trends had been a long time in coming. For decades, EM physicians have been in huge demand, just as physicians in other specialties have been. And then, as if quite suddenly, they weren’t.
In 2021, the American College of Emergency Physicians convened a task force to study the EM physician workforce. The workforce looked at estimates of the baseline workforce supply of physicians, NPs, and PAs and projections about how many new ER doctors would enter the workforce. They looked at estimates of workforce productivity and also future demand for emergency care services.
Their findings? By 2030, there would be 7,845 excess emergency physicians.
ACEP has proposed several strategies to deal with this problem. Among these:
- Take a look at reviewing and defining standards for starting EM residencies
- Review “legal, legislative, and regulatory” issues at CMS related to funding for graduate medical education, presumably to ensure that its expansion is not being overly incentivized
- Opposing the expansion of independent practice for NPs and PAs
- Working with CMS and other agencies to protect and promote jobs for EM physicians in underserved and rural areas
Just as the recent change was decades in the making, however, even if ACEP is successful with these initiatives, just like it will take a while to bring new oil and gas to market, it will be a decade at least before any of the ACEP strategies could start to have an effect.
So essentially, the genie is already out of the bottle.
Interestingly, even as emergency medicine has become oversupplied, it is still a geographically-oriented workforce. It’s still hard to find ER physicians in rural areas, and we are probably never going to have board-certified ER docs in every ER in the country, first, because that’s not where the majority of residency-trained EM physicians want to practice, and second, because not every rural ED has the volume to support a board-certified EM physician.
Implications for Hospitals
1. Transition risk is lower
For as long as many of the current hospital leaders can remember, transitioning your ER group was fraught with the risk that many of the doctors could choose to leave, and the fear that hiring new ones would be extremely difficult, with consequent interruptions to patient care and damage to the hospital’s standing in the community.
We are moving towards a world in which if a hospital wishes to transition its ER group, there simply won’t be as many places for all the physicians to leave and go to. And, even if many choose to leave, hiring a new team can be done much more easily than before.
The clear implication is that hospital leaders should not be as hesitant to find a better EM physician services partner if they feel a change is necessary.
2. Rates for physicians will come down
It’s the basic law of supply and demand: an oversupply of EM physicians means their rates will have to come down over time, relative to other costs in the healthcare system.
But it’s not just supply and demand. Even with big victories in the ongoing legal fights related to the No Surprises Act, the financial pressures to squeeze more value out of physician services are only increasing.
3. Rural hospitals may get better-trained physicians
One happy consequence for rural communities is that, with more competition for jobs in urban areas, more board-certified emergency physicians will take jobs in rural areas. They may make less money, but those communities are going to have access to better-trained physicians.
4. Physician services must (finally) become more than staffing companies
I know that many physician services groups feel they do much more than simply staff a service line, but in the eyes of some hospital leaders, the perception remains that companies in the space are simply staffing agencies.
In fact, I had a conversation with a hospital executive just recently. His ER is staffed by what I think of as a solid group, but he was hard-pressed to come up with anything the group did other than recruit, schedule, and pay physicians.
Of course, that was music to my ears, since a big part of Core Clinical Partners’ differentiation in the marketplace is our ability to provide flexible partnership models that actually address hospital- or system-wide problems.
What about Hospitalist Medicine?
Some ER groups’ efforts to become more than staffing companies centered around their expansion into hospitalist medicine. If they could staff both the hospital side and the ER, the thinking went, these groups would be able to recognize all kinds of “synergies,” improving patient flow and unifying the two service lines under one set of incentives and one leadership team.
Meanwhile, the job market for hospitalists remains in somewhat of a balance. As more facilities have wanted hospitalists, more physicians have chosen to become hospitalists. Today, a hospitalist career is a great lifestyle choice for many family care physicians.
The Bottom Line
So what is the bottom line for hospitals now that that historical dynamic has shifted? In my view, it is that physician services companies must continue to differentiate themselves far beyond just their ability to recruit EM physicians.
Thankfully for Core, we were built for this kind of changing environment. We don’t have a one-size-fits-all approach to hospital partnerships or contract models, instead tailoring each one to the specific preferences and goals of the facility. This has led to extraordinary growth over the past three years.
While other groups have tried to fit their pre-existing models into a changing healthcare environment, our decision not to do so has allowed us to be more flexible and nimble than our peers, and being independently financed means gives us the flexibility to quickly make decisions and pivot as necessary to continue to meet the needs of our partners and their patients.