In light of the growing shortage of healthcare providers, hospitals must plan today for establishing the physician workforce necessary to satisfy the future healthcare needs of their communities. Depending on location, a hospital often finds itself needing to recruit physicians from outside its service area.
It can be difficult to entice physicians to relocate their practices, especially into rural areas, so hospitals must typically offer salary guarantees or incentive payments to facilitate this transition. However, to avoid potentially costly compliance errors, hospitals should be aware of the rules that apply to physician recruiting. Completing a Physician Needs Assessment (or Physician Manpower Study), including identification of the Stark-defined service area and calculation of physician need, is the first step in demonstrating a compliant physician recruitment program.
As with any arrangement involving payment to a physician, when structuring physician recruitment arrangements, hospitals should consult legal counsel for advice regarding compliance with certain healthcare regulations, including the Physician Self-Referral Act (Stark Law) and the Anti-Kickback Statute. For example, the Stark regulations include extensive requirements that a hospital must meet to satisfy the Stark physician recruitment exception. A full analysis of those requirements is beyond the scope of this article, but the Stark exception’s definition of the “geographic area served by the hospital” is important when identifying the need for physicians in a hospital’s service area.
Stark specifies that “the geographic area served by the hospital is the area composed of the lowest number of contiguous zip codes from which the hospital draws at least 75% [90% for “rural” hospitals] of its inpatients.” Furthermore, a hospital may include as part of its service area those zip codes from which a hospital draws no patients, provided such zip codes are entirely surrounded by zip codes in the geographic area from which the hospital draws at least 75% of its inpatients.[1]
Once the Stark-defined service area has been identified, a hospital must assess the current and future provider supply and demand within each specialty to determine the total need and uncover any manpower gaps. This assessment includes both quantitative analyses, such as population trending or review of specific diagnoses and disease incidence, and qualitative analyses related to provider access, such as review of hospital coverage, insurance acceptance, and appointment wait times. By determining provider need in each specialty, a hospital can then prioritize physician recruitment initiatives within its service area.
As demand for physicians continues to outpace the corresponding supply, and with additional factors such as population aging and growth, the shortage of healthcare providers is only expected to increase in the coming years. Primary care specialties are projected to be most heavily impacted, with the Health Resources Services Administration (HRSA) estimating a projected shortage of 20,400 primary care physicians by 2020. Accordingly, hospitals should begin planning their physician recruitment strategies now to prepare for the future.
PYA’s experience with physician needs analyses includes both rural and non-rural hospitals, as well as multi-campus hospitals. Our analysis can include a short-term or long-term assessment, and can be tailored to fit the specific needs of your organization. For more information related to assistance with your Physician Needs Assessment or Physician Manpower Study, contact the experts listed below at PYA, (888) 420-9876.
[1] 42 C.F.R. §411.357(e). Additional special rules apply with respect to hospitals that draw fewer than 75% (90% for “rural” hospitals) of their inpatients from all the contiguous zip codes. The Stark Law includes a specific definition of “rural.”
