Healthcare provider workforce planning is never simple. Hospitals and health systems must reckon with recruiting and retaining physicians and advanced practice providers (APPs) amidst clinician shortages, ensure and expand access as patient demographics shift, balance preventing provider burnout while meeting consumer demand for convenient and high-quality care, and comply with applicable regulatory guidelines for provider recruitment.
These challenges are amplified for rural hospitals and health systems where provider recruitment and retention are more difficult, particularly for specialized care. In fact, there are approximately 30 specialists for every 100,000 rural residents (compared with 263 in urban areas), as reported by the American Medical Association. Further, the National Institute for Health Care Management notes that 31 out of 35 physician specialties face ongoing shortages including primary care, obstetrics/gynecology, pediatrics, and geriatrics.
The Value of a Provider Needs Assessment
A provider needs assessment (PNA) can address these challenges by documenting and supporting provider needs, outlining future provider workforce planning to address critical patient and provider recruitment needs, informing compensation planning and design, quantifying access to primary and specialty care, and identifying strategic expansion of service offerings where applicable. Additionally, a PNA can spotlight opportunities to address unmet community health needs, support the strategic goals of the organization, and ensure physician and APP recruiting efforts comply with Stark Law and Anti-Kickback regulations. Specifically, and in conjunction with defined policies and procedures, the assessment helps ensure that any recruitment or compensation aligns with actual, documented need.
Provider Needs Assessments for Compensation Professionals
PNAs have long played an important role in provider planning and recruitment—that is, answering whether and how many providers are needed within a community. PNAs also provide data to inform the determination of fair market value (FMV) and commercial reasonableness (CR)—guiding, as appropriate, how providers could be compensated. PNAs help compensation professionals support remuneration decisions and demonstrate that compensation arrangements were developed absent referrals. For example, a rural hospital whose PNA revealed a sizable deficit of urologists and that has unsuccessfully sought to recruit and retain a urologist for the last several years may use these results, along with others, to support the necessary compensation level to meet the community’s needs.
Because compensation design exists at the intersection of finance, operations, legal, compliance, and clinical leadership, compensation professionals can use PNAs to coalesce these stakeholders. PNAs can translate identified need into financial and compensation implications and increase reliance on fact-based data informed by nuances within a community. PNAs can also inform compensation strategy. For example, deficits for providers in hard-to-recruit specialties may warrant consideration of a compensation structure with a higher guaranteed salary rather than variable pay, and/or inclusion of a signing bonus designed to align the community’s needs with provider commitment.
The Provider Needs Assessment Process
An effective PNA process is typically carried out in five key steps:
1. Service area definition and analysis
- Define the geographic zones reflecting where patients live and seek care. This analysis informs understanding of marketplace dynamics and creates a foundation for subsequent specialty-specific assessments. If performed to meet the Stark Law physician recruitment exception, for example, the geographic service area must be defined in accordance with the exception.
2. Confirmation of provider supply
- Quantify the supply of physicians and APPs, which allows analysis of:
- Providers in the broader service area(s)
- Full-time-equivalent calculations and applicable adjustments, such as adjustments for anticipated retirements or planned future locations outside the defined service area
- Scope of practice and use of APPs
- Insights related to coverage limitations, faculty and resident implications, and other unique community-specific nuances (i.e., presence of military or transient populations)
3. Market analysis and assessment of existing capacity
- Evaluate and project demand using nationally recognized physician-to-population ratios; existing wait times and patient access studies; market share data; claims data; patient panel size, value-based care prevalence, and community health needs assessments.
4. Baseline provider needs identification
- Compare supply data to demand projections to calculate provider surpluses or deficits.
5. Findings and actionable insights
- Incorporate local knowledge, such as anticipated service expansions, disease prevalence, and telehealth adoption, to refine findings and insights.
Provider Needs Assessment Outcomes
PNA’s investigative and analytical process can help a health system achieve a number of outcomes, such as:
- Increase access to care in underserved areas
- Robust workforce planning can identify critical gaps and guide targeted interventions.
- Target recruiting and align recruitment strategies with actual community health needs
- Maintenance of the provider pipeline can be achieved with consideration of each service area and reliable data.
- Focus resources on high-demand specialties throughout the region
- Prioritizing the recruitment of providers for critical access issues supports improved community health by minimizing treatment delays and potentially the cost of care.
- Assure compliance with federal regulations
- Workforce planning is based on documented community need.
- Inform compensation planning and design
- Establishing the “why” behind hiring and retaining providers and shaping the “how” of structuring their pay.
More than ever, the financial health of a hospital relies on sound and defensible data, and the PNA can be a source of that critical information. Over time, PNAs have become more complex—and valued—due to changes in population distribution, physician supply and demand, regional chronic health issues, and the increase in regulations. In today’s challenging healthcare environment, compensation professionals can leverage PNAs to provide clarity, defensibility, and intentionality to workforce planning and design.
This PYA thought leadership was originally published by the American Association of Provider Compensation Professionals.
PYA has more than 40 years of experience helping healthcare organizations conduct physician workforce planning and compensation design that are compliant with federal regulations. Our experts understand the complexity of workforce management and help healthcare organizations support the needs of their communities through strategic assessment and planning.
