BFMV Perspective: Physician Moonlighting is on the Uptick as Shortages Grow


The unprecedented growth of the aging population, combined with accelerating physician retirements, is causing a dramatic shortage of qualified healthcare providers in the U.S. The American Association of Medical Colleges (AAMC) currently projects a nationwide shortage of 37,800 to 124,000 physicians by 2034.

 

Interesting facts about the situation:

  • Per-capita healthcare spending is substantially higher for senior citizens. According to the U.S. Census Bureau, over 50 million senior citizens live in the U.S., making up 16.5% of the total population. In 2012, the senior population represented 14.7% of the total population. Over the next decade, the percentage of seniors is expected to grow to over 20% of the population, with adults over 65 outnumbering children under 18 in the U.S.

  • More than two out of every five active physicians in the U.S. will be sixty-five or older within the next decade. According to the AAMC 2020 Physician Specialty Data Report, 44.9% of all practicing physicians in 2019 were 55 or older.

  • According to the AAMC 2019 National Sample Survey of Physicians, 40% of the country’s practicing physicians felt burned out at least once a week before the COVID-19 crisis began. A 2021 Mayo Clinic/Stanford Medicine study found that the overall burnout prevalence among physicians had increased to 62%. In October 2022, MGMA released its physician burnout, engagement, and retention survey results which reported that 40% of the medical practices responding had a physician cite burnout as a reason to resign or retire early in the past year.

 

Notable efforts are being made to address the shortage. For example, in December 2020, bipartisan congressional leaders took steps to address the national physician shortage by adding 1,000 new Medicare-supported graduate medical education (GME) positions—two hundred per year for five years—targeted at priority communities, including rural, urban, and other teaching hospitals, nationwide, ending a nearly 25-year freeze on federal support for GME. However, efforts like these are not quick fixes.

With physicians in short supply, “low switching-cost” specialties such as hospital medicine present some of the biggest retention challenges to physician employers. Adjusting to a new practice in a low switching-cost specialty typically demands less of a physician from a monetary, psychological, effort- or time-based standpoint. From our perspective, the use of moonlighting physicians (i.e., physicians working multiple jobs) in hospital medicine appears to be on the uptick. It also seems that the supply of moonlighters increasingly consists of local providers supplementing their private practice incomes. Here are a few important considerations hospitals must make when negotiating with private practice physicians for moonlighting services.

  • The hospital must be able to document a legitimate need for the service being provided and that the arrangement with the physician makes economic sense compared to other alternatives.

  • For the fair market value assessment, it is important to use market data that reflect the services the physician provides under the agreement – which may differ from the services provided in private practice. For example, if a cardiologist provides hospitalist services, market data for hospitalist services (as opposed to cardiology services) should be used to set compensation.

  • It is critical to understand that while a physician’s opportunity cost (i.e., lost revenues or profits from private practice) may factor into their decision to moonlight, it may vary significantly from the fair market value of the service.

BFMV supports health systems with compensation consulting and FMV opinions for physicians. Contact us for more information about establishing fair market value compensation for moonlighting arrangements and other physician contracts.

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