Staffing: The tide turns in the nephrology job market

from Nephrology News and Issues , November 2009
by Martin Osinski

Now, a shortage of jobs to go with a shortage of physicians

Within the last year, recruitment firms spent the course of a normal business week scrambling to find candidates to fill slots left by retiring nephrologists and the continuing growth in ESRD. "Shortage" was a word that bounced around the hallways at nephrology meetings and throughout the corporate headquarters of dialysis providers.

Today, the tide has changed. The word "shortage" is still being used, but now it is also being spoken among renal fellows looking for jobs, There is still a shortage of nephrologists, but these precarious economic times have altered the balance between the two.

A perceived demand, but a weak job market
The outlook for jobs has been one of the weakest in the past 25 years. One only needs to take a look at the New England Journal of Medicine classified advertising pages to see the decrease in positions across the health care market.

But the drop is especially noticeable in nephrology. In the past, on average, one could expect anywhere in excess of 50 nephrology positions in any given issue of NEJM. Look today, and that number is cut in half.

History repeats
This is not the first time a job slowdown like this has occurred. In 2001 and 2002, physicians held off on hiring associates as a result of the Dot-com bubble and 9/11. It only took 12 to 18 months for the job market to pick up again. This time the slowdown is a little different (although potentially just as short). There are several additional factors that are playing a role in limiting the number of positions available for physicians coming out of fellowship, as well as physicians trying to make a move from their current practice.

Overall outlook for the labor force
According to the Bureau of Labor Statistics, "Since the start of the recession in December 2007, the number of unemployed persons has increased by 7.6 million." Even though the economy is improving, it is not clear when the job market will rebound.

Nephrology, and other specialties, is part of that bleak picture. True, health care is a relatively safe field to be in during a recession; one recent NN&I article suggested that our specialty is not necessarily recession proof, but recession resistant.

Physicians are still in high demand; with the annual growth in the incident population for ESRD and the burgeoning growth of the chronic kidney disease population (those not yet on dialysis), there is indeed a severe shortage of nephrologists. This was also most recently chronicled in the October 2009 issue of Renal Business Today (Note: this author was interviewed for that article). So why should the market appear so tight?

Depleting nest eggs
The economic collapse of the past two years has caused major damage to many physicians' 401K and pension plans. Someone looking to retire this past year or the next few years (in many cases dependent on how their portfolios were diversified) could have seen drops in their potential assets of 40% or greater. Even with the recovery that has taken place in the markets over these past few months, that's enough to make one rethink retirement plans, and many nephrologists are. Therefore, the number of positions that normally would open due to retirement are not opening up.

Health care reform
Secondly, one cannot turn on the news, read a newspaper, or speak with associates in your practice or at the hospital and not realize health care is upon us. What does that change mean to physicians and to nephrologists is anybody's guess at this time. As RPA public policy director Rob Blaser stated at the most recent RPA annual meeting, "We know what we know and we don't know what we don't know." Many physicians and group practice administrators and hospital administrators are waiting to see what the future is going to look like before they add staff. Most hospitals and academic institutions today have hiring freezes in place, and many group practices (the majority of nephrology opportunities are with group practices) are holding off as well. To bring on a new physician to practice (unless it is to replace someone who has left or is leaving) is to take money out of the pockets of the individuals already there. In these uncertain economic times, many physicians are not comfortable enough with current unknowns in the future to do that.

Because Medicare is the primary pot of money for the ESRD program (nephrology is a specialty where 60% or more of revenues are generated from Medicare according to the RPA 2007 Benchmark Survey), its future is important. Although everyone, including the President, says not to worry, if things remain as is, Medicare reimbursement to physicians across the board is projected to go down 21% as a result of the sustainable growth rate formula. Congress may step in, as it has yearly (a congressional stopgap adjustment passed each year since 2002), to correct the problem, and a permanent fix is part of the health care reform language. President Obama's advisors on several occasions have made it clear that there is a carve out in place of $240 billion, exclusive of any health care reform plan, to fund the proposed 21% shortfall for 2010. But even with that, the threat of these cuts is creating hesitation among physician practices that want to expand as well.

Other health care-related businesses will tighten their belts as part of health care reform. The government has already received assurances for $80 billion in cuts (over the next 10 years) from the pharmaceutical industry; hospitals have agreed to reduce Medicare charges by another $150 billion over the same time period. There have been no numbers bantered about-yet-as to what Congress may expect from physicians.

What about bundling? There was concern about the potential of physician compensation being rolled into the bundled amount at sometime in the future. The release last month of the first draft reinforces the fact that Medicare is not contemplating that for now; bundling is still projected for implementation for 2011 but physician compensation is not part of the package. Will it remain that way and if so, for how long is anyone's guess at this time.

Consults down
Many practices are seeing a decrease in the number of consults coming to them from primary care physicians and are concerned about the immediate impact that this is having on their practices' future growth. The reality is that the consults have decreased because a lot of primary care patients have either lost their jobs or are tight on money and prefer eating rather than going to see their primary care physicians. For obvious reasons, this translates into fewer consults today. You will not be seeing the Stage 2 and Stage 3 CKD patients being referred that you normally would. A bad economy does not translate into better health for the masses. Just because the economy is down, continued growth in individuals with kidney disease is not necessarily going to change in a similar manner. The patients will be there eventually, but more will be coming at Stage 4 or Stage 5 CKD. There may be a lull in the number of patients that nephrologists are currently seeing, but rest assured that it is temporary. These patients will eventually have to be seen by a nephrologist, and unfortunately they will just be sicker and the demands on nephrologists will be greater.

The cost of moving
Like many in other industries, the ability for a nephrologist to relocate can be extremely difficult if they own homes in their current practice or fellowship location. Unlike the recession we had in 2001-2002, the housing prices in markets today have decreased dramatically and many families are upside down on their mortgages. Physicians may not be happy in their practice, but getting out without a major loss on their real estate will not be easy. Even if one does, getting favorable financing for a new home may be difficult.  For many that have to leave it means carrying a home in one city while relocating to another and many would prefer not to do that. Additionally many physicians are hesitant to make a change.

So where does that leave the job market? For the short term, probably it will not be so good, but in the long term, prospects can and will get better. Here's why:

• Those physicians delaying their retirement will have to eventually retire, and most of them will within 3-5 years of their original planned date.  The consensus appears to be that if something doesn't happen this year with health care reform, it will be several years before it will be brought up again. By early December, we will have a better idea if anything will change and shortly thereafter, its impact on physician compensation and how physicians will be practicing medicine. Regardless of the outcome, renal patients will need care, and unless there is blatant direct rationing (political suicide for all involved), nephrologists will be paid to provide services to these patients, and most probably at a similar rate (CMS is projecting a 2% increase) as they currently receive.
• If the President and Congressional members are to be believed, the 21% cut in Medicare is not going to happen in 2010 and if there is reform, threats of future cuts of this magnitude will in all probability diminish as the sustainable growth percentages will be removed from the reimbursement calculations.
• The renal patients will find their way to you, maybe not as an early referral (as would be preferred) but when the GFR and kT/V gets to a certain point-they will come.
•  The housing market has only one way to go at this point and (at the time of this writing) new home prices went up for the first time in three years. Hopefully that is the start of a positive trend.

Summary
The bottom line? Nephrology positions are out there, but this year and probably for the next year to come there is a good chance you may not find them where you want them.

Mr. Osinski, a member of NN&I's Editorial Advisory Board, is president of the recruiting firm NephrologyUSA (www.nephrologyusa.com), a division of American Medical Consultants Inc. He is based in Miami, Fla.