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Medical Staff Development Plan – Actionable Plan for Physician Recruitment & Documented Rationale for Private Practice Support Payments

Medical Staff Development Plans (“MSDP”) have been used by healthcare organizations over the past three decades to project the local and/or regional need for physician specialties.  Many forward-thinking healthcare organizations have maximized the utilization of a well developed Medical Staff Development Plan for:
  • Facilitating strategic and business planning efforts  
  • Developing strategies toward physician-hospital alignment 
  • Differentiating clinical service offerings from competitors 
  • Indentifying allied health practitioner needs 
  • Documenting private practice recruitment support payments
Hospitals and health systems are required to have a Medical Staff Development Plan in place for the support of charitable purpose (e.g., maintain tax exempt status). The Form 990 requires hospitals and health systems to address community need and the hospital/health system’s role in meeting community “gaps.”  Additionally, the medical staff development plan has practical implications in which it assists in determining whether and how recruitment support can be given to an independent physician group (e.g., IRS regulations, Kickback regulations).  
At its most basic level, an MSDP essentially serves as an action plan for the recruitment (and retention) of necessary healthcare professionals into the community.  A well designed MSDP should include, at minimum, the following components:
  • A description of the community served by the hospital (i.e., the primary and secondary service area)
  • Physician-need-per-population ratios applied to the service area
  • Quantitative adjustments:
    • Aging in the population
    • Physician retirement and recruitment patterns  
    • National and regional healthcare resource utilization trends
    • Incidence of disease
    • Physician productivity
    • Outmigration of patients (types of cases)
  • Qualitative adjustments:
    • Interviews/surveys (physicians, community representatives)
    • Perceived work-style patterns  
    • Perceived recruitment targets of regional physician groups
    • Perceived community access to healthcare resources
    • Call coverage
The medical staff development planning process can be broken down into the following steps:
  • Determine physician supply and demand (defined geographically);
  • Issue the medical staff development plan itself – “fact base”;
  • Establish healthcare organization’s share of providing health care resources to the community; and
  • Determine physician recruitment targets and whether or not assistance can be provided to community-based private practice groups. 
Additionally, its also important for healthcare organizations to have a defined policy regarding physician recruitment.  For example:
  • If there is a deficit in the primary service area, Healthcare Organization can choose to employ a physician to meet that need or assist an independent group in recruitment and/or seeding of a physician. 
    • Recruitment is defined as those activities, and expenses related thereto, in recruiting and selecting a physician candidate.  Seeding is defined as those expenses related to the hiring and ongoing practice of a physician.
  • ?If there is a deficit in the secondary service area, Healthcare Organization can employ a physician to meet that need but cannot assist an independent group in recruitment and/or seeding of a physician.  
  • If there is a surplus in the primary service area or secondary service area, Healthcare Organization can employ a physician for reasons other than need (need as defined by Stark) but cannot assist an independent group in recruitment and/or seeding of a physician.
There are resources available to utilize when developing an MSDP, such as physician supply and demand statistics or pitfalls of retention plans. Check out the following for further information:
Integrated Healthcare Strategies (Gallagher Integrated), a division of Gallagher Benefit Services, Inc., is available to assist organizations with developing, facilitating and documenting the Medical Staff Development Plan and Physician Recruitment Policies.
Contact Tony Kouba at Gallagher Integrated for more information at
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Tony Kouba is a Principal Consultant with the Physician Services practice of Integrated Healthcare Strategies, a division of Gallagher Benefit Services, Inc.  Mr. Kouba has over ten years of experience in physician compensation, acquisition, and integration. 

Mr. Kouba’s uniquely balanced perspective of drawing conceptual conclusions from detailed analysis has helped many clients realize their strategic vision and accomplish corresponding objectives.  Mr. Kouba’s consulting is dedicated to helping clients ensure that their existing compensation programs are market ...

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