The labor market is changing. The recent surge in open job postings for physicians and surgeons marks a notable shift from previous months, potentially indicating tightening labor conditions. Despite declining growth rates in healthcare wages, the sudden increase in job postings suggests a possible reversal in this trend. Google searches for primary care services have decreased, nearing pre-pandemic levels, while patient visit rates have stabilized after a post-pandemic rise, indicating a new equilibrium. Additionally, since October 2023, there has been a rise in healthcare job openings alongside declining quit rates and increasing hires, implying intensified competition for talent. Although M&A activity has normalized post-pandemic, there’s been a rise in smaller deals, suggesting a trend toward localized consolidation in the healthcare industry.
Here are the top six takeaways to remember this year.
1. Physician office job opportunity growth sharply rises off lows.
The growth rate of open physician and surgeon job postings had been low before the recent surge where the year-over-year growth rate jumped from 2.1% to 13.3% over a few weeks.
Indeed.com Job Postings for Physicians and Surgeons
Key takeaway: The recent surge in physician job postings suggests a tightening labor market, potentially leading to increased competition for qualified talent. As a result, physicians’ offices may need to offer higher wages and improved benefits.
2. Lower wage growth due to looser labor markets may see a reversal.
Healthcare wage growth rates for physicians’ offices have seen a sharp decline relative to the national and healthcare averages as looser labor markets drive wages lower. However, with the recent sudden rise in job postings (see prior chart), we could see wages for physicians’ offices start to trend higher.
Wage Growth
Key takeaway: While wage growth rates are relatively low, the recent surge in physician job postings could signal a shift to a tighter labor market, potentially leading to increased competition for physicians. Consequently, physicians may have more leverage in negotiating higher wages and better employment terms, which could make it more challenging for physician offices to reduce their overhead.
3. Google searches for primary care continue to decline.
After peaking in late 2021, Google searches for “primary care near me” have been generally trending lower and are now near pandemic levels.
Google Trends: “Primary Care Near Me”
Key takeaway: The decline in Google searches for “primary care near me” suggests physicians’ offices may experience lower patient visits and appointment bookings as patient care moves toward alternative venues, such as urgent care locations. With the post-pandemic surge in digital healthcare, search engine optimization, online marketing, and telehealth integration could help combat lower online demand.
4. The number of visits to the physician’s office has stabilized.
After experiencing a significant post-pandemic rise, the recent trend in the number of patient visits has stabilized, with the 12-month average leveling off. This suggests that patient visit rates have reached a new equilibrium following a period of high demand and volatility.
Patient Visits
Key takeaway: The stabilization in patient visits suggests that the number of patients seeking care has reached a consistent level. If the trend remains stable, physician offices can better optimize staffing, equipment, and space utilization without sudden fluctuations in demand. Focus on patient satisfaction, follow-up care, and building strong patient-provider relationships to maintain a solid patient base for long-term success.
5. Rising job openings and lower quit rates in healthcare may lead to tighter labor markets.
Since October 2023, there has been a notable rise in job openings in the healthcare sector. Concurrently, quit rates have steadily declined and hires have consistently increased, suggesting tighter labor conditions.
Healthcare Jobs Market
Key takeaway: For physician offices, this could translate into heightened competition for talent, potentially leading to upward pressure on wages and difficulty recruiting and retaining physicians. Practices must adapt their hiring and retention strategies to remain competitive in this evolving labor market landscape.
6. M&A activity in the healthcare space subsided to more normal levels.
With significant healthcare consolidation occurring post-pandemic, M&A activity has since reverted to more traditional levels. However, smaller deals have increased in the last three quarters with the deal count rising and the average deal size remaining relatively low.
M&A Activity
Key takeaway: The increase in smaller M&A deals within the healthcare sector suggests a trend toward consolidation at a more localized or specialty-focused level. For physician offices, this could mean heightened competition from larger healthcare entities, such as private equity-backed platforms and health systems, and potential opportunities for smaller entities or strategic tuck-ins. Physician offices should seriously assess M&A in addition to their organic growth plans to navigate the evolving landscape, where scale matters to grow efficiently.
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