Where Have All the Physicians Gone?
The Physician Shortage Crisis and My Generation
By George Martin, MD – Senior Medical Director for Health Integrated
Since World War II, the baby boom has driven the economics of the United States. We drove baby sales in furniture and then bicycles. We drove housing and cars. Now, we drive, and will continue to drive, health care demand for the next 20 years. We are aging and there are a lot of us so the needs for health care, from drugs to hospice, are a growth industry based on demand. Time to invest? Perhaps.
Hidden in the demand model is the supply model. Here’s where it gets scary. Among the number of baby boomers, is the largest supply of workers for the health care industry, most importantly, primary care and specialty physicians. Given that the delivery of health care services is, by definition, a local event; it is difficult to send these jobs overseas. Yes, I know that there is an opportunity to get your hip replaced in Thailand. However, if you fracture your hip, it’s unlikely that a trip overseas would be tolerable. Add to the local nature of healthcare deliver the fact that healthcare is a people industry, and we have double trouble. As baby boomers age not only do they require more care, but they will be providing less care to others. The reality is, retirement is upon us.
The American Association of Medical Colleges estimates that by the year 2025 we will be 130,000 physicians short of demand. Half of the total will be in primary care. As we touched on in last week’s post, the demand for primary care outstrips demand now. The AAMC further estimates that the shortage in primary care will increase the cost of care.
Why would the lack of a resource drive up the cost? The short answer can be explained by the law of supply and demand. However, healthcare finance is so regulated that the normal response to a shortage, which is to increase price, cannot happen. Take the cost of gasoline. Over the past several years the supply of gas and the demand for gas have been in exquisite balance. Tiny changes in demand send the price skyward and vice versa. The system is so sensitive because the supply has been limited by cartels and governments and nature.
In healthcare, supply and demand are both fully elastic but payment is fixed. Of course, price fixing inevitably leads to reduced supply as providers vote with their feet. The lead-time to ramp up new doctors in healthcare is long because the educational investment required of providers is large. For the same reason, opting out becomes difficult as there are significant loans to repay. Still, that time has come. Hence the increase in retirements, some as soon as financially feasible.
How then does reduced supply lead to increased cost? According to the AAMC, there are several paths:
- Since demand is still present, demand will seek alternate, more expensive pathways to care such as:
- Urgent care
- Emergency departments
- Specialists
- Since access to care (supply) is reduced, patients may delay care until more expansive (and expensive) care, such as an inpatient admission, is required.
- The care that the patient receives is neither coordinated nor holistic resulting in the potential for expensive duplication of tests and effort on the part of treating physicians.
Then again, the American College of Physicians white paper of 2008 concludes that there is s 5% increase in the mortality rate for each decrease in the patient-to-PCP ratio of 1:10,000 primary care docs per population. So we have increased cost for decreased results. To quote Hannibal Smith “We love it when a plan comes together”.
My goodness. Where to from here? How do we address this critical shortage, not only for future generations, but for baby boomers like me, even for my own generation? Tell me, please.
You can reach me directly at healthexecforum@healthintegrated.com, or comment directly in the blog. As always, thanks for reading and for your input.
George Martin, MD
