Classen_HealthEcon_Class29 - Intro to Markets for...

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Unformatted text preview: Intro to Markets for Physicians Intro to Markets for Physicians Class 29 (Makeup for 3/28) Health Economics Loyola University Chicago April 6/7, 2011 Lecture Outline Lecture Outline Demand for Physician Services Supply of Physicians Too many or not enough? Demographic characteristics Demand for Physician Services o o Annual spending for physician services is $540 billion and has grown 7% annually over the last decade 950k trained MDs, with 800k active physicians o o o o o 25% internationally trained MDs 70% office­based, 25% on hospital staff (incl. residents) ~ $600k of revenue per physician on average But this includes all revenues to physician practices which must be paid out to staff, malpractice insurance, and supplies Spending on physician services accounts for roughly 20% of National Health Expenditures Shares of Payments to Physicians 70% Share of Physician Payments 60% 50% 40% 30% 20% 10% 0% 1971 1965 1968 Out of Pocket Private Insurance Medicare Medicaid Projected 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 24% Female 18% 65 or older 25% IMGs 40% primary care Gender Mix of MD Grads Gender Mix of MD Grads Percentage of Physicians in Differing Practice Arrangements Declines in solo practice physicians are offset by increases in salaried physicians and group practices. 21.3% 5.3% 26.1% 9.8% 31.3% 30.1% 8.2% 38.4% 9.2% 33.8% 33.1% 32.1% 42% of all physicians are now salaried. 40.4% 32.0% 25.7% 23.3% 1987 1993 1999 2001 Self Employed in Solo Practice Employee in Group Practice Owner of Group Practice Other Employee Source: AMA Socioeconomic Monitoring System and 2001 Patient Care Physician Surveys, American Medical Association How Many Doctors Are Enough? Analysts have used two general approaches to estimating the future demand for physicians. First approach assesses past levels of the use of physicians' services Identify forces that influenced previous levels Considers historical levels and patterns of investment in health care as either desirable or inevitable. How does technology influence demand for MDs? Complements or substitutes? How to forecast? Predict future demand based of predictions of growth of both GDP per capita and the population. Alternative to 1st Approach Alternative to 1 Second approach rejects historical patterns of the use of physicians' services as a guide to the need in the future. Instead asks how many doctors we ought to have or how many would be required to take care of the U.S. population in a properly organized health care system. Predictions of demand for physicians required based on places or systems that provide care of similar quality to that provided elsewhere in the U.S. health care system with the use of lower physician­to­population ratios. How to account for development of substitutes for doctors? One benchmark is HMOs which use 30 percent fewer physicians per 100,000 enrollees than the national averages for other types of health care arrangements. Hospitalists, nurse practitioners, midwives, etc. Geographic comparisons (either within U.S. or vs. other countries) Blumenthal (2004) on Physician Supply From Flexner to GMENAC •Physician-supply debate begins with Flexner report (1910). • Concluded that U.S. had oversupply of poorly trained physicians produced by an unregulated, largely proprietary system of medical education. • Led to decrease in the supply of physicians • Medical schools that were deemed “educationally deficient” were closed • Need for “Fewer but better doctors“ • Number of medical school graduates increased to levels that obtained before the Flexner report by the early 1930s and grew in parallel to the growth of the U.S population in the years from 1930 to 1960. Policies for Physician Supply, Policies for Physician Supply, cont’d 1959 report of the Surgeon General's Consultant Group on Medical Education (the Bane report), predicted a shortage of approximately 40,000 physicians in the United States by 1975. Kennedy and Johnson administrations responded in the 1960s by proposing and passing legislation that subsidized medical schools to grow in number and size. Between 1965 and 1980, the number of medical schools increased from 88 to 126, and the annual number of graduates doubled from 7,409 to 15,135 Eli Ginzberg quote: "Neither the restrictive policies of the first four decades of this century, nor the expansionary policies of the postwar era were formulated and implemented on the basis of demand and supply for physician services .” Debate on Physician Supply & Demand, 1979 to Now • GMENAC in late 1970s advised HHS on physician workforce and attempted to forecast the supply of and demand for physicians for the years 1990 and 2000. • Panel concluded that U.S. would have a surplus of 145,000 physicians by the year 2000, or 23 percent of the projected supply of 643,000. • Report recommended restricting both number of places in medical schools and the number of graduates of international medical schools permitted to immigrate (large share of residents now) Last 20 years of debate Last 20 years of debate Congress discontinued general federal support provided to medical schools for the education of new physicians in 1981. However, Congress provided teaching hospitals with an incentive to increase the numbers of graduates of foreign medical schools entering training programs Congress provided extra payments to teaching hospitals to cover the special costs associated with medical education # of graduates of U.S. medical schools increased modestly during next 20 years (~16,000 new MDs annually) Number of trainees in U.S. hospitals grew substantially, expanded by an influx of graduates of foreign medical schools As part of the Balanced Budget Act of 1997, the number of residency slots eligible for federal support were capped at 1997 levels. Today we still debate whether we have enough, too many or not enough physicians. Richard Cooper argued that supply of physicians is highly correlated with economic growth in the U.S. so demand for physicians reflects increased demand for health services in growing economy ...
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