A report from the Association of American Medical Colleges (AAMC) lists 29 state studies that warn of looming physician shortages. Twenty-one specialty-specific studies and at least six national reports characterize the situation as critical.
The most recent comparable physician shortage occurred more than 40 years ago, when Medicare and Medicaid were introduced. At that time, the increased demand for physicians’ services was met in part by changes in immigration law: In the 1970s, more than 40 percent of newly licensed physicians in the U.S. were trained overseas. At the same time, the output of domestic medical schools grew substantially, and together those changes helped alleviate the shortage. The concern now is that the large cohort of physicians who entered practice in the late 1960s and 1970s — one in three U.S. doctors is 55 or older — is nearing retirement.
The AAMC, which is involved in the accreditation of medical schools and other health-care education programs, has called for an increase in the number of medical-school graduates and corresponding increases in the number of residency positions. The enrollment increase is well under way. But even with new medical schools in several states and across-the-board increases in enrollment in existing schools, AAMC statistics suggest that a shortfall will be unavoidable as the population ages.
And we should be wary of the idea that training more doctors is a panacea for the supply shortage. Most physicians choose to settle in urban areas, and training additional physicians does not ensure that they will locate in underserved communities. In fact, it is mostly doctors’ lack of interest in working in poor or remote communities that has prompted some states to overcome their opposition to the independent work of nurse practitioners.
The solution is rather to change the way medical care is provided in this country. Eliminating regulations and reforming reimbursement methods would free providers to innovate, reduce costs, and improve access to care. Directing public policy toward these ends is a tall order, but would certainly be no more disruptive of the status quo than the regulations proposed in the health-care bills before Congress. Deep, innovation-enabling reform would, however, lead to an outcome that the proposed health-care legislation wouldn’t: more care at lower cost.
A 2008 report from the Association of Academic Health Centers (AAHC), “Out of Order, Out of Time,” blames the shortage of medical professionals on piecemeal regulation and market forces. As a solution, the authors advocate the establishment of a national planning authority to develop a “coherent, overarching health work force policy,” as well as a “harmonization in public and private standards, requirements and prevailing practices across jurisdictions.” This, however, would make the health-care system even more rigid. It would also subject regulators to intense pressure from various stakeholders, the most prominent being organized groups of medical professionals and hospital associations seeking to promote their own interests. For example, the AAHC’s plan — which calls for guessing where shortages may occur and then subsidizing education in those areas — would increase federal funding for its members. And while both the American Medical Association and the American College of Physicians recognize the role advanced-practice nurses and other non-physician clinicians can play, they are fearful of the competition and demand that non-physicians be allowed to practice only with physician supervision. They persist in this demand even though there is no evidence that direct physician oversight of nurse practitioners is necessary.
The reality is that federal and state regulations play a far larger role than market forces in the shortage of doctors and other medical practitioners we face today. Federal Medicare and state Medicaid reimbursement rates are set below market prices, predictably causing shortages. States insist on regulating exactly what health professionals are allowed to do and require excessive levels of education and training that limit providers’ entry into the marketplace, thereby restricting patients’ access to care. Some states micromanage health care with laws that mandate nurse-to-patient ratios and restrict the independent activities of non-physician caregivers such as advanced-practice nurses and dental hygienists.
These regulations stifle innovation in the provision of health care. In other markets, consumer demand for efficiency and convenience has motivated changes in the way goods and services are provided. But except for the growing use of advanced-practice nurses and physicians’ assistants, medical care remains much as it was 40 years ago: One doctor sees one patient, face to face, even as we rely increasingly on the telephone and e-mail for a broad range of other exchanges. The high cost of these static practices is thrown into relief by the rare innovations that do occur. In 2004, Kaiser Permanente Hawaii put in place a system that allows patients to contact physicians via e-mail. By 2007, in-person office visits had fallen more than 25 percent. Telemedicine also offers promise in meeting the health-care needs of underserved communities. It would benefit from the elimination of regulations that prohibit practicing across state lines.
#page#Medical education in the United States is shaped by the Liaison Committee on Medical Education, a joint project of the AAMC and the American Medical Association; its accreditation of medical schools forms the basis for professional licensing by the states. It currently requires adherence to inflexible rules and fixed teaching methods, making innovation difficult.
Robert H. Brook of the RAND Corporation suggests an innovation in medical education that would expand access to care without increasing the number of physicians. He argues that a fully trained gastroenterologist or surgeon is not needed to perform a colonoscopy (a common screening for cancer), nor a fully credentialed ophthalmologist to perform routine cataract surgery. Instead, he suggests, two years of focused education and training would yield professionals qualified to perform these procedures, vastly expanding patients’ access to these services.
And given the concern over provider shortages, it is troubling that certifying organizations continue to raise the education requirements for non-physicians. Following a decision by the Council on Academic Accreditation in Audiology and Speech-Language Pathology to accredit only doctoral programs, 18 states now require a doctorate of audiologists. The new requirement adds two years to the time it takes to train an audiologist, significantly raising the cost of entry into the profession. Until the 1990s, physical therapists needed only a bachelor’s degree. Then a master’s degree was required. Now the Commission on Accreditation in Physical Therapy Education has announced it will require doctorates by 2017. This adds three years of training beyond a bachelor’s degree. Soon a doctorate will also be required for advanced-practice nurses and others. These decisions proceed from a self-interested desire to restrict the number of actors in the marketplace, and that is one reason no single organization should have the authority, under the law, to accredit medical schools or health-related educational programs.
State rules dictating how medical professionals must be trained and employed are ostensibly designed to protect consumers. It is, however, patently mistaken to defend these regulations on the basis that they offer protection beyond what private credentialing can provide. That is because the vetting process is already outsourced to private organizations, including specialty boards and malpractice-insurance underwriters. Taking into account its real costs — a false sense of security and the suppression of innovation — the existing regulatory structure cannot be justified. Economists agree that medical licensing is a constraint on the efficient use of resources and a drag on innovation.
Eliminating these burdensome rules would reduce supply constraints, but that alone will not be sufficient to generate more and better options for care. The prevalence of third-party reimbursement removes an incentive for consumers and medical professionals alike to use resources efficiently. For example, few consumers know what a physical exam actually costs or what it should include. Consequently, prices are rarely considered when patients and their physicians make decisions. The solution, as John C. Goodman of the National Center for Policy Analysis and others have pointed out, is to put health-care dollars directly into the hands of consumers. If health-savings accounts and similar measures were used to empower consumers while state regulations were simultaneously lifted, competition among suppliers would generate the type of innovation we enjoy in other service industries.
The elimination of regulatory constraints and third-party payment could also improve providers’ earnings by expanding the scope of their practices and allowing market-rate fees, thereby drawing new practitioners into the marketplace. We won’t really know how many physicians we need until we discover how the health-care industry can take advantage of technology and specialization. At that point, if we allow the markets to work, wages will adjust to reflect the real value of services instead of being arbitrarily set by a government agency.
Health-care providers would like us to believe that there is something unique about their business that requires heavy government regulation. They favor the low-competition status quo that has been secured through legislative and administrative mandates for education and practice, and their solution is more of the same. But it is government regulation that has brought us to this pass. Reducing regulation on the supply side while increasing consumers’ power on the demand side is the combination most likely to produce better care at better prices.
– Shirley Svorny is a professor of economics at California State University, Northridge.