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Physician Supply: Surplus or Shortage?

Mark Smith, for HealthLeaders Media, January 17, 2008
Only a few years ago, the majority of healthcare experts and analysts who follow physician supply trends supported the premise that the United States had too many physicians. Today, the majority now sees things the other way--a change reflected in the positions of such organizations as the Association of American Medical Colleges, the AMA, and the Council on Graduate Medical Education, all of which now project a physician shortage.

Nevertheless, pro-surplus theorists continue to make their case. Just last month, an article in the December The Atlantic Monthly reignited the debate between those who believe the United States has too many physicians and those who believe it has too few.

The two primary arguments recycled by those who contend there is a surplus of physicians are economic ones.

The first is that demand for medical services is driven by doctors themselves. The more physicians in a given population, the more medical services (and, therefore, the more medical spending) a population is likely to generate. The solution to high medical spending and to reducing unnecessary medical procedures, the argument goes, is to reduce the number of doctors.

The second argument is based on the outcomes achieved at medical centers with a relatively high number of physicians per patient population versus outcomes achieved at medical centers with a relatively low number of physicians per patient population.

According to a study conducted by Dartmouth researchers, patients do better at facilities such as the Mayo Clinic in Rochester, MN, which has a relatively low physician-per-patient ratio, than they do at facilities such as New York University Hospital, which has a relatively high physician-per-patient ratio. The way to improve outcomes, they conclude, is to reduce the number of doctors.

These arguments have been most conspicuously contested by Richard "Buz" Cooper, MD, an academic at the University of Pennsylvania and cochair of the Council on Physician and Nurse Supply. Note: The Council on Physician and Nurse Supply is funded by Merritt, Hawkins & Associates' parent company, AMN Healthcare.

Cooper argues that demand for medical services is largely driven by economic growth, technology, population growth, and other factors, not by physicians. He also argues that it is spurious to compare medical outcomes in relatively affluent, demographically homogenous cities like Rochester to economically and ethnically heterogeneous cities like New York.

Which side is right?
Trends in physician recruiting incentives show that financial offers to physicians in most specialties have consistently increased in recent years, suggesting demand for physician services is growing and the supply of physicians is limited.

A key point to consider in the physician supply debate is that the supply of physicians cannot be increased if the number of residency slots available does not increase. However, no such increase will occur unless Congress removes the cap on what Medicare currently spends on residency training.

Although the physician supply debate largely takes place in academic circles, it has practical effects on physician compensation, recruitment, and retention. As long as the argument remains unresolved, physician supply is unlikely to increase and, based on physician demographics and other factors, can be expected to decrease.

That will put additional upward pressure on recruiting incentives and continued strain on hospitals, medical groups, and other organizations committed to maintaining or enhancing their medical staffs.


Mark Smith is president of Merritt, Hawkins & Associates, a national physician search and consulting firm and a division of AMN Healthcare. He can be reached at msmith@mhagroup.com.