Do Oil and Healthcare Mix?

Philip Betbeze, for HealthLeaders Media, May 12, 2008

At first glance, oil prices and healthcare don't seem to have much in common. But the premise of an article on last week got me thinking. The article tackled reasons why oil prices of $120 (or more) per barrel were "good." If, like me, you commute to work each day, you did a double-take at that headline. The fact that oil prices are at record levels, even adjusted for inflation, isn't "good" for my wallet, that's for sure. Even though I drive a gas-sipping old Acura Integra, I'm still spending twice as much every time I fill my tank than I did about 18 months ago.

But the folks interviewed in this story had an interesting take on $120 oil. They argued that regardless of why black gold is at such high levels (speculators, an oil cartel), high prices are the catalyst that's needed to drive innovation into alternative fuels—alternative means of motivating everything from cars to power plants. With cheap oil, there's no economic reason to innovate. Short-term individual pain brings long-term societal gain, in other words. Oil prices are where the micro and macro views of the economy fight a duel to the death.

But what does this have to do with healthcare in general and healthcare finance in particular? Believe it or not, there are parallels between a shortage of oil and the shortage of doctors we're starting to face now, which seems likely to grow much worse over time. Before you start sending e-mails complaining that I'm equating a physician to a barrel of oil—I realize it's more complicated than that—hear me out.

We've all heard the reasons we're facing a looming physician shortage in this country. New doctors want more flexible work schedules. Baby boom physicians are starting to retire en masse just as their fellow boomer patients are getting older and sicker. We have a shortage of certain specialties, such as geriatricians, pediatricians, and family practitioners. One big reason these specialties have been so hard-hit is that they offer far lower compensation than others. If general practitioners aren't as valued as other specialties, why should we expect medical students to flock to those specialties?

And remember when we Americans freely poached physicians and nurses from the developing world? Don't be surprised if it starts happening in reverse before too long, as countries that are growing rich on natural resources start to offer huge pay to physicians on our shores. Brazil, Russia, and the Gulf states are poor in healthcare infrastructure, but they're rich in the stuff that everyone wants now—natural resources.

So what's to be done in response? My suspicion is that the looming physician shortage is one reason hospitals are so interested in employing physicians these days, despite physicians' desires to work shorter hours and have more career flexibility. And integrating physicians not only into the clinical decisions but also the strategic ones—as is done in clinic-model healthcare—might be a big reason why you rarely hear the clinic healthcare systems complain about physician shortages—at least as the physician shortage affects them specifically. Physicians run these organizations, and boards made up of physicians drive policy there. Docs don't just want money. They want to be included in the strategic decision-making of the organization. So perhaps the shortage will drive better use of the resources we do have—by encouraging innovation in how physicians are recruited and integrated into running the organization, be it a hospital or other healthcare organization. In some cases, that will mean finding new ways to extend a physician's reach, through nurse practitioners and other physician assistants, such as we're seeing in the convenient care clinics that are popping up all over the country in grocery stores, big box retailers, and even gas stations. Perhaps it will provoke a return to the clinic model in hospitals that have relied on the medical staff model in the recent past.

At least, like high oil prices, that's the optimistic way of looking at it.

Editor's note: What are you doing to address the coming physician shortage, financially or otherwise, at your organization? I would love to hear from you.

Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at

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