Health Reform and the Physician Shortage

Will health reform alleviate the physician shortage, or exacerbate it?

Before answering that question one has to be satisfied that there is, in fact, a physician shortage in the United States. Many people think so. The Association of American Medical Colleges (AAMC), the Council on Graduate Medical Education (COGME), and some 20 physician specialty societies have released shortage projections. The American Medical Association, which for years was neutral on the shortage issue, also has added its voice to those who foresee a shortage of doctors.

There are dissenters, however, most prominently the academics and researchers at Dartmouth who produce the Dartmouth Atlas of Health Care. In their view, the number of physicians trained in the U.S. is subordinate to the type of physicians being trained, their distribution, and how they practice. Speaking before the Association of Health Care Journalists in Chicago last month, David Goodman, M.D., co-principal investigator for the Dartmouth Atlas, indicated that the number of physicians completing residency training each year in the U.S. (about 25,000) need not be significantly increased, despite the 32 million newly insured patients health reform will add to the system.

From a policy standpoint, the Dartmouth perspective on physician supply has prevailed. The new healthcare law does not address the key choke point in physician supply, which is the cap on Medicare funding for graduate medical education (GME) set by the Balanced Budget Act of 1997. In lieu of removing the cap, the new law calls for redistribution of some residency slots that currently are going unused to facilities where they will be used, mostly to train primary care physicians. The AAMC projects that about 1,300 of the 15,000 residency slots currently not being used could be filled at other teaching facilities. That would lead to several hundred more new doctors coming out of residency each year—a far cry from the thousands that AAMC and others believe are needed. Other provisions in the new law also would redistribute doctors—mostly to rural areas—without increasing the net supply.

While the new law will have little direct impact on net physician numbers, it will likely have a significant indirect impact. Physicians will adjust their practice styles in response to an influx of millions of new Medicaid patients and other patients covered by low reimbursing plans.

In a trend that was apparent before health reform, physicians will migrate toward hospital employment and other practice models where their reimbursement is less uncertain. Many physicians who remain independent will be compelled to reduce or eliminate certain categories of patients from their practices for financial reasons, including Medicaid and Medicare patients.

A growing number are likely to circumvent third party payers altogether by opening concierge practices. Others may elect to work part-time or on a temporary, locum tenens basis, or seek early retirement. Each of these responses entails the reduction of patient access to physicians and/or a decrease in cumulative physician hours worked.

A recent study published in the Journal of the American Medical Association indicates that the average number of hours physicians work already is in decline. The study showed that average hours worked by physicians per week dropped from 55 between 1977 to 1997 to 51 between 1996 and 2008, a 7.2% decrease.

The study’s authors project that this is equivalent to eliminating 36,000 physicians from the workforce. They also note a strong correlation between the decline in average physician hours worked per week and the decline in inflation-adjusted physician fees, suggesting that doctors work less the less they are rewarded. Health reform did nothing to address Medicare’s physician reimbursement formula (SGR), and any significant upward spike in physician reimbursement is unlikely (though reform did provide some primary care doctors with a temporary fee bump).

Cost savings through health reform will not be achieved by limiting access to health insurance (indeed, reform does just the opposite). Savings therefore will have to come from reduced fees to doctors and other providers, leading to an increasingly less independent, less engaged physician workforce that works fewer hours per capita. This workforce will be relied upon to care for our growing, aging population and the tens of millions of patients newly insured through health reform.

Clearly, there is a profound disconnect between the supply of physicians and demand for their services that will need to be addressed if the new system is to work. One key is to train more physicians—limiting physician training to a ceiling set in 1997 is not sustainable.

However, the conditions under which physicians practice also must be changed to ensure a physician workforce that is motivated and robust. Standardized reimbursement processes, reduced educational debt, tort reform, increased clinical autonomy—in short, a paradigm shift in the medical practice environment is needed to stimulate the most productivity from today’s physicians and to attract new doctors who are ready, willing and able to provide patient care in the era of health reform.