Health Care Costs - Doctor Shortages

There is a common theme out there that Health Care Costs are on the rise again and what is usually followed after that particular statement is that the costs can’t possibly maintain their upward trend at this rate.

But could they?

Instead of tackling the issue of Health Care Costs at the point of what the insurers charge or at the point of the enormous expense it is for doctors to get a degree (most have roughly $140,000 in debt 5 years after graduating) or even the amount that lawyers/lawsuits (Tort Reform could fix) contribute to overall costs we will take a look at a wider issue:

Physician Shortages.

Studies have shown, the latest from the American Association of Medical Colleges, that we face a shortfall of more than 150,000 doctors over the next 15 years and this all stems from the same Association who back in 1994 predicted a surplus of 165,000 doctors by 2000. As a result of concerns over physician surpluses, many medical colleges instituted enrollment freezes. From 1980 until 2005, enrollment in medical schools remained virtually unchanged, even though the country’s population increased by nearly a third.

With some even more troubling news from the AAMC is that out of the total shortage of physicians more than a third of the shortfall will be in the area of Primary Care Physicians by 2025 (37% of the overall physician shortage, or about 46,000 FTE primary care doctors). This is consistent with the primary care projections recently published by Jack Colwill of Health Affairs, where they expect a shortage of up to 44,000 generalists by 2025.

The general answer to this issue is usually the call for a Nationalized Health Care System but the AAMC is stating that “Universal health care coverage could add 4 percent to overall demand for physicians; this would increase the projected physician shortfall by 31,000 physicians (25 percent)" (for report see AAMC PCP Points).

There seems to be a great quote about what is happening; “Be careful for what you wish for; you might just get it”.

The other real concern that we face as a nation, which is aging rapidly, is that out of the roughly 650,000 physicians currently working nearly 40% of them are 55 & older while new physicians roughly equal the number of doctors retiring (AAMC Physician Supply & Demand). The more alarming stat to this concern is that it takes about 10 years to train a doctor.

Because of the ramp up of training for newer physicians it has made other studies peg the shortfall to 200,000 doctors in 2020 unless action is taken soon, while other studies are stating that beginning in 2015 the outlook could be 50 % worse than originally anticipated prior to health reform (St. Peters / Drexel Announcement 10/26/2010).

Another whispered issue that we face is that as our most populated generation (Baby Boomers) is quickly advancing to age 65; there are roughly 10,000 individuals turning 65 every day starting back in January 2011 and this number will continue for the next 20 years. As they are advancing towards Medicare we are starting to see physicians turn away from taking patients who are on Medicare.

The main cause of this some will argue is that on average physicians are reimbursed at roughly 78% of costs under Medicare, and just 70% of costs under Medicaid. Physicians must either make up for this shortfall by shifting costs to those patients with insurance — meaning those of us with insurance pay more — or treat patients at a loss.

As a result, more and more physicians are choosing to opt-out of the Medicare altogether. Roughly 13% of physicians will not accept Medicare patients today. Another 17% limit the number of Medicare patients they will see, a figure that rises to 31% among primary care physicians. The story is even worse in Medicaid, where as many as a third of doctors will not participate in the program.

The timing of this could not be worse, once again the largest section of our population is knocking on Medicare’s door right now needing it as their only source of Health Insurance and there is a rise of doctors no longer willing to see patients on it. This aging population will increase participation in Medicare which will mean a greater demand for physician services and we have a shortage of physicians by attrition, faulty planning and finally by economics.

Should we be concerned?

Well if we look to Health Resources and Services Administration, they explain that true shortages are when an area has a population-to-primary care physician ratio of more than 3,500-to-1, so let’s take a look at simple math.

We have a group of people who will be registering for Medicare at a clip of 10,000 per day for the next 20 years and they will be the ones who will be using most of the Health Care Services in the country; they total 3.65 million per year for the next 20 years or 73 million by 2031.

HRSA projected that by 2020, the nationwide supply of primary care physicians will be 271,440, compared with a need for 337,400 primary care physicians.

That leaves us with 1 physician for every 268.9 Medicare Beneficiary. If we hope that our population doesn’t increase and we add the remaining 236 million citizens not on Medicare we are left with one primary care physician for every 1,138.3 of us.

It’s not technically a shortage in true definitions but one might be able to see why costs will not be coming down anytime soon.