Global Trend

The Looming Doctor Shortage

With nearly 80 million Baby Boomers approaching retirement age, America is facing a critical crisis. There simply aren¡¯t enough doctors to care for the aging population.

Currently, the U.S. produces about 25,000 doctors a year. To keep up with the demographic trends, we¡¯ll need between 3,000 and 10,000 more per year. Making matters worse is how long it takes to train a physician ? an entire decade ? which means that by the year 2020, the U.S. will face a shortage of as many as 200,000 doctors, according to a recent report in USA Today.

Twenty years ago, the U.S. had 500,000 physicians. But then the industry made several mistakes.

At that time, the Journal of the American Medical Association predicted a glut of physicians: By 2000, it warned, there would be 165,000 more doctors than the nation would need.

The Council on Graduate Medical Education, or COGME, which was created by Congress to recommend the ideal number of doctors, worked to limit the number of new physicians. Since Congress determines how many doctors are trained each year ? through deciding how much money to grant for medical residency training ? the U.S. government effectively kept the supply from growing beyond the 100,000 a year that it funds through Medicare, the Veterans Administration, and Medicaid.

And because of the anticipated surplus of doctors, the nation stopped opening medical schools in the 1980s.

Those decisions turned out to be major miscalculations. COGME, which has insisted for the past two decades that the nation has too many doctors, has now changed its position. As it announced, ¡°It now appears that those predictions may be in error.¡± It is calling for a 15 percent increase in the number of doctors by 2015.

In fact, the nation now has 800,000 doctors, and that won¡¯t be enough when the current generation of physicians reaches retirement age.

What many in the medical industry misunderstood was that advances in technology would not reduce the demand for doctors; instead, the technology has actually increased the demand.

For example, new procedures for treating victims of heart disease can prolong patients¡¯ lives. As a result, there are more survivors of heart attacks, and those survivors are also living longer, which requires more follow-up visits to their doctors¡¯ offices.

Also, as the generation of Baby Boomers ages, they continue to want to look younger than their years. This has created a huge demand for cosmetic surgery.

In 2004, more than 9.2 million plastic surgery procedures were performed. This is an increase of 5 percent over the previous year and 24 percent since 2000, according to the American Society of Plastic Surgeons. The top five cosmetic procedures were liposuction, at 325,000 surgeries; nose reshaping, at 305,000; breast augmentation, at 264,000; eyelid surgery, at 233,000; and facelift, at 114,000.

Minimally-invasive cosmetic procedures increased 7 percent to 7.5 million procedures, led by Botox wrinkle-removal, at 3 million; chemical peel, at 1.1 million; microdermabrasion, at 859,000; laser hair removal, at 574,000; and sclerotherapy, at 545,000. Botox injections have increased 280 percent since the start of the decade.

Overall, health-care expenses are soaring. In 1980, Americans spent 8.8 percent of their income on health care. Today, the figure is up to 15.4 percent, and it will climb farther ? to 18.7 percent ? by 2014, according to the estimates by Medicare cited in USA Today.

Another factor that is driving the doctor shortage is the growing dissatisfaction many doctors feel toward their profession. For example, 28 percent of the 7,500 doctors surveyed by the Massachusetts Medical Society said they were thinking of leaving their practices. In the survey, reported in The Boston Globe, 56 percent of neurosurgeons and 40 percent of obstetricians said they were contemplating a career change.

For some physicians, the combination of high malpractice insurance premiums, and low reimbursement fees from managed-care companies, is just too much to overcome. Instead, they are jumping to jobs in the pharmaceuticals and insurance industries.

A related trend is the rising cost of health care for patients and their employers. In 13 of the past 17 years, health-care costs for businesses have grown faster than the rate of inflation. As Michael Porter and Elizabeth Olmsted Teisberg explained in a recent Harvard Business Review analysis, the problem is that the players are involved in a zero-sum game. They divide value among themselves, instead of creating it. Everyone is concerned about who pays for the health care, not who provides the best value.

Instead, as Porter and Teisberg assert, the answer is to change the game to a positive-sum competition. In other industries where it¡¯s been tried, this model has always driven up value for customers. In the health-care industry, providers could compete by excelling at preventing, diagnosing, and treating specific diseases.

In this way, they could become more effective and more efficient. For example, at the Texas Heart Institute, surgeries cost one-third to one-half less than other academic medical centers, even though THI uses new technologies and accepts difficult cases.

The features of this new system would include several innovations that could appeal to doctors who are dissatisfied with the current model. For instance, patients would be free to choose the best provider of health care, without needing a referral or having to choose a physician from within a network. Patients would also receive information on treatments, alternatives, and pricing in advance. And, doctors would reveal their level of experience at treating a specific condition, and divulge the risk-adjusted outcome data for each treatment.

Because patients would receive more information, they would theoretically make better-informed choices, with full knowledge of the risks they face. This would lead to fewer lawsuits, and lower malpractice insurance premiums for physicians. Porter and Teisberg argue that giving patients information and the freedom to choose would result in savings of billions of dollars a year in administrative and legal costs for the health-care industry.

Looking ahead, we foresee four developments arising from the physician shortage trend:

First, by 2015, the Baby Boom doctors who started practicing in the 1960s and 1970s will retire faster than the new generation of physicians can replace them. Moreover, because they work shorter workdays than their predecessors, the number of doctor-hours per patient will decline even more rapidly. Half of new doctors are women, who typically work about 25 percent fewer hours than male doctors, according to studies. And medical residents are no longer allowed to work 100-hour weeks as they did in the past. As of 2003, these doctors-in-training must stop at 80 hours. This shortage will create a powerful impetus for change.

Second, we¡¯ll see an increase in the number of medical schools and the number of graduates from existing schools. The only U. S. medical school to open since 1982 is Florida State University¡¯s College of Medicine. Its first class of 30 students, admitted in 2001, will graduate in 2005. Among the states that appear likely to open new medical schools are Arizona, California, Florida, and Nevada. However, between now and 2015, most states will take steps to expand their existing medical schools to accommodate more students.

Third, rising health-care costs brought about by many factors, including the doctor shortage, will create momentum for the kind of positive-sum competition in health care advocated by Michael Porter and others. Employers will increasingly select plans that do not restrict employees¡¯ access to out-of-network physicians; they will increasingly demand that patients receive information on alternative treatments and risks; and they will require a single, transparent price for each service. Congress will institute medical savings accounts and similar programs, which provide incentives for smart health-care decision-making by consumers.

Fourth, the shortage of doctors will create a huge demand for physician assistants, or PAs. PAs practice medicine under the supervision of a doctor. They assist in surgery, conduct physical exams, interpret tests, diagnose and treat illnesses, perform hospital rounds, and prescribe medicine. This allows doctors to handle more complicated cases. Between 2002 and 2012, the number of physician assistants will increase by 49 percent, compared to only a 15 percent increase in U.S. employment, according to the U.S. Bureau of Labor Statistics. PAs will be the third-fastest growing profession in the U.S. during that time, the Bureau predicts. Working with expert systems, these para-professionals will handle the bulk of routine maladies, leaving only the most challenging cases for the limited pool of physicians.

References List :
1. USA Today, March 2, 2005, ¡°Medical Miscalculation Creates Doctor Shortage,¡± by Dennis Cauchon. ¨Ï Copyright 2005 by USA Today, a division of Gannett Co., Inc. All rights reserved.2. To access the American Society of Plastic Surgeons annual statistics for 2004, visit their website at:. www.plasticsurgery.org/news_room/press_releas es/2004-Overall-Statistics.cfm 3. USA TODAY, March 2, 2005, ¡°Medical Miscalculation Creates Doctor Shortage,¡± by Dennis Cauchon. ¨Ï Copyright 2005 by USA Today, a division of Gannett Co., Inc. All rights reserved.4. HARVARD BUSINESS REVIEW ONPOINT COLLECTION, June 2004, ¡°Curing U.S. Health Care,¡± by Michael E. Porter, Elizabeth Olmsted Teisberg, Clayton M. Christensen, Richard Bohmer, John Kenagy, and Regina E. Herzlinger.