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Maybe there's not a doctor shortage, after all

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For years, medical schools have been sounding the alarm that the United States is facing a doctor shortage — that we don't have enough providers for the population we have now, and we certainly won't have enough once Obamacare is in full force.

But according to a new report by the Institute of Medicine, a non-profit that is hugely influential in the health care world, those fears may be overblown. Their analysis finds "no credible evidence" that a doctor shortage actually exists.

We may not need more doctors

As Obamacare increases the ranks of the insured, there's a fear that the current supply of health providers won't be able to meet demand. The notion that this is a crisis our nation is currently facing has become so well-ingrained in policy discourse that it's almost a given. A common refrain goes something like this: Of course we have too few doctors, and of course health reform is going to make that problem worse; the real debate is over what to do about it.

The Medicare program has, for decades now, helped fund the vast majority of residency slots in the United States. The Association of American Medical Colleges and its member organizations will often use figures like these to lobby the government to put additional funding towards training doctors, and creating more residency slots.

Workforcegraphic2012-data(Association of American Medical Colleges)

According to the AAMC, the nation will experience a doctor shortage on the order of 91,000 physicians by 2020 — 45,000 in primary care and 46,000 surgeons and specialists.

But the IOM argues that the data just doesn't reliably support the claim, that it rests on too many flawed assumptions. According to the report, shortage projections use questionable doctor-patient ratios, don't consider geographic differences in physician supply, and ignore the role of new technology and alternate providers like nurse practitioners.

Before the government earmarks more money for graduate medical education, the report argues, there needs to be stronger evidence that increasing residency positions and creating more doctors is really a useful way to spend that money.

Amitabh Chandra, a Harvard economist, keys in on efficiency issues in the health care system.

"Maybe it looks like there's a doctor shortage, but that's because the system is inefficient. Inefficient cars require more gas. Inefficient health care systems require more doctors," he says. "The last thing we'd want to do is increase the number of doctors and then reform the system — then we'd have a surplus, which would result in unemployed doctors or doctors providing excessive services to patients."

This view isn't shared by everyone. Atul Grover, a physician and spokesman for the AAMC, worries that it's much more difficult to address other problems without additional doctors.

"The IOM never comes right out and says there's no doctor shortage, just that there's not sufficient evidence of one," Grover said. "There's no getting around the fact that if you have an aggregate shortage, you're going to have a harder time getting people into rural and other underserved areas."

While monetary costs of an oversupply of physicians could be high, risks and consequences of an undersupply are very real, too.

Experts agree: we have doctor distribution issues

On the geographic distribution issue — that physicians aren't going where they're needed most — there's quite a lot of consensus. Physicians are normal people who are drawn to  attractive places to live, just like everyone else. But it's more than that: doctors who live in wealthy communities are often paid much more handsomely.

"Right now Medicare pays more to providers who work in more expensive areas — providers who work in Manhattan get more than providers who work in Milwaukee," Chandra said. "Maybe what you want to do is offer additional payments to physicians working in underserved areas."

Payment incentives won't be a silver bullet, Grover pointed out. Physicians weigh other factors when deciding where to practice, like prestige and quality of living. No salary bump can turn rural Idaho into Boston, Massachusetts.

Another "distribution" issue has to do with the type of medicine physicians practice: primary care doctors have lower salaries than specialists, and more young doctors have been gravitating toward specialties as a result. This trend toward lucrative specialization means the country is spending more on health care.

Should we pay medical schools to convince doctors to go to rural Idaho?

Hospitals argue that they need funding to subsidize the cost of training new  doctors because that training is expensive. And it is! But those residents are also performing services for patients, generating revenue for hospitals. As a result, they receive modest salaries — and some economists just don't buy the argument that teaching hospitals couldn't get by without the government helping to foot the bill.

"The only reason that residents get paid in this model is because the value of the services they generate for the hospital exceeds the 'tuition' that they have to pay for their training," said Chandra. "It will look to everybody who isn’t trained in public policy like ‘Oh my God, the hospitals, out of pure largesse, pay the residents.’ But it’s no different than the medical student who pays tuition — it’s just in the medical student’s case, they’re not generating anything valuable for the hospital."

Furthermore, federal residency funding is seen as a potential policy lever that can be used to chart the future of health care by encouraging medical school graduates to choose residencies in medical fields or geographic locations that are hurting for more physicians.

Right now, the report charges that the government is funding residencies with blinders on, with little control over how the funding impacts the health care workforce. There are ways to change that: the government could try to use money to make residencies and fellowships in underserved regions and specialties particularly attractive.

It might also try to reshape the workforce by tipping the balance of residency slots away from specialties, back toward general medicine. Over time — a lot of time — this would change the composition of what medicine our doctors practice and where they practice it.

But some economists — like Chandra — think that trying to route this funding through teaching hospitals is too oblique an approach to the problem.

"I think the report represents a pretty big compromise, because someone like me would say, ‘Take the $16 billion of federal GME money and use it to pay for something that we know is valuable and that works,'" Chandra said. "If you want to use it for GME, then it should be a loan-forgiveness program for doctors who work in underserved areas, or who go into specialties where we need more doctors. I just don't see empirical evidence for why we should be using it for medical education."

The full impact of the report remains to be seen

The report also offers a sweeping array of recommendations on how graduate medical education, the residency and fellowship training that doctors get immediately following graduate school, should be revolutionized to meet today's needs. Those recommendations include changing the way training is financed, getting residents more experience outside hospitals, and demanding more transparency and accountability from the academic institutions that teach residents. And that just scratches the surface.

"I hope this report is going to be really influential," said Chandra, the economist. "But I'm not sure; the institutions that train doctors — let's call them 'doctor-makers' — are influential in a way that taxpayers and patients are not."

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