Saturday, September 11, 2010

Easy Domestic Fixes For Doctor Shortages

Doctor shortages typically occur in poor countries that lack the resources to train physicians, or to sustain enough of them to provide proper care.  Only in the US is there a wholly different reason - their supply is tightly controlled in several ways by private doctor dominated bodies with cross-memberships.

The medical schools numbers and overall capacity is controlled by the AAMC (Association of American Medical Colleges) and the LCME (Liaison Committee on Medical Education).  LCME members are appointed in equal parts by the AAMC and the AMA.  In the 1980s and 1990s they allowed only one medical school to be added, though now they've belatedly allowed an 18% increase over the current 131 schools.  It still isn't enough.

They discourage applicants another way.  In all other countries students typically enter medical school straight after high school.  But the US medical schools require a college degree, even if it's in something as unrelated to future medical practice as art history or Slavic languages.  This needlessly adds a crushing expense and burden of four extra years of college, thus taking at least 11 years post high school in the US to become a doctor, as opposed to seven elsewhere.  It also means four less years in these doctors' medical career.

Still, a lack of medical school graduates can be made up by foreign medical graduates who comprise over a fourth of US doctors (Table 108 of NCHS (CDC/HHS) Health publication, 2009).  A much worse restriction on supply is the national cap on medical residencies imposed by the ACGME and the RRCs (again, private doctor bodies). You can't practice in the US without such residency.

Then there was an amazing coup in freezing doctor supply through the passage by a Republican / Gingrich controlled Congress of the Balanced Budget Act of 1997.  Sneaked into this 537 page long Act are sections 4621 and 4623 that froze the future number of medical residents to 1996 levels, for whom Medicare had long paid almost the entire cost of training and salaries. The Medicare direct and indirect payment to hospitals for each of the roughly 100,000 residents, amount to $10 billion a year.  The freeze "saved" incremental payments of $1 billion or so, but resultant scarcities of doctors in subsequent years enabled excess fees hundreds of times greater.  This is like "saving" by denying a patient cheap medicines now, leading to hospitalization costing a hundredfold more.

As a result of these freezes on residents in the Act the doctor trade associations could now sit back and escape adverse notice.  Henceforth this restrictive legislation under the guise of savings would do the job for them by blocking the much needed doctor expansion.  Notably, the provisions capped the number of residents, rather than the total sum of money for payments, which remained very high per resident, averaging over $100K per year.  Why does this matter?

Because it prevents the HHS from obvious solutions like spreading the same pot of money over more residents, thereby increasing doctor supply at no extra cost.  For example, reducing Medicare payment from $100K annually per resident to $75K would allow a 33% increase of funded residencies with the same resources.  There will be plenty of takers.  Residents are eagerly sought by hospitals since they form a vital part of the operations. At an annual salary of $50K, they are remarkably cheap and underpaid.

Hospitals pay nothing for them presently, and will readily pay them $25K if the other $75K ($25K towards salaries and $50K for training and tuition) comes from Medicare.  Reducing Medicare payments per resident may also encourage privately funded or self-funded residencies, which will then face a less steep differential than the current $100K.  But as I said HHS hasn't been allowed this option even though it can dramatically expand doctor supply at no extra cost.

All this has created long standing shortages, with the US having only two thirds of the average doctor density in other developed countries.  This strikingly impacts the price and availability of services.  US doctors earn well over twice as much as their first world counterparts, both in absolute terms and relative to the average incomes in their respective countries.  It is one of the top three contributors to the inflated price of US health care, right up there with hospitals and providers saddled by inefficiencies, over-regulation and legal exposure, and a dysfunctional, complex private insurance system.

Not surprisingly, doctor groups and their experts dispute such nexus between doctor scarcities and inflated provider costs and earnings.  Their counter-arguments are flawed as described in my June 27 post.  There I also stressed the need to import doctors to address shortages, for at least the next ten years.  This is the lead time for any policy changes on domestic supply to have an impact.

But over the longer term these coveted and high paying physician positions can and should be filled by Americans.  The good news is that the solutions need little or no funding, are administratively straightforward and easy to put in place.  The biggest obstacle may be the opposition and fierce lobbying by doctors' bodies.  However, an enlightened administration and lawmakers should be able to do the right thing.  Especially if they are prodded by the increased (and overdue) public awareness of the issues involved, and the potential to add good American jobs.  Besides, if we have new laws that let in foreign doctors to ease shortages, doctor groups may no longer see any benefit from restricting domestic supply, and drop their opposition to such changes.

Here are the fixes that will make it easier and cheaper for talented Americans to pursue medical careers without compromising quality, and eventually internally meet all our doctor requirements:

1)  Medical schools should drop the college graduation requirement and like in all other countries, allow in high school graduates.  The core subject requirements can be met through prescribed AP courses in high schools, with the MCAT typically taken around the same time as the SAT.  The four years of time and resources for college education that is saved can instead be applied to residency training and the actual practice of medicine.

2) The expansion of medical schools and setting up of new ones should not be constrained by the AAMC and LCME with an eye to future demand for doctors.  They should only concern themselves with determining whether such institutions meet the appropriate academic and quality standards.  If the AAMC and LCME refuse to go along the government can replace them with other bodies that it sets up for control over establishing, expanding and accrediting medical schools.

3)  All residency caps imposed by the ACGME and the RRCs should be eliminated.  These bodies should only set professional standards and test procedures, and assess candidates, not determine the quantity of intake.  Like in other professions and disciplines, let the free market prevail. Teaching hospitals can determine how many residencies they want to offer keeping in mind their needs as well as the demand by candidates looking to their own future career prospects.  Of course, almost all residencies presently are wholly supported through public funding, although this shouldn't necessarily continue to be the case.  So residencies will still be constrained by the availability of such funds.  But the decisions on such funding (and consequent availability of residencies) will be made by committees of public representatives looking to ensure adequate future supply.  Not by private doctor bodies whose members benefit from scarcities.

4) The government should be prepared to counter resistance to (3) above, since the ACGME and the RRCs as private bodies may insist on capping residencies as they've been doing so far.  But they derive their power from the government recognizing them as the authority for assigning and filling residency positions.  If they do not cooperate, the government can set up other bodies to implement these functions, either in place of, or in parallel to, the ACGME and the RRCs.

5)  The ill-advised provisions of the Balanced Budget Act of 1997 that restrict the number of residencies should be repealed.  The funding for residencies by Congress will still be needed as it was before 1997, through normal appropriations.  The HHS can seek such funding based on projections of future need for doctors, estimated by an appropriate body of unbiased experts, while erring on the side of oversupply.

6) Doctor fears of future unemployment can be assuaged by guaranteeing their employment by public agencies, so long as they are qualified and competent.  Their minimum salary can be set at a decent, say, $150,000 - $200,000 annually depending on experience and specialty, and they can be employed in public clinics and the like.  Such salaried doctors patterned on UK's NHS will be cheap by US standards and save Medicare and Medicaid money if patients go to them instead of other doctors.  At the same time these salaried doctors will not be spending time chasing insurance payments or running a practice and consequently enjoy a better work-life balance.  Under such a public employment guarantee scheme, doctors will likely be less opposed to the other changes proposed here.

7) Finally, Americans can be quite naive and vulnerable to propaganda by special interests, as shown by public opinion against the March 2010 health reforms and even more so, the failed 1993 reforms.  So the government will need to stay on top and ahead on the message.

No comments: