Sunday, July 31, 2011

Do Our Doctor Imports Hurt Their Home Countries?

The US has only about two thirds of Europe's per capita availability of doctors.  This scarcity is the largest cause of severe overpricing of medical services that underlies the US health care crisis.  Any sensible policy should massively expand the domestic pipeline of doctor supply, but there's a decade's gap between initiating such long overdue measures and boosting the ranks of trained doctors.

The immediate solution is to import highly qualified and experienced doctors from accredited medical institutions around the world that can be put in place in as little as a year or two. Attracting such doctors is easy as actual US physician earnings are about thrice those in Europe and tenfold over their peers in developing countries.  Setting high standards and requiring these foreign doctors to clear the same board exams as domestic doctors should address any real or feigned concerns about quality of care.

Objectors also cite the plight of countries like India (a front page WSJ story on July 30) whose best doctors are ideal candidates because of their qualifications, salary differential, and fluency in English.  They say India already has much fewer doctors per capita, and its populace will suffer further hardship if the US poaches their top medical practitioners.  Such concerns by US doctors and their proxies are probably self serving and hypocritical, aimed at preserving their "scarcity premium" and thwarting competition in their home turf.  It is like US workers opposing imports out of professed solidarity with foreign workers toiling in sweat shops.

I had briefly countered in my June 27, 2010 post that remittances to, and investments in their country of origin by immigrant US doctors should by themselves generate enough resources to train several more doctors.  But in our collaborative work Prof. Jagdish Bhagwati has been questioned about this "brain drain" even by some policy advisers with legitimate concerns about the donor countries.  So here's more elaboration for why the benefits of this free flow of doctors should exceed the costs for a donor country like India:

1. Remittances finance replacement doctors.  As compared to the US, India is not only far more cost efficient in medical treatment but also in training doctors.  And it's not just because US and Canadian medical schools absurdly require entrants to be college graduates, unlike medical schools elsewhere that only require completion of high school.  It's also that quality education in India costs only 10%-20% annually of the tab in USA.  So while the 11 or more years of post high school that it takes to get a doctor through residency in the US costs about $600,000, training to the same level in India in 7 years costs about $40,000.

Consider now remittances and money flow benefits by emigrant doctors which have never been tracked separately.  There are various estimates of remittances by all Indian emigrants, but a US Congressional report has private remittances from the US to India at $3.2B as quoted on Feb. 25, 2011 by the Economic Times.  This comes to 5%-6% of worldwide remittance inflows from the Indian diaspora, estimated by the Indian government to be $40.8B in the eight months from April to December of 2009.  According to the 2009 American Community Survey of the US Census Bureau (S0201) there are 2.6 million Indian immigrants of which 1 million are full time workers, so the annual remittance per worker is $3,200.

But the mean earnings of an Indian worker are $80,000 while doctors average over 4 times this. Taking remittances in the same proportion of earnings, an emigrant Indian doctor would remit $12,000.  Even if we scale this down to half (Prof. Bhagwati thinks the well-off Indians here may not send to relatives back home at the same rate and may instead simply bring them over) that is $6,000 annually. Over a 25 year career span in the US that's $150,000 in remittances alone - enough to train four new Indian doctors for every exported one.  These numbers exclude informal or illegal remittances like hawala transactions - the reason a World Bank report regards official estimates to considerably underestimate actual money flows.

2. Benefits of shared expertize and enhanced country brand.  We saw how countries that banned or restricted emigration during the Iron Curtain years limited the development and vibrancy of their own skilled workforce.  Conversely, the free flow of ideas, knowledge and experience between emigrant Indian professionals and their home country counterparts has enriched and raised professional, including medical, standards in India.  Then there are perceptions in the US.  One in 20 doctors here is of Indian origin which is a reason why patients think well of, and are comfortable with them. That can significantly boost medical tourism to India if and when constraints of politics and worries about legal exposure abate.

3. Outsized contributions by doctors returning home. Indian doctors in the US get first hand experience in the world's best system in terms of quality of health care (even if it's also the least cost effective.)  They have it so good here that in terms of percentage very few return home. But those that do have an immensely positive and transformational impact on Indian medical care.  Most of the top private medical hospitals in India have been founded or are headed by doctors who have practiced in the US or UK.  These include the Apollo Hospitals Group founded by Dr. Pratap Reddy, Escorts and now Medanta - The Medicity set up by Dr. Naresh Trehan, the Asian Heart Institute headed by Dr. Ramakanta Panda, and Narayana Hrudayalaya established by Dr. Devi Shetty.  Within such hospitals are prominent US and UK trained doctors who are renowned for their specialist surgical expertise and have trained many other doctors.

In sum, a free movement of doctors should be a win-win for both the US and the donor country.  Not all imported doctors will come from developing countries, of course.  The enormous earnings differential between the doctors in the US and other first world countries will persist to some extent even if and when US doctor scarcities are addressed.  This will ensure that many doctors from Europe including the most affluent countries like UK, Germany and France will come to the US if they're allowed to practice here.


Aside: Some other useful background readings and links:
  • A 2006 overview of skilled Indian migration to developed and gulf countries by Binod Khadria.
  • American FactFinder of the US Census Bureau for US population, demographic and economic data.

1 comment:

R. McCarter said...

I scanned your article and I understand what you are saying. There are several issues that need to be addressed and some will be hard put or seemingly impossable to implement due to the politics and the leverage of large corporations and the health care money grab at every level. Health care is much less expensive overseas and south of the border. There is growing trend of John/Jane Q. Public to tourist out of country for medical procedures and care as the costs are lower even with insurance and there may be shorter wait times for such things as transplants and etc. However lowering the standards for MD will not set well with the American psyche. The NP and PA have filled some of the gaps in services but ultimately the provider of choice for most is the MD. I see in the future the possibility of insurance companies paying for overseas treatment for patients because of the costs savings for them. However the AMA may have a stroke and they will lobby hard against such a thing as they will not want to loose the business. Health care is so convoluted in the US it will be impossible to entirely unravel. However there are things that can be done to eliviate some of the problems. I like what Ron Paul has to say about health care although there is no way that medicine will go back to the way it was in the 50's and 60's. The American appetite for entitlements is overwhelming. Health care expenditures are putting a huge drain on the tax payer and the economy. However there are solutions as you have stated. The crux of the matter is how do we get people to listen to reasonable solutions and begin implmenting them. I am an RN with a business degree and I also am the CEO of MediCARD1. I have a blog and you may be interested in what I have written concerning health care issues in the US. I am following your blog it is very interesting and you have very good insights. My blog is the link below. I look forward to having many discussion with you.