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July 6, 2020
The Demand for Market-Driven Innovations in Medical Care Is All in the Numbers
David Burda
Economics Innovation System Dynamics

The Demand for Market-Driven Innovations in Medical Care Is All in the Numbers

One of the bellwethers I follow to see what direction healthcare is headed is the annual physician supply and demand reports from the Association of American Medical Colleges. If the AAMC’s latest forecast is any indication, you should expect prices for physician services to continue to rise at a healthy clip. 

By 2033, which is only 13 years away, the U.S. will be dealing with an estimated shortage of between 54,100 and 139,000 doctors, according to the AAMC’s latest annual report.

The AAMC released the report, The Complexities of Physician Supply and Demand Projections from 2018-2033, on June 26. You can download a copy of the 92-page report here

The new shortage estimate is 14 percent to 15 percent bigger than the AAMC’s estimate last year. That’s much more than a smidge, which is not a formal economic term. Neither is smidgen. 

What’s pushing the shortage range higher? The AAMC says it’s basic supply and demand. The demand for physician services will rise faster than the supply of physicians can provide them.

Let’s talk supply. The AAMC starts will a baseline of 807,400 active physicians in 2018, which includes:

  • 228,100 primary-care physicians
  • 137,300 physicians in internal medicine and pediatric subspecialties
  • 155,200 physicians in surgical specialties
  • 32,200 primary care-trained hospitalists
  • 254,600 physicians in other medical specialties

The AAMC adjusts those supply numbers up or down based on different variables like projected medical school graduates, physician ages and retirements and changes in work-hour patterns. The net of all that will be 28,980 new doctors entering the healthcare workforce each year through 2033.

Now, let’s talk demand, which is the more interesting part of the equation. It’s more interesting because of how all the different market-driven delivery changes can affect the demand for doctors. The variables affecting demand include:

  • A growing population (more demand)
  • An aging population (more demand)
  • Enrollment in managed-care plans (more demand)
  • Growth in alternative care settings like urgent care, retail clinics and telemedicine (more demand)
  • Growth in non-physician practitioners like advanced practice nurses and physician assistants (less demand)
  • Population health (less demand)
  • Access to behavioral health services (less demand)
  • Value-based care models (less demand)

All told, the number of new physicians entering the workforce will fall 54,100 to 139,000 short of what the U.S. will need by 2033 based on those demand variables, according to the AAMC.

Well, what does that mean? My guess is that it will mean higher prices for physician services. Prices go up when demand exceeds the supply, right? Now, how much of that money will go into the pockets of physicians is something completely different and will depend on what’s left after everyone else takes their cut.

The other thing it means is that, if those projections come anywhere close to being true, we’ll need a lot more market-driven innovation to make up the difference.  New technologies to extend or even replace doctors. New types of caregivers and settings to extend or even replace doctors. And new ways to keep healthy patients healthy and chronically ill patients as healthy as possible so they don’t need a doctor.

It’s all in the numbers.

To learn more on this subject, please read “Doctors and the Laws of Supply and Demandon 4sighthealth.com.

Thanks for reading.

Stay home, stay safe, stay alive.

About the Author

David Burda

David Burda began covering healthcare in 1983 and hasn’t stopped since. Dave writes this monthly column “Burda on Healthcare,” contributes weekly blog posts, manages our weekly newsletter 4sight Friday, and hosts our weekly Roundup podcast. Dave believes that healthcare is a business like any other business, and customers — patients — are king. If you do what’s right for patients, good business results will follow.

Dave’s personnel experiences with the healthcare system both as a patient and family caregiver have shaped his point of view. It’s also been shaped by covering the industry for 40 years as a reporter and editor. He worked at Modern Healthcare for 25 years, the last 11 as editor.

Prior to Modern Healthcare, he did stints at the American Medical Record Association (now AHIMA) and the American Hospital Association. After Modern Healthcare, he wrote a monthly column for Twin Cities Business explaining healthcare trends to a business audience, and he developed and executed content marketing plans for leading healthcare corporations as the editorial director for healthcare strategies at MSP Communications.

When he’s not reading and writing about healthcare, Dave spends his time riding the trails of DuPage County, IL, on his bike, tending his vegetable garden and daydreaming about being a lobster fisherman in Maine. He lives in Wheaton, IL, with his lovely wife of 40 years and his three children, none of whom want to be journalists or lobster fishermen.

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