678

ANTICIPATING FUTURE SHIFTS IN AMERICAN HEALTH-MANPOWER POLICY* JOHN H. MORROW Senior Associate McKinsey & Company, Inc. Washington, D.C.

U NTIL recently, health-manpower policy in the United States has been directed at overcoming perceived manpower shortages, and, given its aim, that policy was remarkably successful. Current projections indicate, for example, that the combined graduating classes of American medical and osteopathic schools will soon be twice those of the mid-1960s, and will reach about 17,500 in 1981. In addition, about 8,000 foreign medical graduates have been entering this country each year. These enlarged "pipelines" have already shown impressive results. Between 1965 and 1975 (about the time a policy shift began to emerge), the ratio of physicians to population climbed about 20%. Only West Germany and Austria have more than our 178 physicians per 100,000

people. More significant, though, is this: if we achieve the projected number of American graduates, and if foreign medical graduates continue to arrive at their current rate, the American physician-to-population ratio will grow half again (to 265/100,000) during the next 25 years, and will continue to grow well beyond the turn of the century. Figure I shows this projected growth of physician manpower relative to population. The projections are based on several assumptions: the two just mentioned about the numbers of American and foreign medical graduates, that a quarter of foreign graduates leave the United States after their graduate medical education, an annual attrition rate of only 2% of the physician population, which reflects its relative youth and rapid growth, and, finally, that the population grows according to the Census Bureau's *Presented in a panel, The Government and The Community: Their Influences on the Ethics of Medical Education, as a part of a Symposium on Ethical Concerns in Modern Medical Education held by the Committee on Medical Education of the New York Academy of Medicine October 13, 1977. Address for reprint requests: U.S.C. School of Medicine, 2025 Zonal Ave., Los Angeles, Calif. 90033.

Bull. N.Y. Acad. Med.

679 HEALTH-MANPOWER POLICY POICY67

HEALTHMANPOER

Active Physicians Per 100,000 Population *%._r

275

T I

I I I

250 L_

I

I I

225

200

1

_

1

+49% I I I

t

I I I I I

175

l

150ir &m

1975

1980

-

I

I

I

1990

1995

1

1985

I 2000

Fig. 1. Projected growth in ratio of specialists to population, 1974 to 1990, assuming continuation of 1974-1975 first-year residency-training levels. Assumptions prior to restrictions on foreign medical graduates: 1) Number of American medical and osteopathic school graduates reaches 17,500 in 1983 and remains at that level. 2) Foreign medical physicians entering the United States equal 8,000 annually. 3) One quarter of foreign medical graduates entering the United States leave upon completing their graduate education. 4) Annual rate of deaths and retirements of active physicians equals 2% of the total, reflecting relative growth of current and rapidly growing physician population. 5) Series II population projections.

midrange projections. I might add, also, that similar growth is in store for many other categories of health manpower. To visualize the economic implications of this manpower policy, suppose there had been 50% more physicians in 1975, providing a commensurately increased quantity of services. (If one is not prepared to assume such an increase in services, the need for such an increase in the supply of physicians is questionable.) Suppose also that these additional physicians had drawn on supporting workers and other resources in the same proporVol. 54, No. 7, July-August 1978

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J.H. MORROW

tions as their existing colleagues. Finally, assume that the incomes of these additional physicians and other workers were the same as their counterparts. In other words, envision expansion of the American health-care system, which represented about $122 billion and 8.4% of the gross national product in fiscal 1975, by about 40 to 50%. In this scenario we would have spent more than $50 billion more (or about $270,000 in total health-care expenditures for each additional physician) on health careabout $1,000 per family of four. And we would have devoted more than 12% of the gross national product to health care. And these may well be conservative estimates. Now, even though it would mean fewer resources for other purposes, spending another 4% or more of the gross national product on health care might be worthwhile if doing so would improve the health of the population. Indications are that it would not. It is increasingly clear to many observers that the principal health problems contributing to premature mortality and to much morbidity are those largely attributable to life-style and environment. For most people, it now appears, good health-which is much more than simple longevity-can be effectively and relatively inexpensively preserved although, of course, not maintained forever when people act on their own behalf. But beyond environmental, public health, and health-education measures, society can neither impose good health on the unwilling nor regularly retrieve it after years of self-destruction, regardless of the resources applied through personal health services. Fortunately, in my opinion, we have moved away somewhat from the manpower policy I have just described, at least with respect to physicians. Growing concern over the qualifications of many foreign medical graduates and over the geographic and specialty distribution of physician and other manpower has led to new policies embodied in the Health Professions Educational Assistance Act of 1976. Because you are no doubt at least as familiar as I am with the specifics of the legislation, I shall not dwell on it other than to note that its principal thrusts restrict the inflow of foreign medical graduates, increase the supply of primary care physicians, and improve their geographic distribution. It is too early to know precisely what impact the Act and its accompanying regulations will have on the inflow of foreign medical graduates, but assume a severe impact, that the inflow of foreign graduates will drop from the recent 8,000 each year to about 1,000 annually by 1980 (Figure 2). Such a decline would eliminate about half, but only half, of the growth in Bull. N.Y. Acad. Med.

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POLICY HEALTH-MANPOWER HEALTH-MANPOWER POLICY

Active Physicians Per 100,000 Population

1975

1980

1985

1990

1995

2000

Fig. 2. Projected growth in the number of active physicians (M.D.s and D.O.s) per 100,000 population in the United States, 1975 to 2000, after recent legislation restricting inflow of foreign medical graduates. Assumptions after restriction on foreign medical graduates: 1) Number of American medical and osteopathic school graduates reaches 17,500 in 1983 and remains at that level. 2) Number of foreign medical graduates entering the United States declines from 8,000 in 1976 to 1,000 in 1980 and remains at that level. 3) One quarter of foreign medical graduates entering the United States leave upon completing their graduate education. 4) Annual rate of deaths and retirements of active physicians equals 2% through 1980, 2.1% from 1981 to 1990, and 2.2% from 1991 to 2000. 5) Series II population projections.

the physician-to-population ratio that would otherwise occur during the next 25 years. We would still reach a ratio of about 220 physicians per 100,000 people by the turn of the century and this ratio would continue to grow for some time. The implicit price of our current policies, while smaller than before, is still sizable: an additional $25 billion in 1975, to a total of more than 10% of the gross national product. Again, these are probably conservative estimates. Vol. 54, No. 7, July-August 1978

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The question thus arises: Are our latest policies toward health manpower enduring ones, or do they merely represent transitions in an evolutionary process toward a point opposite the expansionary thrusts of the mid-1960s? Let me hasten to say that I am aware of no significant sentiment in Washington at this time to restrict the number of graduates of American medical and osteopathic schools. It will take several years to digest and implement the provisions of the recent health-manpower legislation. Moreover, this legislation contains some provisions that may induce yet further growth. I am thinking specifically of the first-year enrollment "floors" that determine capitation grant eligibility and of the start-up financial assistance available for new schools. Nevertheless, I believe that we can expect, sooner or later, and probably sooner, strong pressures to contain the growth in American health expenditures through a comprehensive cost-containment strategy. That strategy will probably emphasize rationing the supply and altering the distribution of health-care resources. This strategy, perhaps influenced by the apparent success of costcontainment initiatives being undertaken in Canada, will probably concentrate most heavily on controlling the number and distribution of hospital beds and the size of their operating and capital budgets. But is it prudent to believe that the size and composition of our healthmanpower supply will go untouched, particularly since manpower accounts for more than half of total health-care costs? I think not. Rather, I think that health-manpower policy will eventually include specific limits on the number of American medical and osteopathic graduates, and that those limits may be below current levels. Only about 14,000 American graduates would be required each year, together with 1,000 foreign medical graduates, to reach about 200 physicians per 100,000 population by the mid-1980s and to maintain that ratio for some time to come (Figure 3). Fourteen thousand graduates each year is 20% fewer than the combined projections of the Association of American Medical Colleges and the American Osteopathic Association, and, of course, implies a significant reduction in current entering classes. Moreover, if recent restrictions of foreign medical graduates inflow have a less severe impact than I assumed a moment ago, then even fewer American graduates would be needed to reach and maintain a position of equilibrium. I would also emphasize that any policy limiting the number of medical and osteopathic undergraduates simultaneously creates a need for someone to referee the allocation of graduate medical positions among specialities and institutions. Bull. N.Y. Acad. Med.

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HEALTH-MANPOWER POLICY POIY HEALTH-MANPOWER~~~~~~~~~~

Active Physicians

Per 100,000 Population 275-

m

Potential Impact of FMG Restrictions i

9B

I

aI

225

-

-

2001-

yAdditiohal Impact 75 I

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of USMG 'RReductions

4

4

I4

-

1980

1985

A- --

,A

I

1990

1995

I

1975

----

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---"

2000

Fig. 3. Projected growth in the number of active physicians (M.D.s and D.O.s) per 100,000 population in the United States, from 1975 to 2000, assuming reduced number of American medical graduates. Assumptions with United States Medical graduate reductions: 1) Number of American medical and osteopathic school graduates peaks at 17,000 in 1981, declines to 14,000 by 1985, and remains at that level. 2) Number of foreign medical graduates entering the United States declines from 8,000 in 1976 to 1,000 in 1980 and remains at that level. 3) One quarter of foreign medical graduates entering the United States leave upon completing their graduate education. 4) Annual rate of deaths and retirements of active physicians equals 2% through 1980, 2.1% from 1981 to 1990, and 2.3% from 1991 to 2000. 5) Series II population projections.

To use Dr. Howard Hiatt's analogy of the "medical commons," there would be only so many graduates among whom residency programs could "graze." No institution or specialty would be able to dine more heavily on the commons without forcing others to diet. Moreover, American policymakers could no longer pursue the relatively comfortable policy of supporting growth in the primary care specialties without directly addressing the effects on other specialities. Vol. 54, No. 7, July-August 1978

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MORROW J.H. ..MRO

FAMILY/GENERAL PRACTICE MEDICAL SPECIALTIES #

4

Pediatrics Internal Medicine Dermatology

87%

1

*45 ;36

* W

SURGICAL SPECIALTIES 72%

Plastic

Thoracic

Orthopeedic Otolaryngology Obstetrics & Gynecology Ophthalmology Urology Neurological General (Including Colon & Rectal)

_

20

_

20 20 19

-5 |

OTHER SPECIALTIES _

Neurology

7 4%

41

PM&R Pathology

38

Psychiatry

Radiology Anesthesiology

29 26-

* Relative to ap 14and under population Fig. 4. Projected growth in the ratio of specialists to population, 1974 to 1990, assuming continuation of 1974-1975 first-year residency training levels.

Bull. N.Y. Acad. Med.

HEALTH-MANPOWER POLICY

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Without more detailed discussion of the implications of evolving health-manpower policies for graduate medical education, I would like to share some estimates of growth trends in the number of specialists relative to population (Figure 4). These estimates portray the change that would take place by 1990 if the size and specialty mix of first-year residency programs for 1974-1975-the most recent data available-continue unchanged. Now, I do not pretend to know what the mix of specialists should be. But it almost certainly should not be the mix that would result from these growth trends. Of course, significant change in the speciality composition of graduate medical education programs is taking place. So it is important to recognize that making these projections is like trying to anticipate the remainder of a motion picture on the basis of a single frame. Nevertheless, I believe they suggest the general magnitude of the graduate medical education allocation task that probably lies ahead. Assuming that health-manpower policy does evolve in the general directions I have indicated, what does it mean for medical education in this country? Perhaps two general observations can be made. The first is that the external environment, which has grown more complicated and constraining in recent years, is likely to become more complicated and constraining in the future. Increasingly, institutions are likely to be viewed and treated as public-purpose rather than independent in nature. And freedom to make policy decisions unilaterally will continue to shrink. Some medical schools, particularly those located in states as generously provided with physicians and medical schools as New York, may eventually be invited or induced to reduce the scale of their undergraduate programs. Similar invitations or inducements may be extended in connection with the size and specialty distribution of graduate medical education programs. The ethical and other concerns regarding current health-manpower policies, concerns reflected in the theme of this symposium, are not likely to go away. Indeed, they may multiply and include concerns about the appropriateness in a democratic society of limiting, in effect, the amount and mix of care to be provided and further limiting the freedom of individuals to choose and pursue medical careers according to their own interests and capabilities. A second and concluding observation is this: it seems increasingly important for medical leaders to decide fairly soon what their stance will Vol. 54, No. 7, July-August 1978

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be with respect to health-manpower policies increasingly characterized by resource constraints and rationing. One posture is simply to acquiesce. I doubt that they will, and they should not. The other extreme is to fight tooth and nail against the development and implementation of such policies. If this is the posture adopted, I think we shall all lose in the long run. Surely, some middle course offers the best hope for dealing wisely and effectively with the growing dilemma of how to meet the genuine healthcare needs of the population on an affordable basis. That middle course requires that medical leaders participate more positively and constructively in the development and implementation of balanced health-manpower policies responsive to this growing health-care dilemma.

Bull. N.Y. Acad. Med.

Anticipating future shifts in American health-manpower policy.

678 ANTICIPATING FUTURE SHIFTS IN AMERICAN HEALTH-MANPOWER POLICY* JOHN H. MORROW Senior Associate McKinsey & Company, Inc. Washington, D.C. U NTIL...
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