Solving the Healthcare Workforce Supply Problem

Recently, Dr. Jeffrey S. Flier, distinguished service professor and former dean of the faculty of medicine at Harvard University, joined Leck Shannon, healthcare program manager for the Mercatus Center, to talk about his recent work with Jared Rhoads on The US Health Provider Workforce.

We started by discussing what Dr. Flier calls “the supply side” of the healthcare workforce. In other words, we talked about how many healthcare providers there are, and how they are educated, trained, and licensed.

That matters, because the number and type of healthcare providers can determine a host of other healthcare outcomes. Dr. Flier pointed to shortages in the supply of providers, both because an aging population will require more healthcare providers, and because the health provider workforce is, itself, aging.

Highlights

• Shannon and Dr. Flier discuss the “iron triangle” of healthcare, identifying ways in which improving the healthcare provider workforce can help reduce costs, improve quality, and expand access.
• Dr. Flier explains the history of the accreditation process for medical schools in America, and points out how the current system could hamper innovation.
• Dr. Flier points out the challenges faced by foreign medical graduates seeking employment in the US, and how improving their path to US healthcare careers could help address the shortage in the health provider workforce.

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REESE: Welcome to the Mercatus Center Policy download. I'm your host, Chad Reese. Healthcare policy debates often quickly devolve into familiar arguments about insurance, in other words, who pays for care and how they do so.

Today, we're going to take a different approach. We're talking about a recent study by Dr. Jeffrey Flier and Jared Rhoads, who refer to the supply side of healthcare. Who provides the care and how they do so?

In order to understand exactly what that means and why it matters to the future of healthcare, we're joined by two terrific guests. First up, Dr. Jeffrey Flier, the former Dean of Harvard's Faculty of Medicine, and currently Harvard University Distinguished Service Professor. Thanks for joining us, Doctor.

FLIER: Nice to be here.

REESE: And we also have Leck Shannon, who manages our healthcare research program here. Thanks for joining us, Leck.

SHANNON: Thanks, Chad, glad to be here.

REESE: I just want to go ahead and kick us off by making sure everybody is on the same page here, particularly our listeners, and just say, when we talk about the supply side of healthcare, what does that mean? What is the 30‑second definition?

FLIER: In particular, in our piece, we're talking about the supply of providers, because there's also supply of hospitals and equipment and the other things. With respect to providers, the question is, who is there to deliver the care? Whether that be physicians, other kinds of health providers.

There's a whole complicated ecosystem through which we end up in this country with a certain number of physicians of certain kinds practicing in certain places, with certain training, and then other kinds of providers.

As you said at the top, most of the focus policy‑wise these days is on, how do you pay for care? Are people insured, etc.? The focus that I've been deciding to spend some time on is how do we end up the providers who give the care?

I will say that they are connected. The way you pay for care does influence what kind of providers will be there to provide it, but it's not the sole story.

REESE: That sounds great. Let's just go ahead and dive in then. I'm assuming if you're writing a paper on this topic, and someone with your background has a lot of different ways you can approach healthcare policy. What's the challenge here? What's the problem that we're concerned about with the supply side of healthcare?

FLIER: The issue is what are the mechanisms by which a country, or a state, or a region develops the provider workforce that will make the population happy with the care that they're receiving, will make them able to get appointments under circumstances that they are happy with. How does that all come about?

Even as someone who ran a medical school for nine years, I can say that it's hard to give a simple answer.

There are many interlocking factors that range from the accreditation of schools, of medicine, and schools of osteopathy, and other kinds of schools to how you then have to train after you graduate from medical school, what kind of training is needed to become licensed, which is a state‑related procedure.

Then these days in recent decades, almost everyone who trains then does further additional training, residencies, and fellowships. Those are regulated by different bodies.

Then the final thing I'll say before just going further with some questions is that there's also the matter of physicians and other providers coming in from other countries, having trained, gone to school in those other countries, and what provisions we put in place in states and nationally to influence whether they can come in and add to the medical workforce.

SHANNON: Jeff, as you mentioned, there's a pretty large focus right now on the who's paying for healthcare. One of the major things that is discussed is what's often referred to as the iron triangle of healthcare, the cost, quality, and access of healthcare.

In the same way that you mentioned that who pays for healthcare and the number of providers is connected, what would the supply of providers like your paper discusses, how could that affect the cost, quality, or access, and is that an equal thing to look at as much as who pays for the healthcare?

FLIER: No, absolutely. All of those three things, cost, quality, and access are influenced by who's there to provide the care. If you just say quality first, you obviously want providers who will be capable of providing excellent care.

That has something to do with the process through which they are educated in medical schools if you focus on medicine specifically. It also has to do with how they are further trained in their specialties of medicine, surgery, pediatrics, psychiatry, etc.

How their behaviors are monitored by state boards to make sure that they're not criminals or behaving in untoward manners that you wouldn't want them to be behaving. The quality is definitely influenced by the education.

The access is influenced in part by how many physicians there are of what kind. That's partly influenced by how many medical schools we have that are accredited, how many students they graduate, as well as how many physicians we allow to come into the country from outside who were trained outside.

Cost, as well, if you have a real shortage of doctors, depending on what the payment mechanisms are, that will tend to drive the cost up when there's a shortage, all things being equal. If you have many more providers, that's a force to bring down the cost.

They're all interlocking factors. I would never want to say that the supply of the providers just overwhelms the issue of who pays and how they pay. At the same time, you cannot ignore the issue of the providers themselves.

REESE: I do have to say we may have just set a record for the fastest three people talking about healthcare have ever come to a consensus point if we're saying that we're trying to get the supply of healthcare providers to a point where that iron triangle means that healthcare in this country is working properly.

Congratulations. We could probably just wrap it up there and pat ourselves on the back.

I want to go back a little bit to the accreditation issue that you mentioned. Whenever we talk about a workforce or a profession, a lot of people immediately think, "OK. How do we train these people? How did they get here in the first place?"

We've obviously got arguably the most qualified person on the planet with the former Dean of Harvard's Faculty of Medicine to talk about how we educate future healthcare providers.

Jeff, if you can just kind of walk me through briefly what that accreditation system looks like right now and then your experience with it and how you think we can do better.

FLIER: I could also give you just a little bit of history that preceded the way it is now to just make the point that in the 19th century, we didn't have much scientific medicine, and there was almost no coordination of what it is to be an accredited medical school by any organization or government body. It was the Wild West of education, really no standards.

That's the world we were coming out of when we hit the 20th century and scientific medicine began to seem like a real possibility. That led to the current accreditation system that we have, which took place over a series of decades.

A famous event was the so‑called Flexner Report of 1910, which said we need to have some more thoughtfulness about this. We need to have some standards. People, for example, need to know how to read before they go into medical school.

REESE: That seems pretty reasonable to me.

FLIER: Yeah.

REESE: [laughs]

FLIER: I can tell you it wasn't that way in the 19th century. We need to have some examinations to ensure that they actually learn something. All of that happened. Then on top of that, Flexner argued that it would really be important to have medical schools to be associated with or parts of universities, which was a rarity before that.

We ended up now with a system that has really produced a great increase in the quality of physicians, and that is one in which there is an organization called the LCME, the Liaison Committee of Medical Education.

It's overseen by the major professional organizations like the American Medical Association and some other associations like that. They set the standards for what a medical school has to do to be accredited.

Why is accreditation important? It's important because if you're not a graduate of an accredited school by this organization, then you cannot be licensed by any state. If you're not licensed, you can't practice. In effect, they determine the inflow of American physicians by the standards that they have.

What I would say is, much of what they do is outstanding. It's important to think about how you educate physicians to have some standards and to monitor them in ways that we now monitor them.

There is a flip side that as the mechanisms for doing that become, let's say, bureaucratized and rigidified, and given the fact that they also reflect the interests of the profession as opposed to sometimes conflicting interests of the population for what they might want and need in providers.

You can have a situation where there's not as much innovation in the education of physicians. There's not as much of a feedback from the market for them to do different things.

It's not black and white. They do receive signals. They do innovate. They have been increasing the number of schools in the last decade, decade‑and‑a‑half after a long period where there wasn't much increase.

My feeling is they can do better. Because it's such a charged mechanism that they have through reviewing schools to see if they're going to be reaccredited, it puts a bit of a damper on the capacity for innovation.

REESE: It sounds like very real concerns in the history of medical accreditation. Maybe the pendulum has swung a little bit too far the other way, and there's some room for improvement going forward.

FLIER: Yeah, I think that's a fair way of describing it.

REESE: You mentioned innovation there, too, at the end. That's probably the elephant in the room whenever we talk about healthcare, other than insurance I should say. We see other industries have labor force supply issues, we run out of people in various STEM fields.

Oftentimes, as industries, they seem to find a way to innovate their way of out of it, right? Technological advancement might replace a lot of things that used to be hand‑done. Is that what we're waiting on in the healthcare profession? Can't they just innovate their way out of this shortage?

FLIER: I think that that is one of the major opportunities that we face now. There is no doubt that the development of new technologies, artificial intelligence, which is really required more now, because the amount of knowledge that you must have available to you to make an intelligent decision in many of the complex areas of medicine, really exceeds the capacity of the human mind, right?

You want an intelligent, thoughtful person who's been well‑educated. I believe that they, in the future, will be interacting with computers and various other artificial intelligence mechanisms to enhance what they do...

[crosstalk]

FLIER: The question is, is medicine...Go ahead.

REESE: I was just going to say our listeners right now are probably terrifyingly imagining terminator doctors in the future as you speak.

FLIER: You can always worry. You can always wonder. For people who only want to deal with the human being and nothing else, they should have that option. I believe both to improve the care of patients in the future and to reduce the cost, we're going to see more of that.

I think there's anxiety within the medical profession and the accrediting bodies about how fast to do that. That's natural. It also is influenced by the fact that the profession tends to get it conservative.

It doesn't want to subject especially its older doctors to more new competing approaches. That's why I'd like to see the capacity for more competition in the medical education space to just speed up some of the innovation.

SHANNON: What role would you say policymakers play in this versus just industry itself? Take for example, what Amazon and Berkshire Hathaway and JPMorgan recently announced that they would like to set forth on a new initiative to try to improve the benefit that they offer their employees.

One of their first things to tackle was better use of technology, as well as the program that you worked on it at Harvard with the joint MIT program to try to bring more technology training to the medical field. What role is there for the policymaker within this and for the industry?

FLIER: It's a great question and it's a complicated. No simple answer. One thing I would say at the highest level of how innovation occurs is that my understanding from reading, talking to people who are very thoughtful in this area is that, frequently, the biggest innovative changes do not come from within the standard profession that is being innovated.

You'd tend to get resistance to change from within. The biggest changes come when some completely new player has no previous connections or limited connections comes up with something completely radically different. Then, it turns out to have the capacity to change field X or field Y.

That's what I think might be necessary in the hospital business, in the medical provision business of health providers. If new players come in, this is the kind of thing that deans of Harvard Medical School aren't supposed to say.

We might find Amazon changing a way of producing medical providers in a way that just wasn't going to come out of the normal last 100 years of educating doctors.

Let me make one other point. This is not a high‑tech answer, but it relates to the theme of what you asked me. That is 40, 50 years ago, there was no such thing as a profession as nurse practitioner or a physician's assistant.

REESE: That's a good point.

FLIER: They did not exist at all. What's happened, since the 1960s when those two professions started out as individual schools in a particular state, is that they've massively grown. The reason they've grown is because they were providing services that weren't available through MDs.

Now, there's about a quarter of a million nurse practitioners. A large fraction of them in 21 states can practice independently. They can prescribe medicines, and all of things, especially in primary care, but in other areas as well that physicians can do.

When we look at how well they do what they do, most of the evidence says that for the things that they do, the outcomes are just as good. This is a disruption. It was a quiet disruption that took place. In many places, the physicians and the medical organizations tried to suppress it.

Some places, they're still trying to suppress it, such that they require that a nurse practitioner has to have a supervising physician or pay a physician to do what they do as opposed to doing it independently.

You go from the low‑tech version of an alternate kind of provider to what I'm imagining is going to happen 10 to 20 years from now. What a physician does is going to be tied into data acquisition, and computers, and artificial intelligence in a way that we don't do today. What we want to do is we want to avoid regulatory efforts to suppress that.

SHANNON: Exactly. You may be familiar with the paper that my colleague Bob Graboyes wrote a few years back called "Fortress and Frontier," where he relates the healthcare industry to this imagery of having a fortress, and what we would like to get to is the frontiers.

The fortress obviously has walls that protect the people on the inside of the fortress from the people on the outside.

The frontier is this open place where anybody can go and chart their own course, and bring value to the land, and start a new path. Do you see that changing within healthcare? It's pretty obvious to see in many instances that healthcare is actually the fortress at the moment.

For innovation to occur, and for these newcomers to come forward similar to the nurse practitioners, as you mentioned quietly did it years ago, what does the future for that look like?

FLIER: I think that it's pretty bright although it's always going to be a struggle between the forces of stasis and maintaining the physicians of the organizations and the practitioners of the day. There's going to be a tug of war.

My guess is that with the new world that we live in, with access to information, with patients radically changed from what they were 30 or 40 years ago...When I was learning to be a doctor, the idea that a patient would come in with all kinds of information about their disorder and how they want to be treated, because they can obtain it from all sorts, none of that existed.

The doctor was the final answer. They would come in with their solution, and that's it. You did it. It's a radically different world. The opportunities are very great. I see the main goal of policy makers being to be very sensitive to rearguard efforts to prevent those changes from taking place.

Need to be very frank about it. In most major cities in the United States, if not all but certainly most, the health providers, the hospitals, they are some of the biggest employers and corporations.

When you see that, and then they measure their success by how many people they're hiring, the change in technology and the change of the workforce could upset that, and they're not going to like it. The local politicians won't like it. Many of the power brokers influencing the legislatures, they won't like it. We need to make some of these efforts succeed despite that resistance.

REESE: You teed us up a little bit earlier, Jeff, when you mentioned this. One of the areas in which a lot of industries, particularly if they find themselves with an aging workforce or an aging population, where they turn is often to immigration or from external or foreign labor.

You mentioned something about foreign medical students, foreign medical graduates. Listening to you, I would think we've got a lot of problems here, but can't we at least shore up issues in the short term by just saying, "If you're a medical professional in Europe, or Asia, or Africa, South America, anywhere in the world, come here. We'd love to have you come help take care of our people?"

FLIER: Yeah. It turns out that almost a quarter of all licensed physicians in the United States were educated outside of the United States. If you look at all the people in training, let's say internships, and residences, and specialty fellowships, it's also about a quarter across the United States who were educated in other countries. It's already quite large.

There are factors. Maybe the one that I would point out, to be brief, that is most easily changed if the will is there is this, that if you are...I'll try to give an example naming a particular place. You're a graduate of the medical school at University College, London, one of the great medical schools and their associated hospitals.

You go there, and you train, and then you become a surgeon, or an internist, or a cardiologist. You're fully trained there. There's information on how well you have done and what your quality level is.

If you want to come to the United States, because let's say there's a shortage in rural Minnesota where I know there's a shortage, and you'd like to come in to be licensed to practice, you can't do that.

What you have to do according to this complicated ecosystem of licensing and oversight of foreign‑trained physicians is you must...There's an organization called the ECFMG. I won't say what it stands for. They set the rules.

You have to apply to them and pay them some money. They correctly figure out you really did graduate from a certain medical school. There's over 2,000 around the world. Then you have to pass the same exam that American students have to pass. That's not necessarily a bad thing. You pass that exam, and then you have to apply for a residency.

You must take a residency. What if I already did a residency? What if I'm already a highly respected practitioner? No, we're sorry. You have to still be an intern again and do residency and retrain.

There are some people who do that, especially from the poorest countries. The largest number of such people who come in are from India, because there's such a big step up of what their quality of life is if they go through that.

If you're from Australia, or Israel, or England, or France, or Germany, you would still have to retrain, take a period of years and redo your training. Most people don't want to do that unless they have some overwhelming reason to do it. We could change that rather simply.

REESE: I was going to say I'm not exactly a world‑class heart surgeon or anything like that, but I feel like if somebody came to me and said, "Hey, do you want to go to this other state and take this new job? You're just going to have to start as an intern first," I think I might have some hesitation there before...

[crosstalk]

FLIER: Yes, and we know that that's true, that there is hesitation. The other thing is there's another bottleneck. I don't want to get you too much in the weeds, but if you need to do a residency, the question is do we have enough approved residencies to have the number of physicians that you might want to have? The answer is we don't.

Then there's a whole complicated story about why we don't have more residencies. The consequence of that is that if you look at the number of foreign‑trained physicians who graduate from medical schools and then go through this process, they pay their money, they pass the exams, and then they try to get a residency, less than half of them in any given year will find a residency.

The other half, there just aren't enough for them to do a residency. Some of them then just stay where they were. Some will find a way to immigrate to the United States and hope to maybe ultimately get a residency. Occasionally, some of them do.

Others of them drive taxis, or decide they're going to become optometrists, or all kinds of different things. It's a wasted opportunity where we could have an enhancement of our medical workforce.

The last thing I'll say on this is if you look at what the foreign‑trained physicians do compared to American‑trained physicians, they're much more likely to do primary care, which we sorely need. They're much more likely to work in rural communities and in underserved communities.

Once again, the data suggests that when they go through these mechanisms and end up here, their care is as good, and they're loved by the people as much as the American‑trained physicians are loved by their patients.

There are things that we can do at this. Unfortunately, it's mainly at the state level, so these 50 states, you would have to approach this. There are states now that are beginning to look for ways to enhance the access to these foreign‑trained physicians.

SHANNON: As you mentioned, there seems to be the bulk of the problem with the shortage of physicians at the primary care level. The Affordable Care Act, commonly called Obamacare, tried to remedy some of this problem at hand with the 10 percent Medicare bonus if you are primary care physician, and the scholarship opportunity.

I don't know how familiar you are with those, but your paper doesn't really recommend those as options for trying to fix this problem at the primary care level. I'd be interested to hear what is your opinion of solutions like that, versus yours that take more of a changing the institutions at hand approach.

FLIER: There is benefits from many different kinds of changes. I would say that the biggest reason why American medical students are shying away from primary care is because it pays less, and the lifestyle is more difficult. Other than that, it's wonderful.

SHANNON: Right, perfect job.

FLIER: Of course, there are many people who love it. The fact is you can make, over a lifetime, great deal more money, and in some of these specialties, you can also have a much more relaxed, family‑friendly lifestyle if you go into some of these other specialties.

I'll just give you one anecdote if it's OK about a particular specialty, which is one of the great anomalies in my mind. That is the field of gerontology. Everybody knows that the population is aging on average. We have a large tsunami wave of older individuals around us.

We have the major system that ends up paying for large elements of their healthcare is Medicare, right? You would think Medicare should be able to say in all of its wisdom through all the mechanisms that things get decided, "Boy, we need more gerontologists because we surely do. It's a specialty that's diminishing in the number of people who practice it. In most places, you cannot find a gerontologist to see your aging parent or your aging self, whatever it is."

Why is that? The reason for that is gerontologists are paid a pittance through Medicare. Here's the anomaly. The health system designed for the aged cannot find a way in the political process that we have to pay more to gerontologists. I can assure you that if you double the income of gerontologists, there would be gerontologists.

REESE: [laughs] That seems like a reasonable guess.

FLIER: Yes. Then, you have to go back deeper and deeper. Why is that? You have to look into how it is that Medicare has ended up allocating the payment schedules for different procedures and specialties essentially to the professions.

In a way, that privileges and it gives advantage to the high‑priced professions and procedures and things of that sort. The process has gotten so complicated and political that it just isn't possible or hasn't proven to be possible to change around how you pay to solve that particular problem.

The business with Obamacare and some enhancement to pay for primary care, that was fine. I don't think it actually is achieving its goal for a whole variety of reasons.

SHANNON: I know the Medicare bonus has been phased out, I believe. I'm not quite sure about the scholarship for primary care education.

FLIER: I'm not too familiar with that myself.

SHANNON: It may have never come to fruition, actually.

FLIER: I can't say I've heard about it.

REESE: I know this is going to come as a surprise because time flies when you're solving institutional challenges in an industry that's about one‑sixth of the entire US economy. I think that does just about to wrap us for now. I do want to thank our guests for helping unravel and unpack this issue a little bit for our listeners for tuning in.

Since we're obviously just scratching the surface of a complicated and fascinating topic, I want to give our listeners somewhere to go after this conversation. Some additional resources where they can learn more. I'll start with you Dr. Flier. Where can our listeners go online to find more of your research and commentary?

FLIER: I say the simplest place would be my Twitter, which is @jflier, J‑F‑L‑I‑E‑R. I'd love to participate in that medium.

REESE: Great. Leck, what's the best way for folks to keep up with your work and the latest on healthcare from Mercatus?

SHANNON: Sure. The first easiest way to find our work and what we're up to now is go into our website, mercatus.org, or you can email me directly, [email protected]. If you didn't catch that, then you can find my email online as well.

REESE: Sounds good. As always, I'm eager to hear from you as well. Please feel free to email me your questions, comments, complaints, or episode ideas at [email protected], or find me on Twitter @ChadMReese. Thank you and have a great day.