Tag Archives: reform

Healthcare Delivery System – Supply & Impact

12 Aug

There are numerous factors that may impact the future supply of healthcare providers (physicians/hospitals) – Here are few possible factors that impact supply and impact on the US delivery system.

Healthcare reform will provide insurance to roughly 36 million uninsured Americans, which is expected to increase the demand for healthcare services. The population of older adults is growing radically due to greater longevity as a result of better nutrition, safety, and medical care. Older adults have different health care needs compared to younger age groups, and this has an impact on the demand placed on the health care system. Older population is more likely to suffer from chronic illnesses, have greater physical vulnerability, and consume more emergency care, hospital services, nursing home services, and home health care services than younger population. Also, older population has a smaller pool of family caregivers than younger adults.

Although many older adults have some sort of accompanying coverage, majority of them use Medicare reimbursement. Medicare and Medicaid reimbursement policies can affect both supply of health care and demand for services. The percentage of reimbursement for the hospitals and doctors by Medicare and Medicaid is very low compared to what private insurance companies reimburse and settle claims. Since, aging population who use Medicare services is on rise, it is resulting in lower profits and higher operating costs for the hospitals and is acting as disincentive for the businesses and providers. As a result many doctors have dropped out, few have started specialty hospitals, and many hospitals have shut their high cost – low profit departments such as maternity ward, etc.; because of lower reimbursement rates.

Large numbers of health care workers are retiring at the same time the demand for health care is on the rise due to aging population. Also, educational requirements are playing a greater role in supply of the doctors. Relatively new occupations and specialty degrees that didn’t exist 50 years ago are attracting more people. Some health professions are more attractive to young people than others, and these new professions will be better able to survive large numbers of retirements, as the retirees will be speedily replaced.

Misdistribution of physicians i.e. less interest by medical school graduates in primary care and lack of work/life balance,  (long hours, night and weekend calls) are the additional deterrents which are resulting in poor supply of health care providers such as doctors. Burnout due to sudden increase in demand of services due to ACA and the stringent legal requirements under the Obama Care is also a cause of concern. Also, the residency slots may not keep up with growth in medical school graduates. Licensing provides guarantee of quality, but it also limits entry into the profession. Money is also one of the major causes of shortages of primary care physicians. According to National Council of Behavioral Health, mental health in physicians in public sector work twice as those physicians in private organisations but on average public workers earn about $25,000 less than those in private sectors. 

The health care reform has resulted in the increased demand because the people enrolling are those with the greatest needs for medical services as now there’s no limit to coverage, its compulsory for all to buy insurance, it’s subsidized and anyone can buy insurance without limitations on pre-existing conditions. So, people who will need extensive service have access to insurance now and will likely consume more services resulting in increased demand for medical services. According to the U.S. Census Bureau, The supply of physician is increasing at 7% compared to the number of Americans over 65 years of age which is growing at 36%, resulting in demand and supply mismatch, causing supply shortage.

When demand rises but supply cannot increase at the same pace, prices go up.   Hospitals and clinics may increase the wages of nurses, technicians, and doctors because they are more often reimbursed for their services by insurance companies and also because few numbers of doctors and nurses will be handling the increased demand i.e. more workload. This will also cause waiting times for appointments and procedures to increase. 

Also, there has been increasing pressure on doctors, nurses and hospitals to provide improve quality, reduce cost and improve customer experience, resulting in lower supply of healthcare providers. Thus, the above mentioned factors are the cause of concern and will impact the supply and the US delivery system.


Center for Health Workforce Studies School of Public Health, University at Albany (2006, March). The Impact of the Aging Population on the Health Workforce in the United States: Summary of Key Findings. Retrieved January 30, 2014, from http://www.albany.edu/news/pdf_files/impact_of_aging_excerpt.pdf

Robert J. Stonebraker, Winthrop University (2013, October 17). The Joy of Economics: Making Sense out of Life. Retrieved January 30, 2014, from http://faculty.winthrop.edu/stonebrakerr/book/medicalcare.htm

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