Geographic Imbalances in Doctor Supply and Policy Responses

By Tomoko Ono, Michael Schoenstein, James Buchan
OECD Health Working Papers No. 69, April 3, 2014

Doctors are distributed unequally across different regions in virtually all OECD countries, and this causes concern about how to continue to ensure access to health services everywhere. In particular access to services in rural regions is the focus of attention of policymakers, although in some countries, poor urban and sub-urban regions pose a challenge as well. Despite numerous efforts this maldistribution of physician supply persists. This working paper first examines the drivers of the location choice of physicians, and second, it examines policy responses in a number of OECD countries.

The choice of practice location is complex, but across the examined OECD countries, several key factors have emerged in studies of doctors and medical students in recent years. First, the relative unattractiveness as places to live and work is the root of an unequal distribution of physicians across regions and areas. Second, the mode of employment and payment for physicians set the frame for their options for location choices. Third, while incomes for general practitioners in rural regions are higher than those in urban regions in some counties, it may not be sufficient compensation as they work for longer hours and in generally more difficult working conditions. Furthermore, professional prestige plays a role as more prestigious specialties tend to be concentrated in urban areas and by default making rural practice less attractive. Finally rural origins and experience in rural settings are influential factors as doctors who are from rural regions are much more likely to go and practice in rural setting compared to those with an urban upbringing.

While a truly comprehensive regional development policy is helpful to tackle the maldistribution of physicians across regions, policymakers in the health sector have three broad strategies to respond to imbalances in physician distribution.

* The first strategy is to target future physicians to maximize the pool of physicians available for practice in relatively underserved regions. This means increasing the number of qualified physicians who are interested in practice in underserved regions, and/or the number of working hours they are willing to provide. The crucial focal point of action for this strategy is the selection and education of medical students.

* The second strategy is to target current physicians to maximise the share of physicians in the health system who practice in underserved regions. This requires a suitable incentive system, which may include both “carrots and sticks”, i.e. not only financial incentives, but also suitable regulatory measures to influence physicians’ location choices.

* The third strategy is to do with less, i.e. accept that staffing levels will be lower in some regions and focus on service re-design or configuration solutions. This can be done through expansion of involvement in health service delivery by non-physician providers. Service delivery innovations can also make a difference, by the use of technology (e.g. through better use of telemedicine), better management of human resources and their workload, or a combination thereof.

Policymakers in most countries will have to blend a range of elements of these three strategies, and review this mix over time. The best mix of such strategies will depend on various factors: patient needs, demography of the population and the physician workforce, health system characteristics, the budgetary situation, and the overall health reform context. While broad characteristics of interventions can be identified, more robust evaluations are required to improve the evidence basis for these policies and strategies in order to support policymakers to make better informed choices.

http://dx.doi.org/10.1787/5jz5sq5ls1wl-en

All OECD countries experience maldistribution of the physician supply. Of particular concern is the distribution of primary care physicians, especially the lack of their presence in underserved regions. This OECD working paper describes the problem and suggests some approaches to improve distribution.

Currently I am in San Francisco, participating in the National Conference on Primary Health Care Access presented by the Coastal Research Group. The chief of adult medicine of a highly respected California family medicine residency that is noted for training physicians who would more likely practice in community health centers in underserved communities told me that though their program is initially very successful, their graduates experience burn-out, typically after about three years of practice. This is a very serious problem that obviously requires the attention of public policymakers. This OECD report suggests some strategies that could help.

The fact that all OECD nations experience these problems indicates that the health care financing system alone cannot be expected to correct these deficiencies. However, a public financing system, such as single payer, should improve the flexibility to work with the health care delivery system to drive improvement in the distribution of health care professionals. Our current fragmented financing system provides little opportunity to incentivize strategies that might help.

We do need a single payer national health system, but also we need to elect public officials who believe in better health care for all. Although correcting maldistribution will always remain a challenge, there is much that can be done, but we need people in charge who will want do it.

Structuring Incentives Within Organizations: The Case of Accountable Care Organizations

By Brigham Frandsen, James B. Rebitzer
NBER, April 2014

Accountable Care Organizations (ACOs) are new organizations created by the Affordable Care Act to encourage more efficient, integrated care delivery. To promote efficiency, ACOs sign contracts under which they keep a fraction of the savings from keeping costs below target provided they also maintain quality levels. To promote integration and facilitate measurement, ACOs are required to have at least 5,000 enrollees and so must coordinate across many providers. We calibrate a model of optimal ACO incentives using proprietary performance measures from a large insurer. Our key finding is that free-riding is a severe problem and causes optimal incentive payments to exceed cost savings unless ACOs simultaneously achieve extremely large efficiency gains. This implies that successful ACOs will likely rely on motivational strategies that amplify the effects of under-powered incentives. These motivational strategies raise important questions about the limits of ACOs as a policy for promoting more efficient, integrated care.

http://www.nber.org/papers/w20034

Comment:

By Don McCanne, MD

The growth in the number of accountable care organizations (ACOs) has been phenomenal considering that they are primarily only a wish on the part of the policy community and bureaucrats that such organizations would increase efficiencies to reduce health care spending, especially when earlier results have been very disappointing. This study has added to the doubts about ACOs by showing that incentive payments that they receive will exceed cost savings unless the ACOs “achieve extremely large efficiency gains” – an extremely unlikely outcome.

The policy literature is saturated with these “wish they would work” reports and recommendations to further expand the use of ACOs. The experiment has already failed, and we are meandering back into the disdained managed care organization model disguised as ACOs. The tragedy is that this has distracted our politicians and bureaucrats from moving forward with a model that actually would increase efficiencies, not to mention meeting other goals such as universality and removing financial barriers to care – a single payer national health program.

Health-care changes seem to be paying off in B.C.

By Keith Baldrey
Surrey Now, April 8, 2014

Have we finally wrestled that voracious gobbler of tax dollars – the public health-care system – to a standoff, if not to the ground? By that I mean the days of the system automatically devouring increasingly large amounts of money every year to feed itself may be drawing to a close, at least in British Columbia.

Of course, I don’t mean the health-care system will stop being the biggest area of government spending by far (the health-care budget this year is pegged at $16.9 billion, out of a budget of $44.4 billion).

But the rate of growth in spending is slowing down significantly. The annual hike is down to 2.6 per cent this year, compared to just several years ago when it was above five per cent.

Now, there are those who think this is bad news. After all, shouldn’t we be plowing even more money into the system rather than less? If we don’t, won’t health-care standards suffer? The answers are: a) not necessarily and b) no.

The ideological defenders of the public health-care system (who think the answer to everything is to blindly spend gargantuan amounts of more money) think the only measuring stick worth anything is per capita spending. In other words, B.C. should spend more dollars per person than anywhere else, and things will take care of themselves.

But those with experience in the system, who study it and come up with good ideas for change, point to another and far better measurement: health outcomes.

And in that regard, B.C. ranks the highest in the country. While we sit second-to-last in per-capita spending, (only Quebec ranks lower) we beat most other provinces in all kinds of areas: best cancer survival rates, lowest heart attack rate, longest life expectancy, lowest smoking rate, lowest infant mortality rate, etc.

When it comes to wait times for certain surgeries (an admittedly frustrating situation for many people on those wait-lists), they’ve been mostly going down and not up. The median wait time for a hip joint replacement has declined to 13 weeks from 19 weeks over the last 10 years, while a knee joint replacement has gone from 25 weeks to 18 weeks over the same time period.

None of this is to suggest the health-care system does not need constant up-keeping and reform (crowded emergency rooms, for example, seem to be a chronic problem, and we could always use more nurses). But it is encouraging that blind yearly spending hikes are being replaced by newer, innovative ways of spending that are both efficient and lead to healthier outcomes for the users of the system.

Not being able to count on big increases in funding every year has brought some much-needed discipline to the system, and employing some different models has also helped.

One of the most significant changes that is paying off is the government’s relationship with doctors.

In the past, physicians were viewed as costly, self-interested cogs in the system.

Now, however, they are viewed as equal partners who have real responsibilities when it comes to running the health-care system.

For example, several joint committees have been established with the Doctors of B.C. (formerly called the B.C. Medical Association) where doctors and the government shape policies that are aimed at improving patient health, rather than protecting the financial interest of either party.

One committee is for general practitioner services (overseeing improvements to the primary care system), another is for specialist services (aimed at improving access for specialist care) and a third is for shared care (focused on better integration of all levels of care).

As well, something called the Divisions of Family Practice has been created. It links family doctor practices and is designed to improve common healthcare goals in a particular region (improved maternity coverage, for example).

Committees such as these were unheard of a decade ago. They appear to be improving patient care by focusing on smart, evidence-based decisions rather than on simply demanding more money, either for doctors’ pay packets or a health authority’s budget.

The Canada Health Accord between the provinces and the federal government died last week. It means Ottawa will be cutting in half its annual transfer of money to pay for health care.

The fact the B.C. government hardly said a peep about the accord’s demise is evidence of how much the system has changed in the past few years.

http://www.thenownewspaper.com/opinion/baldrey-health-care-changes-seem-to-be-paying-off-in-b-c-1.946815

****

Comment:

By Don McCanne, MD

Evidence based health care. Why should that be controversial? Yet it is. It provokes accusations of “cook book medicine,” or “bureaucrats interfering with your health care.” Current efforts in British Columbia can provide us with a more rational perspective than is being provided by these negative memes.

Physicians from the B.C. medical association (Doctors of B.C.) and the government are cooperating on efforts to improve patient health in manners other than by simply increasing spending (though that should not be neglected when there is an obvious imperative). Such efforts to spend better rather than simply spending more will be particularly important now that the federal government is being run by individuals who promised to protect Canada’s medicare but instead cut federal spending on the program in half.

Although single payer systems are often criticized for being bogged down by government inflexibility and laggardly progress, the activities in B.C. demonstrate that such processes need not be an inevitability. In fact, B.C. is showing us that their single payer system does have the flexibility to make needed improvements.

In the United States we are currently using models, such as accountable care organizations, supposedly to achieve higher quality at a lower cost. Unfortunately, the model seems to have been misdirected away from efforts to improve health care based on evidence to efforts granting nominal awards based on penny pinching and a few negligible teach-to-the-test measures. Under our fragmented, multipayer system it is difficult achieve widespread adaptation of systemic improvements, simply because it is our unique, dysfunctional financing system that is so inflexible.

This is not to belittle the efforts of AHRQ toward expanding the use of evidence based medicine. Rather it is to make the point that government efforts such as those of AHRQ can be more effective if we get the dysfunctional financing system out of the way, especially the intrusive private insurers, and allow AHRQ and other public entities to cooperate more effectively with the people actually delivering health care.

Health-care changes seem to be paying off in B.C.

By Keith Baldrey
Surrey Now, April 8, 2014

Have we finally wrestled that voracious gobbler of tax dollars – the public health-care system – to a standoff, if not to the ground? By that I mean the days of the system automatically devouring increasingly large amounts of money every year to feed itself may be drawing to a close, at least in British Columbia.

Of course, I don’t mean the health-care system will stop being the biggest area of government spending by far (the health-care budget this year is pegged at $16.9 billion, out of a budget of $44.4 billion).

But the rate of growth in spending is slowing down significantly. The annual hike is down to 2.6 per cent this year, compared to just several years ago when it was above five per cent.

Now, there are those who think this is bad news. After all, shouldn’t we be plowing even more money into the system rather than less? If we don’t, won’t health-care standards suffer? The answers are: a) not necessarily and b) no.

The ideological defenders of the public health-care system (who think the answer to everything is to blindly spend gargantuan amounts of more money) think the only measuring stick worth anything is per capita spending. In other words, B.C. should spend more dollars per person than anywhere else, and things will take care of themselves.

But those with experience in the system, who study it and come up with good ideas for change, point to another and far better measurement: health outcomes.

And in that regard, B.C. ranks the highest in the country. While we sit second-to-last in per-capita spending, (only Quebec ranks lower) we beat most other provinces in all kinds of areas: best cancer survival rates, lowest heart attack rate, longest life expectancy, lowest smoking rate, lowest infant mortality rate, etc.

When it comes to wait times for certain surgeries (an admittedly frustrating situation for many people on those wait-lists), they’ve been mostly going down and not up. The median wait time for a hip joint replacement has declined to 13 weeks from 19 weeks over the last 10 years, while a knee joint replacement has gone from 25 weeks to 18 weeks over the same time period.

None of this is to suggest the health-care system does not need constant up-keeping and reform (crowded emergency rooms, for example, seem to be a chronic problem, and we could always use more nurses). But it is encouraging that blind yearly spending hikes are being replaced by newer, innovative ways of spending that are both efficient and lead to healthier outcomes for the users of the system.

Not being able to count on big increases in funding every year has brought some much-needed discipline to the system, and employing some different models has also helped.

One of the most significant changes that is paying off is the government’s relationship with doctors.

In the past, physicians were viewed as costly, self-interested cogs in the system.

Now, however, they are viewed as equal partners who have real responsibilities when it comes to running the health-care system.

For example, several joint committees have been established with the Doctors of B.C. (formerly called the B.C. Medical Association) where doctors and the government shape policies that are aimed at improving patient health, rather than protecting the financial interest of either party.

One committee is for general practitioner services (overseeing improvements to the primary care system), another is for specialist services (aimed at improving access for specialist care) and a third is for shared care (focused on better integration of all levels of care).

As well, something called the Divisions of Family Practice has been created. It links family doctor practices and is designed to improve common healthcare goals in a particular region (improved maternity coverage, for example).

Committees such as these were unheard of a decade ago. They appear to be improving patient care by focusing on smart, evidence-based decisions rather than on simply demanding more money, either for doctors’ pay packets or a health authority’s budget.

The Canada Health Accord between the provinces and the federal government died last week. It means Ottawa will be cutting in half its annual transfer of money to pay for health care.

The fact the B.C. government hardly said a peep about the accord’s demise is evidence of how much the system has changed in the past few years.

http://www.thenownewspaper.com/opinion/baldrey-health-care-changes-seem-…

Evidence based health care. Why should that be controversial? Yet it is. It provokes accusations of “cook book medicine,” or “bureaucrats interfering with your health care.” Current efforts in British Columbia can provide us with a more rational perspective than is being provided by these negative memes.

Physicians from the B.C. medical association (Doctors of B.C.) and the government are cooperating on efforts to improve patient health in manners other than by simply increasing spending (though that should not be neglected when there is an obvious imperative). Such efforts to spend better rather than simply spending more will be particularly important now that the federal government is being run by individuals who promised to protect Canada’s medicare but instead cut federal spending on the program in half.

Although single payer systems are often criticized for being bogged down by government inflexibility and laggardly progress, the activities in B.C. demonstrate that such processes need not be an inevitability. In fact, B.C. is showing us that their single payer system does have the flexibility to make needed improvements.

In the United States we are currently using models, such as accountable care organizations, supposedly to achieve higher quality at a lower cost. Unfortunately, the model seems to have been misdirected away from efforts to improve health care based on evidence to efforts granting nominal awards based on penny pinching and a few negligible teach-to-the-test measures. Under our fragmented, multipayer system it is difficult achieve widespread adaptation of systemic improvements, simply because it is our unique, dysfunctional financing system that is so inflexible.

This is not to belittle the efforts of AHRQ toward expanding the use of evidence based medicine. Rather it is to make the point that government efforts such as those of AHRQ can be more effective if we get the dysfunctional financing system out of the way, especially the intrusive private insurers, and allow AHRQ and other public entities to cooperate more effectively with the people actually delivering health care.

Does Winning a Pay-for-Performance Bonus Improve Subsequent Quality Performance? Evidence from the Hospital Quality Incentive Demonstration

By Andrew Ryan, Matthew Sutton and Tim Doran
HSR, April 2014

To test whether receiving a financial bonus for quality in the Premier Hospital Quality Incentive Demonstration (HQID) stimulated subsequent quality improvement.

Under the HQID, hospitals received a 1 percent bonus on Medicare payments for scoring between the 80th and 90th percentiles on a composite quality measure, and a 2 percent bonus for scoring at the 90th percentile or above.

We found little evidence that hospitals’ receipt of quality bonuses was associated with subsequent improvement in performance. This raises questions about whether winning in pay-for-performance programs, such as Hospital Value-Based Purchasing, will lead to subsequent quality improvement.

http://www.hsr.org/hsr/abstract.jsp?aid=49319522092

Comment:

By Don McCanne, MD

Quality derives from dedicated professionals, working within a well-designed health care infrastructure, striving to obtain the best health care for their patients.

Politicians and the policy community seem to miss this point as they continue to look for administrative gimmicks that are essentially managed care innovations. What we don’t need in the United States is more administrative excess. Pay-for-performance (P4P) continues to fail as an incentive for true quality improvement, even if some studies have shown almost worthless teach-to-the-test increases in scores.

If we really want quality, we need to work on our health care infrastructure, beginning with implementing a financing system that drives quality – a single payer national health program.

Does Winning a Pay-for-Performance Bonus Improve Subsequent Quality Performance? Evidence from the Hospital Quality Incentive Demonstration

By Andrew Ryan, Matthew Sutton and Tim Doran
HSR, April 2014

To test whether receiving a financial bonus for quality in the Premier Hospital Quality Incentive Demonstration (HQID) stimulated subsequent quality improvement.

Under the HQID, hospitals received a 1 percent bonus on Medicare payments for scoring between the 80th and 90th percentiles on a composite quality measure, and a 2 percent bonus for scoring at the 90th percentile or above.

We found little evidence that hospitals’ receipt of quality bonuses was associated with subsequent improvement in performance. This raises questions about whether winning in pay-for-performance programs, such as Hospital Value-Based Purchasing, will lead to subsequent quality improvement.

http://www.hsr.org/hsr/abstract.jsp?aid=49319522092

Quality derives from dedicated professionals, working within a well-designed health care infrastructure, striving to obtain the best health care for their patients.

Politicians and the policy community seem to miss this point as they continue to look for administrative gimmicks that are essentially managed care innovations. What we don’t need in the United States is more administrative excess. Pay-for-performance (P4P) continues to fail as an incentive for true quality improvement, even if some studies have shown almost worthless teach-to-the-test increases in scores.

If we really want quality, we need to work on our health care infrastructure, beginning with implementing a financing system that drives quality – a single payer national health program.

Why We’re in a New Gilded Age

By Paul Krugman
The New York Review of Books, May 8, 2014

Review of “Capital in the Twenty-First Century”

By Thomas Piketty, translated from the French by Arthur Goldhammer
Belknap Press/Harvard University Press, 685 pp., $39.95

Thomas Piketty, professor at the Paris School of Economics, isn’t a household name, although that may change with the English-language publication of his magnificent, sweeping meditation on inequality, Capital in the Twenty-First Century. Yet his influence runs deep. It has become a commonplace to say that we are living in a second Gilded Age — or, as Piketty likes to put it, a second Belle Époque — defined by the incredible rise of the “one percent.” But it has only become a commonplace thanks to Piketty’s work.

The big idea of Capital in the Twenty-First Century is that we haven’t just gone back to nineteenth-century levels of income inequality, we’re also on a path back to “patrimonial capitalism,” in which the commanding heights of the economy are controlled not by talented individuals but by family dynasties.

This is a book that will change both the way we think about society and the way we do economics.

Capital in the Twenty-First Century is, as I hope I’ve made clear, an awesome work. At a time when the concentration of wealth and income in the hands of a few has resurfaced as a central political issue, Piketty doesn’t just offer invaluable documentation of what is happening, with unmatched historical depth. He also offers what amounts to a unified field theory of inequality, one that integrates economic growth, the distribution of income between capital and labor, and the distribution of wealth and income among individuals into a single frame.

The current generation of the very rich in America may consist largely of executives rather than rentiers, people who live off accumulated capital, but these executives have heirs. And America two decades from now could be a rentier-dominated society even more unequal than Belle Époque Europe.

But this doesn’t have to happen.

At times, Piketty almost seems to offer a deterministic view of history, in which everything flows from the rates of population growth and technological progress. In reality, however, Capital in the Twenty-First Century makes it clear that public policy can make an enormous difference, that even if the underlying economic conditions point toward extreme inequality, what Piketty calls “a drift toward oligarchy” can be halted and even reversed if the body politic so chooses.

The key point is that when we make the crucial comparison between the rate of return on wealth and the rate of economic growth, what matters is the after-tax return on wealth. So progressive taxation — in particular taxation of wealth and inheritance — can be a powerful force limiting inequality. Indeed, Piketty concludes his masterwork with a plea for just such a form of taxation. Unfortunately, the history covered in his own book does not encourage optimism.

Piketty ends Capital in the Twenty-First Century with a call to arms — a call, in particular, for wealth taxes, global if possible, to restrain the growing power of inherited wealth. It’s easy to be cynical about the prospects for anything of the kind. But surely Piketty’s masterly diagnosis of where we are and where we’re heading makes such a thing considerably more likely. So Capital in the Twenty-First Century is an extremely important book on all fronts. Piketty has transformed our economic discourse; we’ll never talk about wealth and inequality the same way we used to.

http://www.nybooks.com/articles/archives/2014/may/08/thomas-piketty-new-gilded-age/

****

Comment:

By Don McCanne, MD

Hopefully the excerpts above from Paul Krugman’s review of Thomas Piketty’s “Capital in the Twenty-First Century” will entice you to read Krugman’s full review, and then that will entice you to read Piketty’s full book. If you do so, you’ll understand why Krugman says, “we’ll never talk about wealth and inequality the same way we used to.”

Although a book on capital would seem to be off the topic of health care, Piketty provides us with the background to understand why we can’t seem to get health care financing right here in the United States, though he doesn’t discuss it specifically.

We do use progressive tax policies to partially fund health care through general revenues, but we also burden wage earners with the cost of health plans partially financed through regressive tax expenditures – the tax deductibility of employer-sponsored plans paid by employees through forgone wage increases.

Whereas median household income in the United States is now about $50,000, the cost of health care for the typical family of four is now about $22,000 (Milliman Medical Index). These numbers no longer compute, but they tend to be lost in the fragmented, dysfunctional way in which we finance health care. They cry out for reform.

There are two general approaches – on spending and on revenues – that seem to be imperative. One would be to reduce the wasteful spending in health care that occurs from our profound administrative excesses, our high prices, and the maldistribution of our resources due to a lack of adequate public oversight. A single payer system would redirect our resources to much better use.

The other approach that we need – as the disconnect between income and health costs demonstrates – would be to fund the single payer system through much better defined progressive taxes. Piketty’s treatise shows us that we really don’t have any other alternative. And since we already spend such a large portion of our GDP on health care, a progressively financed single payer system would provide a significant step in the visionary direction that Piketty has laid out for us.