Is the Physician Shortage Real?

Last week, the Association of American Medical Colleges released its 6th annual forecast of physician supply and demand. The report concludes that the U.S. could face a shortage of 37,800 to 124,000 physicians by 2034, lower than its 2020 estimate of a shortage between 54,100 to 139,000 by 2033. The report, “The Complexities of Physician Supply and Demand: Projections From 2019 to 2034,” is widely recognized as the industry’s most authoritative forecast of caregiver supply and demand.

The study, conducted for AAMC by IHS Markit, is based on clinical workforce data in 2019 prior to the pandemic. Its highlights include:

Key Assumptions

• The U.S. population will grow by 10.6% from about 328 million to 363 million, by 2034, with the population of Americans ages 65 and older increasing by 42.4% “primarily due to the 74.0% growth in size of the population age 75 and older…and the population under age 18 is projected to grow by 5.6%, which portends low growth in demand for pediatric specialties.”

• More than 2 of 5 active physicians will be older than 65 in the next decade and consider retirement.

• The number of advanced practice registered nurses (290,000) and physician assistants (129,700) will double in the next 15 years: 69% currently provide primary care.

• The supply of physicians will increase: physicians completing graduate medical education this year are 29,627 vs. 28,980 last year plus 200 additional residency slots/year are authorized from 2023 to 2027 via the Consolidation Appropriations Act of 2021. In addition, due to the “Fauci effect”, interest in medicine is expected to be strong as applications have spiked during the pandemic.

• Hospital utilization: “We modeled a gradual 5% reduction in hospital inpatient utilization… 18% decline in emergency room visits and corresponding reduction in demand for Primary-Care-Trained Hospitalists. We assumed that reduced hospital demand for other physicians (e.g., in Medical and Surgery Specialties) would be offset by increased demand for these physician services in ambulatory or outpatient settings.”

Top Line Results

• Primary care shortage: 17,800 to 48,000 by 2034, down from AAMC’s 2020 estimate of 21,400 to 55,200.

• Nonprimary care specialty physicians:21,000 to 77,100 by 2034 (including15,800 to 30,200 for surgical specialties, 3,800 to 13,400 for medical specialties) down from the 2020 estimate of 33,700 to 86,700.

• More than three quarters of the health professional shortage areas are in rural areas.

• Current physician supply (808,400): “Under current patterns of health care service use, the non-Hispanic White population uses about 287 FTE physicians per 100,000 population. The corresponding FTEs used per 100,000 population are 179 for the Hispanic population, 232 for the non-Hispanic Black population, and 204 for all other minority populations.”

Future Direction

• “The physician workforce lacks sufficient diversity and inclusion (i.e., it lacks diversity overall and in positions of leadership and influence). The AAMC has identified addressing this lack as a core strategic priority.”

• The report cautions that “supply and demand scenarios used to calculate the shortage ranges reflect the uncertainty, complexity, and evolving nature of the environment within which physicians practice.” That’s an understatement.

MY TAKE

This AAMC report is helpful but inconclusive. A forecast based on pre-pandemic calculus is fundamentally flawed. The usefulness of telehealth, lasting impact of the Covid-19 on the public’s mental health and harmful economic outcome for small businesses and low-income households is hard to model. In addition, the AAMC report but falls short in considering the 3 factors that will inevitably alter demand for physicians and other providers of health services:

Clinical Innovations that Change how Care is Delivered and By Whom

Science is advancing ways of diagnosing health problems and treating them, including non-allopathic methods of treatment (i.e. whole person care) that reduce interventions dependent on MDs/DOs. In the first quarter, 2021, 48 new molecular entities were approved by the FDA prompting changes in care management. A new JAMA study published last week concluded annual check-ups in primary care offered negligible therapeutic benefit in terms of mortality rates. An Annnals of Surgery study showed over-the-counter remedies for post-surgical pain management as effective as opioids, And last week’s controversial approval of Biogen’s Alzheimer’s drug (Aduhelm) is certain to prompt clinicians to take a fresh look at how it MIGHT be incorporated in their practices once the dust settles around its safety. Clinical innovation is a constant in healthcare. It is driving care away from hospitals and medical offices to the home and in virtual facilities and widening the range of caregiving roles beyond physicians, APRNs and PAs on which the AAMC report is based.

Technologies that Enable Self-Care

Self-care is underestimated in the U.S. healthcare community. Biometric devices/self-diagnostic tests (Apple Watch, et al), provider shopping tools (Healthcare Blue Book, MD Save et al) and the accessibility to one’s medical record (Open Notes, et al) enable growing numbers of individuals to make health decisions on their own. Consumers trust pharmacists to provide many primary care services, over the counter remedies and nutritional supplements to strengthen/maintain their health and social media sources to provide their therapeutic guidance. Technology-enabled self-care is a game changer: it’s the business rationale for big investments in Clover Home Care, Humana CenterWell. CVS Health Hub, Amazon Care others. And technology-enhanced self-care is central to private equity backed ventures like One Med, Privia and others that enable physicians to be more effective in coaching patient self-care and less frustrated by administrative hassles. And technology that enables remote monitoring and virtual care empower consumers and providers to connect effectively and bridge gaps in distance, ethnicity and patient preferences. AAMC report’s assumptions about the “Evolving Care Delivery System” underestimate the impact of technologies like telehealth, artificial intelligence and self-monitoring devices in equipping individuals to manage their own health and in enabling greater productivity by their coaches and caregivers.

Incentives

CMS Center for Medicare and Medicaid Innovation (CMI) Director Liz Fowler told an audience last week that the Direct Contracting and Primary Care models are priorities among Medicare’s 55 alternative payment models: that means capitated payments and primary-care gatekeeping are likely to play a larger role going forward. Replacing fee-for-service incentives with value-based programs will reduce demand for specialists and hospital services and increase demand for a broader range of primary-care services providers including physicians, nurse educators, dentists, nutritionists, mental health counselors and pharmacists who work in team-based population health models. The AAMC report does not consider incentive changes a major factor in the physician workforce of the future.

The AAMC report is good reading, but it presents an incomplete view of the adequacy of the physician workforce and an embarrassing inconsistency in access to caregivers for white vs. non-white persons of color. No doubt, the profession’s penchant for income security and clinical autonomy will continue to be sticking points and the gradual shift from specialist-dominated economics to health and well-being will compound intramural tensions, but ultimately market forces outside the profession will ultimately define the numbers and types of caregivers needed in our system. That’s why I think the reality of a physician shortage is likely overstated in the AAMC study.

Paul

P.S. Last Monday, UnitedHealthcare announced a new policy to reduce unnecessary use of hospital emergency rooms in 34 states: effective July 1, UHG said it would analyze ED claims and reduce/forego reimbursement to the hospital if they deem a claim to be non-emergent. Potentially, a hospital might choose to bill the patient if UHG withheld its hospital payment. Last Tuesday, American Hospital Association President CEO Richard Pollack sent a strongly worded letter to UHG asking the policy be set aside since it posed significant harm to patients. On Thursday, UnitedHealthcare said “based on feedback from our provider partners and discussions with medical societies, we have decided to delay the implementation of our emergency department policy until at least the end of the national public health emergency period.” The same day, the Federation of American Hospitals President and American Hospital Association called for the delay to be permanent.

Last week was a good week for AHA and hospitals: the Provider Relief Fund reporting deadline was pushed back by HHS and UHG stepped back from its emergency room review gambit. But the acute sector faces its share of challenges in coming weeks: the issues of price transparency, hospital consolidation and overall costs remain a focus of regulators, and many face growing tension with their employed physicians and health insurers seeking lower rates.

RESOURCES

IHS Markit Ltd. “The Complexities of Physician Supply and Demand: Projections From 2019 to 2034”; June 2021; Association of American Medical Colleges

Liss et al “General Health Checks in Adult Primary Care: A Review”; June 8, 2021; JAMA Network

Shrank et al “Waste in the US Health Care System Estimated Costs and Potential for Savings”; October 7, 2019; JAMA Network

“Many Surgery Patients get Opioid Prescriptions but Many don’t Need, Study Suggests”; June 11, 2021; UofMHealth

Rebecca Fifer “One Medical and Iora serve radically different populations. Here’s why the $2.1B tie-up might make sense.” June 9, 2021; HealthcareDive

CORONAVIRUS NEWS

Current stats as of Sunday, June 13, 2021: CDC, WHO

• Confirmed cases: worldwide 175.7 million (+719K in last week); U.S. 33.6 million.

• Confirmed deaths: worldwide: U.S.3.8 million; U.S. 604,852.

• Vaccination doses administered: 2.328 billion; U.S. 306,.5 million.

• US Hospitalization rates compared to whites: American Indian 3.5x, Hispanic/Latino 3.0x, Black 2.8x.

• US Vaccination rates: American Indian (1%), Asian (6%), Black (9%), Hispanic/Latino (13%), White (63%)

Relief Funds Deadline Extended

HHS announced Friday four separate deadlines when providers will have to spend or return unused Provider Relief Fund grants to the federal government, depending on when those payments were originally received, extending its earlier deadline of June 30 after significant pushback from providers. The final deadline is for funds received through the end of 2021. Of the original $175 billion authorized by Congress, $24 billion remains undistributed including $8.5 billion earmarked for rural providers. Providers now have 90 days after the deadlines to meet the reporting requirements, instead of the original 30 days. The reporting portal is set to open July 1.

“HHS Issues Revised Notice of Reporting Requirements and Reporting Timeline for Recipients of Provider Relief Fund Payments”; June 11, 2021; HHS

Vaccine Hesitancy: Financial Incentives have Limited Impact, 70% Vaccination Target Unlikely

Background: Vaccination rates in many southern states are below 40%, while Northeast states are nearing 60% and 70%. At least 13 states have created incentive programs to encourage vaccinations. Over 90 million more people need to be vaccinated for the country to reach potential herd immunity and reaching the 70% level targeted by the Biden administration by July 4 appears problematic.

Polling: Non-voting anti-vaxxers make up about 7% of the total population and 40% of vaccine-reluctant Americans. You Gov-Economist polling about vaccine hesitancy highlights:

• 17% of respondents said they do not plan to get vaccinated. Most in this group are Republicans: 81% of these say an encouragement from the former president to get the shot would not convince them to do so.

• Among respondents who are unvaccinated and plan to remain so, 9% said that being entered into a $1m lottery like Ohio’s would change their mind. The offer was no more likely to change poor people’s minds than those of the rich. Receiving a guaranteed $100, rather than a lottery ticket, raised this proportion to a still disappointing 13%.

• A $100 reward would convince 21% of those who are hesitant voters vs. 6% of anti-vaxxers who cast a ballot. For the lottery ticket, these shares were 15% and 3% respectively.

Government funding: Last Wednesday, Medicare announced increased funding for vaccinating homebound beneficiaries. Medicare previously paid $40 per at-home vaccination, CMS will now pay $75 per dose. About 1.6 million adults aged 65 and older reported difficulty accessing the vaccine due to an inability to leave home, according to the Assistant Secretary of Planning and Evaluation. Data showed Hispanic adults are disproportionately affected, with nearly five times more seniors homebound than their white counterparts.

“Incentives may have little impact on American anti-vaxxers”; June 9, 2021; The Economist

Matti Gellman “Medicare, Blue Cross push incentives to spur vaccination rates”; June 9, 2021; Modern Healthcare

Avalere Analysis: Teens and Adults Missed 26 million Routine Vaccinations during Pandemic

A report commissioned by GlaxoSmithKline and conducted by Avalere Health released last Wednesday found teens and adults may have missed millions of routine vaccinations recommended by the Centers for Disease Control and Prevention in 2020.The study, analyzed vaccine claims from January through November 2020 and compared them to the same timeframe in 2019. Highlights:

• Teens and adults may have missed more than 26 million doses of recommended vaccines in 2020, which includes 8.8 million missed adolescent vaccines and 17.2million missed adult vaccine doses.

• Vaccine claims were up to 35% lower for teens in 2020 compared to 2019 and claims for adults were up to 40% lower.

• Flu vaccination claims from August to September 2020 exceeded the same months in 2019. However, the surges leveled off by October, leaving total claims from September to November 2020 up to 35% lower compared to 2019.

“Updated Analysis Finds Sustained Drop in Routine Vaccines Through 2020”; June 9, 2021; Avalere

INDUSTRY NEWS

JAMA study: Widening Disparity in Death Rates between Rural and Urban America that Goes Beyond Racial Lines during Pandemic

Brigham and Women’s researchers compared mortality rates for rural and urban populations. Highlights:

• While mortality rates overall among both urban and rural residents declined over the past 20 years (1919 vs. 2019), the decline was much slower among rural Americans, which fell by 9% compared to 23% among urban residents. In contrast, the gap between mortality rates in Black and white Americans has been narrowing over the past two decades.

• The smallest reductions in mortality rates were found among white men, which fell from 900 deaths for every 100,000 in 1999 to 833 deaths in 2019. The slow decline was driven in part by increases in mortality among white rural residents between the ages of 25 and 64.

Cross et al “Rural-Urban Disparity in Mortality in the US From 1999 to 2019”; June 8, 2021; JAMA Network

Study: MA Enrollment Among Non-Whites, Duals Increasing Disproportionately

Per a new study, Medicare Advantage enrollment among African Americans, dual-eligibles and those residing in the most disadvantaged areas outpaced growth of white and non-dual eligibles from 2009 through 2018. Assuming the enrollment trend continues, the study predicted that the majority of African American, Hispanic, and dual enrollees will be in a Medicare Advantage plan, as opposed to Medicare fee-for-service, over the next five years. Highlights:

• Enrollment in Medicare Advantage plans grew by 12% from 2009 through 2018 including a 101% increase among dual eligibles and 66% among blacks vs. 46% increase among white beneficiaries and 43% among non-dual eligible beneficiaries.

• Applying the Social Deprivation Index, enrollees from deprived communities were more likely to enroll in MA plans than those from deprived communities. The availability of zero-premium plans correlates directly to this trend: many of these have lower quality scores and limits on dual eligible coverage.” About 45% of those enrolled in Special Needs plans in 2018 were Hispanic and 55% were dual enrollees. White beneficiaries, who historically have better access to coverage, only used 10% of these plans. But almost 70% of White beneficiaries were in plans rated four or five stars. That’s 15% more than any other demographic besides those residing in the best resourced areas on the Social Deprivation Index. Their enrollment was close to 74%.”

Meyers et al “Growth In Medicare Advantage Greatest Among Black And Hispanic Enrollees”; June 2021; Health Affairs

PWC Forecast: Costs Forecast to Increase 6.5%

Per PriceWaterhouseCooper’s Health Research Institute’s latest poll released last Wednesday:

• Healthcare costs are projected to increase 6.5% in 2022 as sicker patients seek care after putting it off during the COVID-19 pandemic vs. 5.5%-6% annual cost increases from 2017-2020.

• About 30% of commercially insured Americans surveyed in the spring by HRI said that the pandemic made them anxious or depressed. Meanwhile, 91% of primary-care physicians said more of their patients felt isolated or lonely.

• About half of the commercially insured Americans said they skipped their annual preventative exam during the first six months of the pandemic. Nearly a third skipped routine care for chronic illnesses and lab tests or screenings.

• The share of telehealth-seeking consumers surveyed in September by HRI doubled compared to pre-pandemic levels. Meanwhile, retail clinic use increased by 40% and urgent care visits rose by 18%. While there were some issues with care coordination, most said they would use those sites of care again.

• Some emergency department visits may never return to pre-pandemic levels, which would also slow cost growth. A 10% decrease in lower-acuity ED visits could save U.S. employers and patients nearly $1 billion a year, PwC estimated.

PWC Health Research Institute June 9, 2021

REGULATORY / POLICY NEWS

Drug Manufacturers Contributed to Majority of Congress

More than two-thirds of Congress (72 Senators, 302 House) cashed a pharma campaign check in 2020 per a new STAT analysis. Another new STAT analysis finds pharma funded more than 2,400 state lawmaker campaigns in 2020. STAT’s findings provide an unprecedented look at drug industry influence in state capitols across the 2020 election cycle. Other highlights in the report:

• Drugmakers spent $14 million in 2020 on Campaigns.

• Contributions were almost evenly split between major political parties: $7.1 million went to 214 Republicans, and $6.6 million went to 189 Democrats.

• Pfizer appears to be the most active: In addition to giving roughly $1 million to members of Congress, the company also wrote checks to 1,048 individual candidates in state legislative races.

“Prescription Politics: More than two-thirds of Congress cashed a pharma campaign check in 2020, new STAT analysis shows”; June 9, 2021; STAT

FDA Approves Drug though Advisory Committee Opposed

Since the Food and Drug Administration’s authorization of the Alzheimer’s therapy Aduhelm last Monday, three members of the agency’s advisory committee that recommended against the drug’s approval have resigned. In November, the advisory committee questioned the efficacy of aducanumab: 10 of the 11 panelists found that there was not enough evidence to show it could slow cognitive decline. The 11th voted “uncertain.” Biogen expects to charge $56,000 per dose. After the FDA announcement, Biogen announced its partnership with both CVS Health and Cigna to streamline the process of getting patients access to the drug while monitoring the effectiveness against several patient outcome metrics.

In a letter to acting FDA Commissioner Janet Woodcock on Thursday, Aaron Kesselheim, who had served on the FDA’s advisory committee for nervous system therapies since 2015, wrote that the approval of the drug, called Aduhelm, “was probably the worst drug approval decision in recent U.S. history.”

“Member of FDA’s expert panel resigns over controversial Alzheimer’s therapy approval”; June 9, 2021; STAT