Fraser Forum

Private sector helping address physician scarcity in the U.S.

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Private sector helping address physician scarcity in the U.S.

While Canada has one of the most expensive universal health-care systems in the world, the number of physicians relative to the Canadian population ranks well below the average of other wealthy countries.

Moreover, the relatively long wait times for access to specialist physicians, and media reports of Canadians who are actively—but unsuccessfully—looking for a regular physician highlight the problem. Canada suffers from a scarcity of physicians and the scarcity will likely remain a serious issue for years to come.

One reason for the relatively short supply of physicians in Canada is the limited number of seats available in Canadian medical schools. The limits, set by provincial governments, restrict the number of graduates from domestic medical schools who can then proceed into residency and ultimately into medical practise. Interestingly, Canada’s low physician-to-population ratio is a direct result of the government’s response to a 1991 report that recommended (among other things) a 10 per cent reduction in medical school enrolment and provincially-funded post-graduate training positions along with less reliance on foreign-trained doctors.

While the early 2000s saw a reversal in this policy, it seems it was too little too late. Even generous forecasts suggest that, given current trends in medical school enrolments, the projected supply of Canadian-trained physicians will only result in a small increase in the physician-to-population ratio—rising from 2.74 physicians per thousand population in 2015 to 2.97 in 2030—far below even the current OECD average (3.4).

Clearly, provincial government bureaucracies are continuing to limit the supply of Canadian physicians, ostensibly to control spending on health care.

While some may suggest that the obvious response to this scarcity is for governments to further increase funding to increase medical school capacity in Canada, recent U.S. experience provides an interesting and contrasting alternative.

Like Canada, the United States also has a relatively low physician-to-population ratio compared to other developed countries. The growing scarcity of general practitioners is eliciting a response in the U.S., however, with the private sector taking action. For example, the recent announcement by Kaiser Permanente that it’s opening its first medical school in California.

Kaiser Permanente is a private California-based health system with its own hospitals, clinics, doctors and insurance plan. What will set Kaiser’s medical school apart from most traditional medical schools is that Kaiser will emphasize teaching students its own model of integrated care, whereby doctors work with other types of medical providers including pharmacists, psychologists and social workers. They will also be trained on data systems used in Kaiser Permanente hospitals and clinics.

While Kaiser’s initial intake of students will be smaller than traditional medical schools accept, Kaiser’s initiative might well bring competitive pressure on other large integrated private-sector health-care institutions in the U.S. to follow Kaiser’s lead. Interestingly, students accepted to Kaiser’s new medical school are under no obligation to join Kaiser’s system as practitioners once they graduate. Kaiser’s expectation is that many of the students will be attracted to Kaiser’s style of medical practise. As well, the unique training students receive in Kaiser’s practises and processes makes their training most valuable when used within Kaiser’s system.

While the American health-care system has some important shortcomings, what should be of interest to Canadians is this particular example of the flexibility and incentive of private-sector insurers to fund activities they think will deliver the greatest value to their customers. To fund its medical school, Kaiser is reallocating monies from other activities considered to be of lower priority. The flexibility and willingness to reallocate resources to better serve customers is a clear advantage of private-sector health insurers compared to government insurers.

Despite ongoing, and arguably unsuccessful, efforts by government bureaucracies in Canada to produce the “appropriate” number of physicians, Canadians continue to face challenges finding a family doctor while also experiencing long wait times for specialist treatments. The recent effort by Kaiser Permanente demonstrates how the private sector can step in to address patient needs—when they are allowed to do so.

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