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CHAPTER 5-无代写
时间：2024-09-28
CHAPTER 5
THE PHYSICIAN LABOR MARKET
Econ3004/ Econ6039 Health Economics, 2023 Semester 2
Dr Yijuan Chen, Australian National University
Bhattacharya, Hyde and Tu – Health Economics
Outline
The training of physicians
Medical school & residency
Returns to medical training
Work hours
Barriers to entry
Physician agency
Physician-induced demand
Defensive medicine
The training of physicians
Bhattacharya, Hyde and Tu – Health Economics
Medical school
Entry into med school is competitive and
selective worldwide
In the US, average 50% of applicants are accepted into
at least one school. UC San Diego, for example,
received 6767 applications in 2011 for 149 slots.
In 2004, there were over twice as many applicants as
spaces at the UK medical schools.
Medical school can be super-expensive
US: $140k -- $225k for four years
European medical training often is heavily
subsidized
Bhattacharya, Hyde and Tu – Health Economics
Medical school
Length of medical school varies across country
US & Canada applicants must first get a bachelor’s degree
Applicants need to have completed a pre-medical curriculum
of biology, physics, chemistry, mathematics, and English.
The Doctor of Medicine (MD) program usually last 4 years.
European applicants go directly from high school
The medical program lasts 5 years in the UK, and 6-7 years in
France
Australian medical schools offer both Bachelor and Doctoral
degrees
Bachelor of Medicine and Bachelor of Surgery (MBBS), usual
duration 6 years
Doctor of Medicine (MD), usual duration 4 years
Bhattacharya, Hyde and Tu – Health Economics
Medical school
There are about 20 medical schools in Australia
Medical School Affiliation Established
in
Website
Melbourne
Medical School
University of
Melbourne
1862 http://medicine.unimelb
.edu.au
Sydney Medical
School
University of
Sydney
1883 http://sydney.edu.au/m
edicine
University of
Adelaide Medical
School
University of
Adelaide
1885 http://health.adelaide.e
du.au/medicine/
UQ School of
Medicine
University of
Queensland
1936 https://medicine.uq.edu
.au/
ANU Medical
School
ANU 2004 http://medicalschool.an
u.edu.au
Bhattacharya, Hyde and Tu – Health Economics
Residency
In many countries, in addition to classroom work,
physicians-in-training must also gain hospital
experience
Residency is a period of on-the-job training following
medical school, of which the duration is usually 3+ years.
The first year of residency is often called internship, after
which doctors-to-be can apply for their license to
practice medicine.
After the residency, some doctors will further continue
their training in sub-specialties, which may take another
2-3 years, or even 5 years (e.g. cardiac surgery).
Bhattacharya, Hyde and Tu – Health Economics
Residency
Bhattacharya, Hyde and Tu – Health Economics
Residency
New residents lack experience, and when new
residents arrive at a hospital, empirical evidence
shows that medical errors go up
“July effect” in the US
“August killing season” in the UK
Bhattacharya, Hyde and Tu – Health Economics
Physician work-hours
Work hours
Over 60 hours a week
On call residents could work up to 30 consecutive hours
In 2003, implementation to limit number of hours/week for
US residents
No more than 80 hours a week
No more than 24 consecutive hours
Empirical evidence suggests no change in patient mortality.
But there may be changes on non-fatal outcomes which
have not been studied.
Bhattacharya, Hyde and Tu – Health Economics
Work-hour tradeoffs
Longer work-hours
Pros:
more learning and accumulation of experience;
an in-patient may remain with the same doctor during her entire stay, and
thus receive more complete care
Cons: Fatigue may impair physicians’ cognitive abilities and in turn
may affect patient health
Shorter work-hours
Requires more hand-offs by physicians and thus greater chance for
error
Bhattacharya, Hyde and Tu – Health Economics
Shorter hours leads to fewer errors
Landrigan (2004) conducted randomized experiment
at Brigham and Woman’s ICU at Harvard
2 groups of interns: traditional hours (80 hours/week) &
short work week (60 hours/week)
Traditional hour group
Committed 36% more serious medical errors
21% more medication errors
5.6 times more diagnostic errors
Patient outcomes do not differ significantly
Senior physicians intercepted most serious errors
Bhattacharya, Hyde and Tu – Health Economics
Shorter hours leads to fewer errors
However, one may argue that the less chance to make
mistakes also means the less chance to learn.
A zero-work-hour intern will make zero error!
Thus one can conjecture that reducing residents’ work-
hours may reduce errors by residents at the expense of
increasing errors by recent graduates of residency
programs.
Returns to medical training
Bhattacharya, Hyde and Tu – Health Economics
Returns to medical training
Unlike most occupations,
returns to medical
training are very back-
loaded
Medical school & residency
expensive in direct costs
and opportunity costs
So those who choose
being physician are
patient enough to value
future returns
Bhattacharya, Hyde and Tu – Health Economics
Net present value
Net present value is a way of calculating value of all
future streams of income (from today’s perspective)
Discount factor δ is a measure of how much less an
individual values future income over present income
δ lies between 0 and 1; small if impatient and large if
patient
Those with high δ have high NPV from being a physician
Those with low δ have low NPV (and maybe even
negative NPV)
Bhattacharya, Hyde and Tu – Health Economics
Discount factor
Another way of expressing discount factor is:
Where r is the discount rate, analogous to the
market interest rate that would make a person with
discount factor δ indifferent between saving for
tomorrow and spending today
Ex: δ = 0.90 corresponds with r = 0.11
High patience means a high discount factors δ
and a low discount rate r
δ = 1/(1+r)
Bhattacharya, Hyde and Tu – Health Economics
Internal rate of return (IRR)
Consider two possible career choices P and S with incomes
paths Ip and Is
Internal rate of return r* is the discount rate which
equalizes the NPV of both careers (or the difference
between NPV(p) – NPV(s) = 0 )
Someone with IRR of r* values career P and career S
exactly equally
Bhattacharya, Hyde and Tu – Health Economics
Internal rate of return (IRR)
Bhattacharya, Hyde and Tu – Health Economics
Internal rate of return
IRR in medicine is typically between 11% and 14%!
Significantly higher than market interest rate
This is true for dentists and lawyers too
IRR may be even higher for medical specialists like
neurosurgeons and immunologists
Bhattacharya, Hyde and Tu – Health Economics
Internal rate of return
Bhattacharya, Hyde and Tu – Health Economics
Internal rate of return
The fact that the IRR has stayed high is curious
It suggests that being a physician is highly lucrative
Bhattacharya, Hyde and Tu – Health Economics
Internal rate of return
Bhattacharya, Hyde and Tu – Health Economics
Internal rate of return
The fact that the IRR has stayed high is curious
Why hasn’t the high income attracted more physicians,
which would have pushed the IRR back down to market
levels?
Bhattacharya, Hyde and Tu – Health Economics
Barriers to entry
Barriers to entry may explain the high IRR
In 19th century, becoming a doctor was simple
Anyone could do it, no regulation about training
American Medical Association (1847)
Pre-req’s for medical school
4 years medical school
Require doctors to have a license to practice
1910 Flexner Report helped shut down low-quality med schools
Caps on medical school class size
Caps on residency program enrollment
Result: fewer medical schools and fewer medical students
Bhattacharya, Hyde and Tu – Health Economics
Tradeoffs from barriers to entry
Because of barriers to entry, consumers have to pay
above the competitive price
Physicians therefore earn monopoly rents
Def. wages above the competitive price due to artificial
constraint of the market
On the other hand, barriers to entry ensures that
physicians are qualified
The monopoly rents the patients pay for good health
care may outweigh the patients’ cost to search for good
health care in a more competitive market
Physician agents
Bhattacharya, Hyde and Tu – Health Economics
Physicians as agents
Patients trust physicians to act as perfect agents
for their health
Doctors’ foremost concern should be patients’ well-
being
Not their own financial status or reputation
Are doctors always perfect agents for their
patients?
Bhattacharya, Hyde and Tu – Health Economics
Physician-induced demand (PID)
Information asymmetry between doctor and
patient
Patients cannot assess whether an extra test or
procedure ordered by doctor is necessary
Doctors may have the financial incentive to
prescribe more services than needed
Bhattacharya, Hyde and Tu – Health Economics
Physician-induced demand (PID)
Hickson et al. (1987) randomly assigned a group
of pediatric residents to be either paid by a fixed
salary or paid according to the amount of service
provided (fee-for-service)
The “fee-for-service” group scheduled more visits
per patient:
than the fixed-salary group.
than recommended by the American Academy of
Pediatrics
Bhattacharya, Hyde and Tu – Health Economics
Physician-induced demand (PID)
Empirical studies also find that
Thoracic surgeons compensated for a round of cuts to
Medicare fees in 1990 by performing more surgeries. ( Yip
1998)
Physicians who recently became owners of back and spine
clinics recommended more surgeries than before they opened
their own clinics. (Mitchell , 2008)
Physicians who owned their own MRI machines ordered more
MRI tests than those who had to refer patients to outside MRI
scans. (Baker 2010)
Bhattacharya, Hyde and Tu – Health Economics
Physician-induced demand (PID)
The existence of PID poses a challenge to insurers:
Setting high reimbursement could lead to doctors to over
prescribe certain procedures.
Setting low reimbursement could cause the doctors to
substitute the appropriate procedure by other, more
lucrative, procedures.
Bhattacharya, Hyde and Tu – Health Economics
Defensive medicine
Doctors fearful of lawsuit may overprescribe (and
overcharge) for only marginally-useful procedures
Between 1991 and 2005, 7.4% of all US physicians
covered by a large liability insurer faced at least one
medical malpractice lawsuit. The average payout on
successful claims was $274,887. (Jena, et al. 2011)
Mello et al. (2010) estimate that medical liability
system in the US costs $55.6 billion annually
Bhattacharya, Hyde and Tu – Health Economics
Defensive medicine
Studdert et al. (2005) show that, Among the high-risk
practitioners in Pennsylvania, USA
93% of surveyed doctors reported practicing defensive
medicine.
59% conducted more diagnostic tests than they thought
were medically necessary.
39% avoided caring for high-risk patients in order to
reduce their exposure to liability.
Bhattacharya, Hyde and Tu – Health Economics
Conclusion
Physician supply highly regulated
Leads to a shortage of doctors
Hard for other health care providers to fill the void
Investment returns to being a doctor and
specializing is very high
Physicians are not always perfect agents of care
Overutilization of care
Physician-induced demand and defensive medicine
THE PHYSICIAN LABOR MARKET
Econ3004/ Econ6039 Health Economics, 2023 Semester 2
Dr Yijuan Chen, Australian National University
Bhattacharya, Hyde and Tu – Health Economics
Outline
The training of physicians
Medical school & residency
Returns to medical training
Work hours
Barriers to entry
Physician agency
Physician-induced demand
Defensive medicine
The training of physicians
Bhattacharya, Hyde and Tu – Health Economics
Medical school
Entry into med school is competitive and
selective worldwide
In the US, average 50% of applicants are accepted into
at least one school. UC San Diego, for example,
received 6767 applications in 2011 for 149 slots.
In 2004, there were over twice as many applicants as
spaces at the UK medical schools.
Medical school can be super-expensive
US: $140k -- $225k for four years
European medical training often is heavily
subsidized
Bhattacharya, Hyde and Tu – Health Economics
Medical school
Length of medical school varies across country
US & Canada applicants must first get a bachelor’s degree
Applicants need to have completed a pre-medical curriculum
of biology, physics, chemistry, mathematics, and English.
The Doctor of Medicine (MD) program usually last 4 years.
European applicants go directly from high school
The medical program lasts 5 years in the UK, and 6-7 years in
France
Australian medical schools offer both Bachelor and Doctoral
degrees
Bachelor of Medicine and Bachelor of Surgery (MBBS), usual
duration 6 years
Doctor of Medicine (MD), usual duration 4 years
Bhattacharya, Hyde and Tu – Health Economics
Medical school
There are about 20 medical schools in Australia
Medical School Affiliation Established
in
Website
Melbourne
Medical School
University of
Melbourne
1862 http://medicine.unimelb
.edu.au
Sydney Medical
School
University of
Sydney
1883 http://sydney.edu.au/m
edicine
University of
Adelaide Medical
School
University of
Adelaide
1885 http://health.adelaide.e
du.au/medicine/
UQ School of
Medicine
University of
Queensland
1936 https://medicine.uq.edu
.au/
ANU Medical
School
ANU 2004 http://medicalschool.an
u.edu.au
Bhattacharya, Hyde and Tu – Health Economics
Residency
In many countries, in addition to classroom work,
physicians-in-training must also gain hospital
experience
Residency is a period of on-the-job training following
medical school, of which the duration is usually 3+ years.
The first year of residency is often called internship, after
which doctors-to-be can apply for their license to
practice medicine.
After the residency, some doctors will further continue
their training in sub-specialties, which may take another
2-3 years, or even 5 years (e.g. cardiac surgery).
Bhattacharya, Hyde and Tu – Health Economics
Residency
Bhattacharya, Hyde and Tu – Health Economics
Residency
New residents lack experience, and when new
residents arrive at a hospital, empirical evidence
shows that medical errors go up
“July effect” in the US
“August killing season” in the UK
Bhattacharya, Hyde and Tu – Health Economics
Physician work-hours
Work hours
Over 60 hours a week
On call residents could work up to 30 consecutive hours
In 2003, implementation to limit number of hours/week for
US residents
No more than 80 hours a week
No more than 24 consecutive hours
Empirical evidence suggests no change in patient mortality.
But there may be changes on non-fatal outcomes which
have not been studied.
Bhattacharya, Hyde and Tu – Health Economics
Work-hour tradeoffs
Longer work-hours
Pros:
more learning and accumulation of experience;
an in-patient may remain with the same doctor during her entire stay, and
thus receive more complete care
Cons: Fatigue may impair physicians’ cognitive abilities and in turn
may affect patient health
Shorter work-hours
Requires more hand-offs by physicians and thus greater chance for
error
Bhattacharya, Hyde and Tu – Health Economics
Shorter hours leads to fewer errors
Landrigan (2004) conducted randomized experiment
at Brigham and Woman’s ICU at Harvard
2 groups of interns: traditional hours (80 hours/week) &
short work week (60 hours/week)
Traditional hour group
Committed 36% more serious medical errors
21% more medication errors
5.6 times more diagnostic errors
Patient outcomes do not differ significantly
Senior physicians intercepted most serious errors
Bhattacharya, Hyde and Tu – Health Economics
Shorter hours leads to fewer errors
However, one may argue that the less chance to make
mistakes also means the less chance to learn.
A zero-work-hour intern will make zero error!
Thus one can conjecture that reducing residents’ work-
hours may reduce errors by residents at the expense of
increasing errors by recent graduates of residency
programs.
Returns to medical training
Bhattacharya, Hyde and Tu – Health Economics
Returns to medical training
Unlike most occupations,
returns to medical
training are very back-
loaded
Medical school & residency
expensive in direct costs
and opportunity costs
So those who choose
being physician are
patient enough to value
future returns
Bhattacharya, Hyde and Tu – Health Economics
Net present value
Net present value is a way of calculating value of all
future streams of income (from today’s perspective)
Discount factor δ is a measure of how much less an
individual values future income over present income
δ lies between 0 and 1; small if impatient and large if
patient
Those with high δ have high NPV from being a physician
Those with low δ have low NPV (and maybe even
negative NPV)
Bhattacharya, Hyde and Tu – Health Economics
Discount factor
Another way of expressing discount factor is:
Where r is the discount rate, analogous to the
market interest rate that would make a person with
discount factor δ indifferent between saving for
tomorrow and spending today
Ex: δ = 0.90 corresponds with r = 0.11
High patience means a high discount factors δ
and a low discount rate r
δ = 1/(1+r)
Bhattacharya, Hyde and Tu – Health Economics
Internal rate of return (IRR)
Consider two possible career choices P and S with incomes
paths Ip and Is
Internal rate of return r* is the discount rate which
equalizes the NPV of both careers (or the difference
between NPV(p) – NPV(s) = 0 )
Someone with IRR of r* values career P and career S
exactly equally
Bhattacharya, Hyde and Tu – Health Economics
Internal rate of return (IRR)
Bhattacharya, Hyde and Tu – Health Economics
Internal rate of return
IRR in medicine is typically between 11% and 14%!
Significantly higher than market interest rate
This is true for dentists and lawyers too
IRR may be even higher for medical specialists like
neurosurgeons and immunologists
Bhattacharya, Hyde and Tu – Health Economics
Internal rate of return
Bhattacharya, Hyde and Tu – Health Economics
Internal rate of return
The fact that the IRR has stayed high is curious
It suggests that being a physician is highly lucrative
Bhattacharya, Hyde and Tu – Health Economics
Internal rate of return
Bhattacharya, Hyde and Tu – Health Economics
Internal rate of return
The fact that the IRR has stayed high is curious
Why hasn’t the high income attracted more physicians,
which would have pushed the IRR back down to market
levels?
Bhattacharya, Hyde and Tu – Health Economics
Barriers to entry
Barriers to entry may explain the high IRR
In 19th century, becoming a doctor was simple
Anyone could do it, no regulation about training
American Medical Association (1847)
Pre-req’s for medical school
4 years medical school
Require doctors to have a license to practice
1910 Flexner Report helped shut down low-quality med schools
Caps on medical school class size
Caps on residency program enrollment
Result: fewer medical schools and fewer medical students
Bhattacharya, Hyde and Tu – Health Economics
Tradeoffs from barriers to entry
Because of barriers to entry, consumers have to pay
above the competitive price
Physicians therefore earn monopoly rents
Def. wages above the competitive price due to artificial
constraint of the market
On the other hand, barriers to entry ensures that
physicians are qualified
The monopoly rents the patients pay for good health
care may outweigh the patients’ cost to search for good
health care in a more competitive market
Physician agents
Bhattacharya, Hyde and Tu – Health Economics
Physicians as agents
Patients trust physicians to act as perfect agents
for their health
Doctors’ foremost concern should be patients’ well-
being
Not their own financial status or reputation
Are doctors always perfect agents for their
patients?
Bhattacharya, Hyde and Tu – Health Economics
Physician-induced demand (PID)
Information asymmetry between doctor and
patient
Patients cannot assess whether an extra test or
procedure ordered by doctor is necessary
Doctors may have the financial incentive to
prescribe more services than needed
Bhattacharya, Hyde and Tu – Health Economics
Physician-induced demand (PID)
Hickson et al. (1987) randomly assigned a group
of pediatric residents to be either paid by a fixed
salary or paid according to the amount of service
provided (fee-for-service)
The “fee-for-service” group scheduled more visits
per patient:
than the fixed-salary group.
than recommended by the American Academy of
Pediatrics
Bhattacharya, Hyde and Tu – Health Economics
Physician-induced demand (PID)
Empirical studies also find that
Thoracic surgeons compensated for a round of cuts to
Medicare fees in 1990 by performing more surgeries. ( Yip
1998)
Physicians who recently became owners of back and spine
clinics recommended more surgeries than before they opened
their own clinics. (Mitchell , 2008)
Physicians who owned their own MRI machines ordered more
MRI tests than those who had to refer patients to outside MRI
scans. (Baker 2010)
Bhattacharya, Hyde and Tu – Health Economics
Physician-induced demand (PID)
The existence of PID poses a challenge to insurers:
Setting high reimbursement could lead to doctors to over
prescribe certain procedures.
Setting low reimbursement could cause the doctors to
substitute the appropriate procedure by other, more
lucrative, procedures.
Bhattacharya, Hyde and Tu – Health Economics
Defensive medicine
Doctors fearful of lawsuit may overprescribe (and
overcharge) for only marginally-useful procedures
Between 1991 and 2005, 7.4% of all US physicians
covered by a large liability insurer faced at least one
medical malpractice lawsuit. The average payout on
successful claims was $274,887. (Jena, et al. 2011)
Mello et al. (2010) estimate that medical liability
system in the US costs $55.6 billion annually
Bhattacharya, Hyde and Tu – Health Economics
Defensive medicine
Studdert et al. (2005) show that, Among the high-risk
practitioners in Pennsylvania, USA
93% of surveyed doctors reported practicing defensive
medicine.
59% conducted more diagnostic tests than they thought
were medically necessary.
39% avoided caring for high-risk patients in order to
reduce their exposure to liability.
Bhattacharya, Hyde and Tu – Health Economics
Conclusion
Physician supply highly regulated
Leads to a shortage of doctors
Hard for other health care providers to fill the void
Investment returns to being a doctor and
specializing is very high
Physicians are not always perfect agents of care
Overutilization of care
Physician-induced demand and defensive medicine
