Physician shortages and Medicare: A one-two punch for your clientsArticle added by Dan McGrath on May 24, 2013
Dan McGrath

Dan McGrath

Windham, NH

Joined: April 03, 2013

With the largest segment of our population knocking on Medicare’s door, the timing of this simply could not be worse. We expect to see an ever-increasing demand for physician services and a growing number of doctors who are no longer willing to see Medicare patients.

Recently, we have been hearing more and more about physicians retiring, shrinking their practices and even refusing to accept certain insurance coverage, including Medicare. If what we have been hearing is true, then we may be in for a wild ride. Even before the Affordable Care Act was passed, the health care industry was dealing with a larger issue that has been neglected by the media for some time: physician shortages.

According to the latest studies from the American Association of Medical Colleges (AAMC)1, the United States is going to face a shortage of more than 150,000 doctors over the next 15 years. At the same time, we are witnessing the largest segment of the U.S. population (the baby boomers) beginning their retirement. This is typically the phase where clients will be utilizing health care more frequently.

What is truly amazing is how this shortage came about. Back in 1994, the AAMC predicted2 that the United States would have a surplus of 165,000 doctors by the year 2000. As a result of their prediction, concerns regarding the physician surplus were so great that many medical colleges instituted enrollment freezes. From 1980 until 2005, enrollment in medical schools remained virtually unchanged, even though the country’s population increased by nearly a third. At the same time, the baby boomers were creeping closer and closer to retirement.

The shortage concern becomes even more of a factor once the realization hits home that out of the roughly 650,000 physicians currently practicing, nearly 40 percent of them are age 55 and older.3 This would not be so bad if it weren’t for the fact that it takes roughly 10 years to train a new physician4, and the number of new replacements is only equal to the number of doctors retiring.
Not only is there a real possibility for a shortage in the next 10 years, but there aren’t enough physicians being trained to maintain the demand, even at today’s standards. These current training figures for new physicians have caused other studies to raise their estimates of this shortfall to 200,000 doctors by 2020. Unless action is taken soon, the outlook could be 50 percent worse than originally anticipated5.

Here is the knockout punch for those baby boomers who are heading to retirement: Due to these shortfalls, physicians are starting to turn away patients who rely heavily on Medicare.

The root of this problem lies in the reimbursement rates that Medicare provides to the physician; on average, Medicare reimburses roughly 53 percent of these costs, and even less under Medicaid6. Physicians can make up for these differences by either shifting costs to those patients with insurance (meaning those of us with insurance pay more), or by treating patients at a loss. With the passage of the Affordable Care Act, your physician’s options are only becoming more limited.

Out of the total $700 billion that is being reallocated from Medicare to fund other programs, $260 billion of it is expected to come from “providers.” These providers are comprised of not only hospitals, but more importantly, actively practicing physicians7.

As a result, more and more physicians are choosing to opt out of treating Medicare patients altogether. Roughly 13 percent of physicians will not accept Medicare patients today, while another 17 percent limit the number of Medicare patients they will see. This figure rises to 31 percent among primary care physicians. The statistics are even worse in relation to Medicaid, where as many as a third of doctors will not participate in the program8.

With the largest segment of our population knocking on Medicare’s door, the timing of this simply could not be worse. We expect to see an ever-increasing demand for physician services and a growing number of doctors who are no longer willing to see Medicare patients. This could be a source of severe financial hardship for baby boomers that will depend on Medicare as their primary source of funding for health insurance in retirement.

1 https://members.aamc.org

2 http://www.nytimes.com

3http://www.innovationlabs.com

4http://peterstanos.com/physician-search-trend

5http://www.nj.gov

6 http://www.hcinretirement.com

7http://www.cbo.gov

8http://www.kaiserhealthnews.org
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