Americans regularly complain about wait times to obtain medical appointments, especially with primary care physicians and certain specialists. Waiting several weeks or a couple of months for an appointment is not uncommon, which can sound to Americans like purported wait times in Canada and other countries with socialized medicine.
Economics and Third-Party Intervention Explain Long Waits
Economic analysis of medical education explains what is behind the long wait times, which are not incidental or random. Beyond understanding the economics of medical education, however, well-meaning third-party attempts to overrule the law of supply and demand to “fix” the wait-time problem have only exacerbated it. As Alexander Pope first declared in the early 18th century: a little knowledge is a dangerous thing.
Explanations frequently offered for long medical appointment wait times include: 1) the US supply of physicians is too low; 2) training new physicians is inadequate to replace physicians nearing traditional retirement age; 3) graduate medical education residency programs offer too few openings to accommodate medical school graduates; 4) the aging US population creates increasingly greater demand for physicians’ services; and, 5) physicians are not proportionately distributed across the country by population, between urban and rural areas, and among primary care providers and specialists.
The American Association of Medical Colleges (AAMC)—a membership organization of US medical schools—reports that the US will face a physician shortage of up to 86,000 by 2036, citing the inadequacy in the number of medical residency positions nationwide as one cause. These residency programs, which last from 3 to 7 years depending on specialty, are considered essential for graduates of 4-year medical schools, and a minimum one-year residency is required before a medical school graduate can become a licensed physician.
The National Resident Matching Program claims that there are 1.82 residency positions per graduate, but that after accounting for applicants who attended foreign medical schools (including some Americans who were unable to get into US medical schools), there are only 0.85 residency positions per medical graduate applicant. Every year, hundreds or thousands of aspiring physicians remain unmatched to a residency program and must apply again for a residency slot the following year.
Not only is this supply-side problem—the so-called “physician shortage”—considered a leading cause of long appointment wait times, but it is also considered a cause of high physician fees that generally drive US high healthcare expenditures. US National Health Expenditure Accounts (NHEA) in 2022 reached $4.5 trillion (or $13,493 per person) representing 17.3 percent of US Gross Domestic Product that year. Two major components of healthcare expenditures—physician compensation and prescription drug costs—are notably above those in other developed countries.
No Legislative Fix
The US physician shortage is nothing new. In the 1960s, public pressure encouraged Congress to pass the Comprehensive Health Manpower Training Act of 1971, which increased federal support for medical education and residency training. A major provision of the legislation was the creation of capitation payments to schools of medicine, osteopathy, dentistry, veterinary medicine, optometry, podiatry, and pharmacy, based on the number of students enrolled and graduating.
Congress established annual capitation payments per medical school student, and a bonus for enrollment of first-year students beyond mandated levels. Schools received $2,500 for each student enrolled in first through third years of medical school, and $4,000 for each graduating student. These 1971 capitation amounts equate, respectively, to $19,485 and $31,177 in 2024 dollars. The statute set total funding for this capitation program at $200 million for FY 1972, $213 million for FY 1973, and $238 million for fiscal year 1974. These funding levels equate, respectively, to $1.56 billion, $1.66 billion, and $1.86 billion in 2024 dollars.
The stated intent was, of course, to incentivize medical schools to expand enrollment and prevent attrition during the four-year physician training program, thus producing more physicians and potentially lowering physicians’ fees in an effort to reduce US healthcare expenditures. This approach appeared economically sound, at least at first glance, until it became clear that a little economic knowledge can be a dangerous thing.
How well did the capitation payment plan work in terms of reducing the physician shortage and US healthcare expenditures? On the first question, not as well as some advocates had hoped, though many medical schools did increase their first-year enrollments after capitation payments began. As for lowering physicians’ fees, it soon became obvious that physicians often have minimum targets for office revenue and personal income, such that if patient visits per physician decline as physician supply increases overall, individual physicians often maintain their practice revenue and personal income by recommending more patient visits, more tests and more treatments. This strategy can generate more physician revenue, paid by patients, government-subsidized healthcare, and/or private health insurance coverage.
Economic theory would predict the consequences of increasing the supply of providers, if providers have annual revenue targets for their office revenue and personal income, which apparently many do. Frequency of visits and treatment decisions are typically made by providers rather than by patients themselves, and patients tend to follow visit and treatment recommendations from their providers, deferring to medical experts.
Reasons for physicians’ revenue targets may include, not only their own personal compensation, but also the need to cover overhead fixed costs such as office rent and staff salaries that must be paid regardless of number of patient visits per period of time. Such is the business model of retail physicians’ practices.
New Concerns About a Physician Surplus From 1980 to 2000
Thus, the program of capitation payments to medical schools was not entirely successful on either of its initial objectives—to increase the number of physicians and lower their fees. The program did, however, raise the specter of a possible physician surplus by 1980.
In 1976 the Graduate Medical Education National Advisory Committee (GMENAC) predicted a surplus of 145,000 physicians in 2000. Some observers recommended that the number of US medical school positions be limited and that graduate medical education residency positions be restricted to reduce the entry of foreign medical graduates. They also advocated additional training of non-physician providers such as nurse practitioners and physician assistants.
This prediction of a physician surplus surfaced just a few years after Congress had passed the 1971 program to increase medical school enrollments in order to fix the physician shortage. It seems that neither the federal government nor medical education experts can accurately predict physician shortages and surpluses.
Little Progress for Medical School and Residency Applicants, Appointment Wait Times, and Physicians’ Fees
Despite numerous attempts over the years by government and medical education experts to find the right business model, medical education leaves frustrated medical school and residency applicants, frustrated patients waiting for medical appointments, and erratic predictions of physician shortages and surpluses.
Admission to medical schools and residency programs has historically been highly competitive. Applicants find getting into medical schools and residency programs difficult, and often submit multiple applications to ensure admission to one. Some medical school applicants never do achieve admission, resorting instead to medical schools in Mexico or the Caribbean, or shifting their preference to dentistry or podiatry instead of physician training. Exacerbating this, moreover, the average medical student graduates with $234,597 in debt, excluding premedical undergraduate debt.
A Final Note
Lengthy appointment wait times, of course, do not themselves address the waiting-room time once one arrives at his scheduled appointment, where he then sits with others who would rather be spending their time elsewhere than waiting to hear their names called. There clearly does not exist anything remotely resembling a competitive free market in medical education or in the medical industrial-complex generally. It’s enough to make one wonder whether there must be a better way to run a healthcare industry. But a little knowledge of economics can bring about policies whose “cures” are worse than the “disease.”
