Tuesday, November 06, 2007

Where are the doctors?

Here's a curious fact. The UK and US are both countries where doctors get paid very well: UK is (anecdotally) #1 in Europe on this count (or close), and US doctors are certainly far better paid than their European counterparts. Yet the UK and US - and here's curious bit - are not the countries with the most doctors per capita. Germany - to take one example, there are others - has more docs than either the UK or US. The difference is actually quite striking: Germany has 3.4 practicing doctors/1000 people, the UK and US each have 2.4 (numbers from OECD). This is a huge difference of 42%. Absent any fundamental scarcity, a high wage for a given profession should increase the supply of labour and thereby reduce wages. If this is what's happened in Germany, why doesn't it happen in the UK and US? Given the rewards on offer, why don't more people become doctors in these countries?


Erik said...


One thing that affects the US labor market for doctors is that the number of available slots for medical schools and for residency programs is managed. I'm not sure about the specifics for basic medical school, but assignments to residency programs is done by a stable marriage algorithm.

It's not clear to me whether this level of management is a good thing in terms of the number of doctors per capita and the distribution of specialists. It may be the case that management of medical studies as currently implemented could only work well if the health care sector were also more thoroughly managed; the relatively free market in health care might only work (if it ever could) if paired with a Milton Friedman-style market in medical education. That is, hybrid systems may be fundamentally doomed to inefficiency. Or maybe not. I'm not aware of any thorough, comprehensive analysis of the entire system (in the US), though there is much piecemeal analysis on various segments (pharma, HMOs, etc.) in isolation.

Also, the per capita doctor statistic may not be the most useful metric. See also: http://www.thehealthcareblog.com/the_health_care_blog/2003/10/policy_not_enou.html


The Compulsive Theorist said...

Thanks for the information Erik.

It sounds as though the medical establishment tries to control supply - a perfectly predictable thing for a trade union to do! The UK has a "non-hybrid" system: everything in healthcare is managed by the government, to an extent I don't think you see anywhere else. Yet of course the doctors lobby want the same thing as in the US: restricted supply and higher wages.

In the US case, with a (more-or-less) market-driven healthcare, freeing up the supply side would probably help. This might involve both streamlining qualification procedures for foreign doctors and freely allowing new Medical schools to be set up. In the UK, given the level of government involvement, I think the solution has to be political: there has to be a decision made to increase the number of new medical schools. To be fair, this is now happening, nd the shortage of doctors here may ease in the years ahead.