The Market Of Medical Doctors
The economic issues that this paper will be focused on is the market of medical doctors. The situation describes a family member trying to decide whether or not to go to medical school. As an economist she asked for guidance and has requested a cost benefit analysis on the medical field. The cost benefit analysis that I will conduct will help an individual understand the trade-offs between perusing the medical field or trade school. I gather information in order to demonstrate the future supply and demand for doctors in the United States, as well as its elasticity. Relevant Economic Principles: Determinants of Demand, Supply, Relevant Data
Gross Domestic Product
According to our nations economists the national GDP is a direct determinate of health care spending. Traditionally you will see health care spending increase as the nation’s GDP increases. This helps the medical field prepare for future demand in their field. Victor R. Fuchs published an article that helps people comprehend how much health care spending has risen in accordance with the GDP since 1950. Health care spending will determine the type and extent of care that physicians can provide to their patients, as well as the amount of physicians’ take-home pay. If health care spending continues to increase at the rate that it has since 1995 then it is predicted to reach a total 26% of GDP in 2040 which would severely cripple the United States economy (Fuchs, 2013). However this means that there will always be an increasing demand for physicians in the U.S. market.
Age demographics are a large determinate in the future demand of physicians. According to a Merritt Hawkins health care company article, the United States has almost 27.6% of doctors being aged 60+. That percentage accounts for nearly 225,221 physicians that are reaching retirement age. After studying the data from the AMA physician staffing slide rule I would suggest to anyone to consider specializing in Pulmonology since 73% of Pulmonologists are aged 55+. This would suggest that the future demand for Pulmonologists will be the highest.
Percent of Physicians 55 and Older by Specialty
Orthopedic Surgery 52%
General Surgery 48%
Neurological Surgery 45%
Internal Medicine 40%
Vascular Surgery 40%
Family Practice 38%
Emergency Medicine 34%
The Association of American Medical Colleges has predicted that in the next 15 years the United States will face a shortage of almost 160,000 doctors. They have also forecasted that universal health care would add an another 31,000 to that deficit. When looking at the projected demand number of physicians it is obvious that the demand will far outweigh the supply (Florence, 2018).
The supply of physicians is determinate on schools, teaching hospitals, and cost. The average cost of medical schooling is somewhere around $240,000 according to USA Today. Most families would not be able to send their child to medical school out of pocket. This makes student loans a must for those seeking a career in the medical field. In my mind this is also a barrier to entry in this market. Since I have not been able to locate any projected costs for medical school through 2030 I will make up some data in order to illustrate the price elasticity of supply.
There are 174 medical schools and less than 150 teaching hospitals in the United States alone, each having specific criteria and limited spaces available. This makes training and developing tomorrows physicians a daunting task. With a relatively fixed supply of physicians and a predicted shortage of physicians through 2040 this requires action and adjustment in order to better supply the demand (Student Loan Hero, 2017). Dr. Orlowski of the AAMC has proposed an increase of federal support to add 15,000 residency positions by 2023. This will start to help meet the demand of physicians but will never be able to tackle the deficit (Mann, 2017).
The AAMC has conducted research in order to forecast the number of physicians that will be supplied and demanded by the year 2030 according the status quo. In 2016 a total of 791,400 physicians were in the workforce, by 2030 the median projected supply will be 846,600. In 2016 the demand for physicians was 810,700. This shows that there is already a shortage of medical physicians in the United States. Forecasted demand for physicians by 2030 is right around 951,200, this means that there will be a shortage of 104,600 physicians by the year 2030. That is a shortage increase of 542% over the course of 14 years (Heiser, 2018).
On average physicians made $196,380 a year in 2016. This number comes from an article published by U.S. News. Their research has shown only a slight increase in physician salary from 2010-2016. Since I was not able to locate a salary projection for physicians through 2030 I will estimate those future numbers in order to demonstrate the price elasticity of demand. Since the demand for physicians is projected to create a very large shortage, I believe that the future salary of physicians will have a rather considerable increase.
Recommendations and Economic Justification
After analyzing the data, it is obvious to me that pursuing a career as a medical physician would be a very wise decision. Since the earning potential of physicians is so positive, making an investment in medical school would be beneficial. The projected increase in demand of physicians by the year 2030 is just the tip of the iceberg. I believe that the medical field is an extremely safe career path, as it has been in the past. People will get sick or injured, diseases will continue to develop and mutate, so there will always be a need for doctors. I would highly recommend Jenny consider Pulmonology or Oncology as those fields have the highest age demographic. This will be good in a couple of ways. These doctors are older and have had a lot of experience in these fields. Since they are reaching the end of their careers they will be egger to pass on their knowledge to the next generation, this makes learning opportunities more abundant.
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