Health Workforce Supply and Demand
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What is supply and demand of the health care workforce?
Supply and demand are economic measures that can be used to determine the adequacy of the workforce. The State Health Workforce Data Resource Guide, published by the Health Resources and Services Administration (HRSA) in 2001, provides definitions for these concepts:
- Supply – "represents the numbers of personnel working or available to work in health care settings. The economic interpretation of supply incorporates the notion of willingness to work for a particular level of compensation."
- Demand – "an economic concept based on the willingness of employers to purchase the services of health care personnel at a particular compensation level."
This guide also states that supply and demand can be calculated in a wide range of contexts, including:
- "The present supply and needs or the future supply and needs
- Different health care settings (e.g., hospitals or long-term care facilities)
- Individual professions or occupations (e.g., nurses or dentists)
- Different delivery systems (e.g., acute care or mental health)
- Specific target populations (e.g., the elderly or children)
- Specific health problems (e.g., AIDS or heart disease)
- Specific policy initiatives (e.g., expanding access to primary care)"
For more information about workforce supply and demand data collection and calculation please see our Research and Data Methods topic guide.
What are some of the persistent issues with workforce supply and demand?
Faculty Shortages: see, "How does educational capacity affect supply of health professionals?"
Provider Shortages: As stated in a National Rural Health Association (NRHA) policy brief, "the health care labor shortage in the United States has been widely documented and is expected to last for the foreseeable future." The actual level of shortages can be difficult to determine since estimates for specific professions vary depending on their source.
Health Professional Shortage Areas (HPSAs) are designated by Health Resources and Services Administration (HRSA) to determine geographic areas, population groups, and health care facilities that do not have an adequate supply of health care providers. As of October of 2012 it would take the following additional providers in order to eliminate unmet need in current HPSAs:
- 15,297 Primary Care Providers
- 4,481 Dental Providers
- 3,712 Mental Health Providers
Maldistribution: The Robert Wood Johnson Foundation released a policy brief stating that maldistribution in primary care is an even more significant issue than shortages of providers. According to the brief, areas with higher proportions of low-income and minority residents tend to suffer from lower physician supply. As a result, inner-city communities are often designated as HPSAs
Rural regions also frequently suffer from inadequate supply. According to a Georgetown Public Policy Institute
report, Healthcare, although 20% of the US population lives in rural areas, only 9% of physicians practice in rural locations. Some of this maldistribution has been attributed to the disparity in compensation between rural and urban locations. For more information on this aspect of maldistribution, see "How does workforce compensation impact supply?"
According to the NRHA policy brief, there are several other factors that also impact maldistribution:
- The work environment includes longer hours and less flexibility in scheduling.
- Many health professionals are from urban areas since rural students are often less well prepared in math and science.
- There are fewer medical role models for potential students in rural communities.
- Aspiring rural students are less likely to come from a high socioeconomic status, making it less likely that they can afford medical school.
- Small rural economies offer few job opportunities for spouses.
- There are fewer training sites for medical professionals in or near rural locations.
What are some emerging issues related to supply and demand of the workforce?
The Affordable Care Act: The impact of the Affordable Care Act (ACA) on the health care workforce is one of the most recent concerns in workforce research. According to a Baker Institute Policy report, over 35 million Americans are estimated to gain access to health insurance through the ACA; however, this number will vary depending upon each state’s level of Medicaid expansion. Expansion of health insurance coverage will increase the demand of the health care workforce, particularly in primary care.
For more information on ACA provisions for addressing this issue, see "What provisions in the Affordable Care Act (ACA) address health workforce supply and demand?"
Aging Populations and Long-Term Care: The challenges of aging that affect healthcare are two-fold:
- The population is aging and requiring more primary care, long-term care, chronic care, and acute care for cancer, heart attack, stroke, and other health conditions.
- The workforce is aging and retiring, depleting the availability of caregivers.
For more information, see "How will the aging population increase demand?"
The Economy: The recent recession has sent health care professionals that had previously left the workforce back to work, and also led many who were working reduced hours to pursue full-time work. In 2011,
Buerhaus and Auerbach found that the reentry of registered nurses into the workforce had improved the shortage of nurses. Studies relating to this influx of nurses during the economic downturn warn policymakers to be prepared for shortages to resume when the economy begins to improve.
Health Informatics: The increased concentration on innovation in health information and new federal regulation encouraging the use of electronic health records has increased the demand for health information professionals. A 2012 report states that health informatics job postings increased by 36% between 2007 and 2011.
For more information on recent developments in workforce supply and demand, see our supply and demand resources in the Trends and Emerging Issues topic guide.
How will the aging population impact demand and supply?
According to the SCAN Foundation, from now until 2029, 10,000 Americans will turn 65 every day. A National Center of Health Statistics (NCHS) data brief reports that the percentage of care provided to older adults is growing compared to the amount of care received by other age groups. The combination of the aging population and older adults increasingly requiring more care drastically impacts the demand of the health care workforce. According to a Population Reference Bureau report, nurses and direct-care workers may be particularly impacted as both of these professions play an important role in the care of older adults.
The provider workforce is also experiencing an aging problem. The proportion of the health care workforce reaching retirement age has been on an uphill climb in recent years. According to an American Medical Association report, the number of physicians over 65 more than tripled from 1975 to 2010. The Georgetown University report, Healthcare, states that 40% of physicians and 33% nurses are over 55. As more physicians retire, shortages will increase, particularly in rural areas where physicians tend to be older.
How does workforce compensation impact supply?
Lower wages can lead to health professionals working less. According to a 2003
study, wage increases for registered nurses can improve the supply of registered nurses. Compensation levels also have an impact on the specialty choice of health professionals, particularly for primary care. According to a 2009 report from the Robert Graham Center, the gap in compensation between primary care providers and providers in other specialties has grown over time and was found to reduce the likelihood of a physician choosing to practice in primary care by nearly 50%. According to an AAMC report of the 2012 Medical School Graduation Questionnaire, income expectations had a moderate to strong influence on the specialty choice of almost 48% of medical graduate students.
Medicaid and Medicare reimbursement policies can also impact workforce supply as reimbursement serves as a form of provider compensation. According to a National Academy for State Health Policy study, increasing Medicaid rates for dental services increases the number of dentists willing to provide services to Medicaid patients.
Low compensation levels have also been blamed for provider shortages in rural areas. The AAMC report mentioned above found that only 9.3% of students indicated an interest in working in an underserved rural location. A panel study from 1993 to 2003 demonstrated that physician wages was one of the only characteristics of rural practice that influenced a physician’s decision to relocate. However, there is conflicting evidence about this claim. A 2011 report from the Association of American Medical Colleges reported that rural physicians actually have higher incomes than urban providers after adjusting their wages for specialty vs. primary care and cost of living.
How does educational capacity affect the supply of health professionals?
One of the main concerns with educational capacity is ensuring the adequate supply of educators for prospective health professionals. Nursing and dental occupations have been experiencing faculty shortages. According to the American Association of Colleges of Nursing, in the 2011-2012 academic year nursing schools turned away over 75,000 qualified applicants due to inadequate supply of faculty. The National League for Nursing discusses many factors influencing this shortage, including:
- Age: The nursing faculty supply has retired or is reaching retirement age.
- Compensation: Nursing professionals earn lower wages in faculty positions compared to wages of those in clinical practice. Also, nurse faculty are often paid less than faculty in other disciplines.
- Doctorally-Prepared Faculty: A cycle of depleting supply occurs when qualified students aspiring to faculty positions are turned away when there is not enough current faculty to educate them.
Also, a 2010 report from the National Advisory Council on Nurse Education and Practice addresses the impact of school budget constraints on inability to fill faculty vacancies. A combination of all of these factors means that schools are not able to expand admission slots and prepare additional health care workers for the workforce.
What are some policies and programs that have been designed to improve supply?
Workforce Pipeline: One of the long-term plans for improving supply shortage issues is to focus on increasing the interest of youth in pursuing health care careers. For more information, see our Workforce Pipeline guide.
J1 Visa Waivers: These programs allow communities that are experiencing health care provider shortages to recruit international medical graduates to fill vacancies. For more information on these programs visit the J-1 Visa Waiver guide through the Rural Assistance Center. For a list of J-1 Visa Waiver programs visit our Incentive Programs page.
Loan Forgiveness/Repayment Programs: Federal and state governments have addressed supply and maldistribution issues by providing incentives to reduce the expenses of pursuing education in a health care field. Loan repayment or forgiveness programs can reduce the amount of student loan debt or forgive the entire loan balances for a health care professional that agrees to work in a geographic area or specialty experiencing shortages. For more information visit our Loan Repayment Programs guide.
Area Health Education Centers (AHEC): The AHEC program was designed to increase the supply of providers to underserved and rural locations by improving access to education and training for health care professionals serving in these areas. For more information visit our Area Health Education Centers guide.
Recruitment & Retention: Methods for recruiting and retaining health professionals have become a focal point in the efforts to eliminate shortages. Best Practices for Recruitment & Retention offers 10 brief recommendations for maintaining an adequate workforce including recruitment focused on younger generations and the regular use of job satisfaction surveys. For more information, visit our Recruitment & Retention guide.
Scope of Practice: A report for the National Institute for Health Care Reform stresses the importance of less-restrictive scope of practice laws for advanced practice nurses in order to address the primary care provider shortages. For more information, visit our Scope of Practice guide.
What provisions in the Affordable Care Act (ACA) address health workforce supply and demand?
Research & Policy Development: The Affordable Care Act (ACA), passed in 2010 to address issues in the United State health care system, established the National Health Workforce Commission and the National Center for Workforce Analysis (NCHWA). The Commission and NCHWA are intended to work together to collect workforce data and develop policy recommendations related to the health care workforce. However, the Commission has not yet been funded to meet. Many states also received funding under the ACA to assist state-level health workforce planning.
Primary Care & Rural Health: The ACA increases reimbursements through Medicare and Medicaid programs to primary care providers, including 10% bonuses for providers who spend a majority of their time on primary care services.
Education: The ACA increases National Health Service Corps (NHSC) and Title VII funding to provide more financial assistance for health professionals’ education. The ACA also provides additional education funding opportunities for non-physician providers (nurses, direct care workers, behavioral health professionals) and specialties experiencing shortages. Primary care residency programs are also eligible for more funding and support. To address maldistribution issues, the ACA provides grant opportunities for education programs focused on rural health care.
Impacts of the ACA on the health care workforce are discussed further in the Baker Institute Policy report, Health Reform and the Health Care Workforce, and on our Health Reform introduction.
Page last updated November 27, 2012