Shortages in Healthcare: Why? How Do We Fix Them?

This video provides an in-depth exploration of healthcare shortages, specifically focusing on the scarcity of medical professionals like primary care physicians and nurses. Dr. Eric Bricker, the presenter, uses fundamental economic principles, particularly the law of supply and demand, to explain the root causes and inevitable consequences of these shortages within the healthcare system. He establishes that a shortage, by definition, occurs when the price of a good or service (in this case, labor or medical services) is set artificially low, preventing the market from reaching an equilibrium where supply meets demand.

The presentation details how an artificially low price leads to a situation where the quantity demanded far exceeds the quantity supplied, resulting in a deficit. When such a shortage exists, rationing becomes an unavoidable consequence. Dr. Bricker identifies two primary forms of rationing: queue rationing (waiting lists or first-come, first-served systems) and price rationing (where access is determined by the ability to pay a higher price). He argues that healthcare systems globally, including in the United States, exhibit both forms of rationing, often simultaneously, depending on the specific medical service or national policy.

To illustrate these concepts, the video provides compelling examples from various healthcare contexts. It highlights the projected shortage of 21,000 to 55,000 primary care physicians by 2033 and the annual vacancy of 195,000 nursing positions in the U.S. For rationing, Dr. Bricker contrasts trauma surgery, where government and insurance payments create an artificially low price and thus queue rationing (e.g., a single hand surgeon for a million people on a weekend), with LASIK eye surgery, which is typically self-pay, allowing for price rationing and no shortage of available services. He also draws international comparisons, citing the extensive waiting lists in the British National Health Service and the Canadian single-payer system, including a dramatic example of a 16-month wait for a pediatric pulmonologist in Canada, to underscore the real-world impact of artificially low prices and queue rationing. The overarching message is that while these issues are complex and multifaceted, their economic underpinnings are straightforward, and understanding them is crucial for informed decision-making.

Key Takeaways:

• Significant Healthcare Labor Shortages: The U.S. faces substantial projected shortages, including 21,000 to 55,000 primary care physicians by 2033 and approximately 195,000 annual nursing vacancies, indicating a critical imbalance between demand and supply.
• Economic Basis of Shortages: Shortages in healthcare, like in any market, are fundamentally caused by an "artificially low set price" for labor or services, preventing the market from reaching an equilibrium where supply matches demand.
• Inescapable Rationing: When a shortage exists due to artificially low prices, rationing is an inevitable outcome. This means that not everyone who demands a service at that price can receive it.
• Two Forms of Rationing: Rationing primarily manifests in two ways: "Queue Rationing" (waiting lists, first-come-first-served basis) and "Price Rationing" (access determined by willingness and ability to pay a higher price).
• Dual Rationing in U.S. Healthcare: The American healthcare system exhibits both queue and price rationing. The specific form of rationing often depends on the payment model for the service (e.g., government/insurance-funded vs. self-pay).
• Example of Queue Rationing (Trauma Care): Services like emergency trauma surgery, often paid for by government or third-party insurers at set rates, experience queue rationing. This can lead to long waits for critical procedures, such as a single hand surgeon covering a million-person county on weekends.
• Example of Price Rationing (LASIK Surgery): Elective procedures like LASIK eye surgery, which are typically self-pay, operate under price rationing. This results in no shortage of available services, though affordability can be a barrier for some patients.
• International Comparisons Highlight Consequences: Countries with predominantly government-set, artificially low prices, such as the UK's NHS or Canada's single-payer system, experience extensive queue rationing, leading to very long wait times for specialized care (e.g., a 16-month wait for a pediatric pulmonologist in Canada).
• Understanding Over Solving: The video emphasizes that the goal is not to "solve" these complex issues definitively but to understand their fundamental economic causes and consequences. This understanding allows individuals, companies, and governments to make informed decisions about which forms of rationing they are willing to accept in different medical situations.
• Implications for Healthcare Operations: Shortages of medical professionals and the resulting rationing directly impact the efficiency and accessibility of healthcare services, creating significant operational challenges for pharmaceutical companies, medical device manufacturers, and healthcare providers.

Key Concepts:

• Law of Supply and Demand: The economic principle that describes how the price of a good or service affects the quantity supplied and quantity demanded, leading to an equilibrium point.
• Equilibrium Price and Quantity: The point at which the quantity of a good or service supplied equals the quantity demanded, resulting in no shortage or surplus.
• Artificially Low Price: A price set below the market equilibrium, which inevitably leads to demand exceeding supply and thus a shortage.
• Rationing: The controlled distribution of a scarce resource or service, necessary when demand outstrips supply.
• Queue Rationing: Allocation based on waiting lists or a first-come, first-served basis.
• Price Rationing: Allocation based on the ability and willingness to pay a higher price.
• Perfectly Inelastic Demand: A situation where the quantity demanded does not change regardless of price, often seen in critical, life-saving medical situations (e.g., trauma).

Examples/Case Studies:

• U.S. Physician Shortages: Projected shortage of 21,000-55,000 primary care physicians by 2033.
• U.S. Nursing Shortages: Approximately 195,000 open nursing positions annually.
• U.S. Trauma Surgery: Example of queue rationing due to artificially low prices, leading to limited availability of specialists (e.g., one hand surgeon for a million people on weekends).
• U.S. LASIK Eye Surgery: Example of price rationing, where self-pay allows for an equilibrium of supply and demand, resulting in no service shortage.
• British National Health Service (NHS): Utilizes both queue and private pay (price) rationing, with government-set prices leading to waitlists.
• Canadian Healthcare System: Primarily relies on queue rationing due to a ban on private pay for services covered by the public system, leading to extended wait times (e.g., 16-month wait for a pediatric pulmonologist).