The Health Care Advisory Board research team spent some time modeling the future of physician demand and supply as organizations become better at managing populations. What they found: demand destruction is real. Based on Milliman benchmarks, under moderate degrees of care management, organizations will need about 20% fewer specialists than they would need under a fee-for-service payment system. And under aggressively managed care, organizations will need 40-45% fewer specialists—a dramatic change.
But, as my colleague Sarah O’Hara points out, this modeling shouldn’t be taken as gospel. It offers a high-level starting point, but is not a perfect predictor of physician need within a specific community and it would be unwise to ignore other factors impacting specialty supply and demand.
- Even in a tightly managed population, utilization reduction is unlikely to occur evenly across the board; local payers’ and providers’ choices to prioritize specific population management initiatives will determine the impact on discrete specialties.
- Nation-wide factors like population growth, an aging population, and coverage expansion will affect future volumes to an unknown degree; they may mean more people seeking services and hence more demand for providers.
- Local demand may vary widely as national-level trends impact regions to different degrees. For example, demand for cardiologists will rise 51% in Nevada but only 5% in West Virginia between now and 2025, according to projections from one 2013 study.
To help you sift through all of these factors and come to meaningful medical staff projections, the Medical Group Strategy Council research team wrote the white paper, Assessing Physician Network Needs for Population Health. Now, we’re making this research and diagnostic questionnaire available to members of the Physician Executive Council, too.
Read the full paper to assess your organization’s physician manpower needs to make the transition to population management.
What factors matter when estimating specialist demand?
Here’s a quick look at the three strategic factors for considering the future of specialty care demand:
1. Where are our greatest opportunities for avoidable cost reduction? According to Advisory Board analytics, most provider organizations have greatest opportunity for avoidable cost savings with inpatient medical admissions, outpatient surgery, and prescription drugs—but how much running room there is in each area depends on the organization.
2. How much will we be able to grow volumes through stronger referrals? Efforts to make network specialists more attractive to referring physicians can offset projected demand destruction for specialty care. Here, a key question is, “How much more market share could we theoretically capture for our specialists, or are we topped out?”
3. How much might we backfill lost demand through strategic growth plays? Beyond referrals, organizations can also build their specialty care services through geographic expansion, partnerships and acquisitions, or entering new payer contracts.
It’s important to remember that you don’t need to arrive at precise numerical projections to take meaningful action. Instead, the goal should be to develop a directionally correct sense of provider need—a rough understanding of trends within different specialty areas that can guide recruitment and hiring, now and in the future.
Estimating physician manpower for the future is an interesting and important question. But it’s actually not the most pressing problem. The most immediate problem is: What should our specialists be doing today to survive and thrive today, while also laying the foundation for their practice to succeed in a more risk-based market of the future? I'll explore that in my next post.