KONNOR VON EMSTER – OCTOBER 31ST, 2019                                               EDITORS: ABHISHEK ROY & PARMITA DAS

Going to the doctor’s office and not being seen by a doctor? Some may call this paradoxical, but it is a medical reality that will increasingly be true in coming years. Many functions doctors provide have the potential to be taken over by Physician Assistants or Nurse Practitioners, not to mention steady automation and AI technologies. But are these far flung fantasies, or realizable solutions set to change the course of medicine? 

It is commonly known that being a doctor is one of the most lucrative professions one can pursue, which consequently makes medical care very expensive. The need for substitutes to doctors’ care is palpable, and this is where Physician Assistants (PAs) and Nurse Practitioners (NPs), collectively known as Advanced Practice Providers (APPs), can alleviate some pressure. They are licensed medical professionals who specialize in providing care, but have reduced schooling and residency requirements compared to doctors. While this will not be a silver bullet to reducing medical bills or alleviating the doctor shortage, it does provide hope that people can still receive good care. This implies, contrary to popular belief, that substitutes are not always inferior, especially in the healthcare industry where they have the potential to lower costs and improve the quality of care.

Changes in the traditional view of medicine

Medicine, as described by Medical News Today, is “the field of health and healing.” As with most fields, medicine has undergone a dramatic overhaul in the last couple of centuries. Innovations in germ theory, antibiotics, vaccines, anesthesias, surgical techniques, and discoveries relating to the human body have dramatically increased life expectancy—directly increasing total factor productivity through increases in productive time. Doctors are seen as drivers of the field, but this reality has changed over the last several decades. Doctors are losing their ability to form personal relationships with patients due to increased specialization, technology, and patient demand—which decrease time spent per patient. Patient care is now fractured across primary physicians, emergency and urgent care, specialists, technology, and the wider healthcare bureaucracies. This is not to mention the teams of nurses, NPs, and PAs that all play an important role.

Even when visiting the doctor’s office for primary care, the doctor is no longer the only one in the care lineup. A nurse will often look over the patient and run basic diagnostics, such as measuring vitals and noting symptoms before the doctor arrives. This is to make patient care more efficient for the doctor. At a surgery consultation, the lineup can be even more complex; it can include a nurse practitioner and resident, either before or alongside the doctor. Again, in the name of efficiency, a resident can perform many of the doctor’s tasks before the doctor arrives and, ideally, confirms the resident’s judgement as correct.

Barriers to entry for medicine

Because of the high amount of pressure placed on any given doctor, it is not surprising that medicine has some of the highest barriers to entry of any field. The schooling requirements are substantial, as medical schools in the US require an undergraduate diploma for admission. After their undergraduate career, students must take the gruelling MCAT entrance exam. If they are lucky enough to be accepted into a medical school, students receive medical training for another 4 years, learning how to properly diagnose patients. Even after that, prospective doctors must learn how to act in a clinical setting through residency training. Residency can range anywhere between 3 years for family practice to 7 years for neurosurgeon training. 

Because of these high scholastic requirements, the total number of physicians is only expected to grow 7% in the next decade. But this 7% increase is not enough to cover the increasing demand for healthcare services. It is estimated that between 2014 and 2024, healthcare employment will grow by 21%. Many attribute this gap to an aging population, among other problems, including aging doctors and high physician burnout rates. While doctors will ultimately be behind many of these healthcare service positions, they will not be the primary provider. That job will lay largely on nurses, administrators, and home care providers. 

The outlook is not entirely bleak, as there is some evidence that immigrant doctors are filling the gap, especially in rural areas with special Conrad 30 J-1 Visa Waivers, which allows them to obtain special worker status by committing to practice in underserved areas. 

Simple Supply and Demand

In the classic supply and demand economic model, if demand rises but the supply of doctors cannot keep up, two possibilities emerge. Either prices will rise substantially, or providers will shift to substitutes. Substitutes often increase the elasticity of demand for a product, depending on the relative similarity of the substitute. 

For doctors, the most powerful substitute seems to be APPs. Both of these roles have substantially lower barriers to entry than obtaining an M.D. NPs require on average 6-8 years of total post-high school education and PAs typically require around 7 years (4 for a bachelor’s degree and 3 for a PA program). This is much lower than the standard 11+ years required for an M.D., not to mention other additional requirements that can dissuade entry into the field. PAs can already take over for many healthcare roles such as diagnosing minor illnesses, prescribing medicine, assisting surgery, and creating treatment plans. While PAs ultimately work under doctors in almost every state, they can, and often do, retain a lot of autonomy as healthcare professionals.

Studies have even found that APPs are close to perfect substitutes in the practice of abortions. UCSF found that APPs and midwives were just as successful as physicians in the practice. This is good news for uninsured, low income areas that are often underserved by traditional doctors because they are less lucrative. APPs can instead serve these areas at a lower cost than physicians. In emergency situations such as appendicitis, APPs can diagnose and prepare patients for surgery before the physician even arrives, acting as a substitute in production and allowing the physician to focus their attention on multiple patients. APPs’ most vital role will be transforming primary care, which fewer physicians (doctor shortages are expected to be between 47,000 and 122,000 by 2032) are providing due to lower average salaries.

This being said, there are obviously areas where APPs are not as well suited as substitutes. For example, the American College of Emergency Physicians’ (ACEP) guidelines for the role of PAs and advanced practice registered nurses (APRNs) states “PAs and APRNs do not replace the medical expertise and patient care provided by emergency physicians.” One concern is the gaps in APPs’ experience that can arise from their lack of comparably extensive medical training or clinical experience. In this case, the age old adage from Alexander Pope, “A little learning is a dangerous thing,” holds true. 

The low barriers to entry also mean that these professions are more easily scalable. And with demand for medical services increasing, so has the demand for APPs. The Bureau of Labor and Statistics (BLS) expects NPs to increase by 26% in the next decade, with PAs increasing to an even higher 31%. With both their average annual salaries around $100k, they should both be highly sought-after professions in the coming years. 

There are some differences in the two that could lead to varying levels of substitution. While they do compete directly for some of the same roles in the medical field, their specialties often make them more desirable for some roles than others. PAs are often specialized in surgical areas such as pre and post operative stages, whereas NPs are often specialized in maternal and prenatal care. It is important to distinguish that they are taught from two markedly different schools: PAs focused more on the medical model and NPs focused more on a holistic, wellness model. PAs are therefore a better substitute for doctors because their training and lifestyles are closer. In family care, PAs are more desirable because they are specialized in general care.

AI: A Rising Star

Another substitute to physician care that has been speculated as an upcoming innovation is Artificial Intelligence (AI) technology. AI has the potential to learn from past cases and diagnose patients using its vast learning. However, it has quite a few milestones to reach before becoming integrated within everyday medical technology, and must undergo additional research to confirm its initial findings. Its applications in radiology and cancer screening could have huge mortality impacts, as false positives and negatives have shown to drop with initial AI intervention in Low Dose CT Scans. A main goal in many of these AI algorithms is to assist physicians in reducing time spent per patient, not to replace them entirely.

Several tech companies have jumped on the opportunity to apply their advanced AI algorithms to healthcare. IBM’s Watson has acted to structure and predict results based on both clinical and patient history data, even providing personalized oncology treatments at Memorial Sloan Kettering Cancer Center. IBM has partnered with multiple pharmaceutical providers including J&J, Pfizer, Quest Diagnostics, and CVS health to provide custom AI solutions for their customers. Google’s AI team is working on projects to detect diabetic eye disease, helping pathologists in cancer diagnoses, and genomics research, all of which have extreme potential for improving physician decisions and patient outcomes. 

Conclusions

While quite a bit more complicated, it seems that the healthcare field is still applicable to the traditional supply and demand model that has been posed for centuries. At the same time, PAs and NPs both offer opportunities for substitution in consumption, allowing medicine to thrive even with a shortage of physicians. The extent of substitution varies across the different areas of healthcare, with obvious applications in primary care and family practice where clinics have experienced the greatest physician shortage. Here APPs are well within their scope of substitution, and have less risk of medical malpractice. AI continues to be a promising augmentation to physician efficiency, potentially enabling improved healthcare delivery to patients whose lives depend on it in the future. Costs are expected to stay relatively constant even with new entrants to the field, illustrating that substitution does indeed increase elasticity of demand for medical services.

However, prices are not everything in health care. While APPs may be more efficient and cost-effective, the importance of clinician training provided to physicians through residency requirements should not be understated. With technology and substitutes eroding the desire for clinical skills, the need is still present. In that respect, PAs and NPs will likely never become a perfect substitute, until they too receive comparative medical and clinical training to avoid the problem of ‘too little knowledge.’ In complex medical spaces, such as the ER, APPs are not perfect substitutes, and, as dictated by the ACEP, should always be overseen by physicians. 

What APPs will most certainly bring to an overcrowded and costly healthcare system is the ability to provide adequate care to those who cannot obtain it. Gaps in physicians’ reaches can be substituted by PAs and NPs, which means affordable care for more people. This is a mutually beneficial relationship as well, as APPs serve a niche in labor supply that is quite lucrative and in high demand. Such alternatives will not only fill the need for more primary care personnel, it will enable more people to pursue a field in the medical realm without taking on the burden of medical school. 

 

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Disclaimer: The views published in this journal are those of the individual authors or speakers and do not necessarily reflect the position or policy of Berkeley Economic Review staff, the Undergraduate Economics Association, the UC Berkeley Economics Department and faculty,  or the University of California, Berkeley in general.

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