Physician Shortage: Economic Concept Of Demand

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Physician Shortage: Economic Concept of demand and demand shifts Roberta Mimms University of Phoenix Health Care Economics HCS 552 Amy Shoales April 23, 2012 Physician Shortage: Economic Concept of demand and demand shifts Many of us have the thought that the idea of being a physician, doing good for another individual, has such an appeal that medical schools should have a waiting list several years long. But that is not so. The world is suffering from a shortage of physicians. The Society of Critical Care Medicine, as cited by Gorman (2011), reports that the “shortage of full-time physicians will approach nearly 125,000 by 2025. It is estimated that we will need 1.7 new physicians to replace each one of our retiring physicians…show more content…
In this case, an office visit cost $300. This physician is able to charge this amount for he is the only physician around. Fast forward ten years. There are now 10 physicians in the town. Now the individuals of the town have an option of going to one of the 10 physicians and therefore can be more choosey as to the price they pay. If the new physicians want to establish a clientele they would be wise to charge less than the first physician, let’s say $250 per office visit. Eventually, in order to keep business going, the first physician will also have to lower his price to $250 as well. Another ten years goes by and there is now 20 physicians in the same town. Once again the price for an office visit will drop as individuals have more physicians to choose from and each physician wants to develop a clientele. This example demonstrates the law of demand. As the quantity of a unit increases, the cost for each unit decreases. In thi9s case, the the unit is represented by the number of physicians, and the cost is represented by the price for a routine office visit. This example can be demonstrated graphically using what is called a demand…show more content…
As statistics show, there has already been an increase in the cost of health care partially due to the shortage in health care practitioners and the need to offer higher reimbursement for treatments. If predictions are true, and there is a shortage of 125,000 physicians by the year 2025, the cost of health care will increase more rapidly. Because health care and therefore an individual’s life is considered priceless, there are demand shifters that often affect the demand curve of a health care product. As demonstrated in the example above, physician loyalties and experience are just two of the many types of demand shifters. This demand shifters can cause an even steeper rise in health care cost in the real world. References Getzen, T.E. (2007). Health economics and financing (3rd ed.). Hoboken NJ: John Wiley & Sons, Inc Gorman, M. (2011). Supporting Medical Staff and Patients in a New Era. Physician Executive, 37(5), 40Inc. * Reports fault physician self-referral, workforce shortages for rising health costs. (2005).

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