July 26, 2015
Professor Christopher Nguyen
My niece, Jenny, is trying to make a decision on if it is a good career choice to become a doctor or not. Jenny also would like to know the best places to practice. She asked for your advice and you decided to answer her questions by looking at the job market for a physician in the terms of supply and demand, elasticity, costs of production, pricing, and economic or normal profit of loss. This paper will analyze the physician market to determine if becoming a physician is good career choice for Jenny.
In the United States there are 691,400 physicians and surgeons as of 2012. In order to become a physician one must obtain a four year undergraduate degree; pass the Medical College Admission Test (MCAT), attend four years of medical school, and residency. After the education is completed they are required to take a test to be licensed (BLS 2014). Some teaching medical schools have purposed the idea of charging medical students no tuition since the average medical students owes about $160,000 for his education. This has become a deterrent for many students to become physicians because they do not want to add the debt and many are unable to borrow that amount of money for loan institutions. Exhibit 2 there is approximately 240,800 active primary physicians, 125,600 physicians with a specialty, and 155,300 surgeons (IHS Inc., 2015).
Currently in the United States the demand for physicians is growing faster than the supply this is in part due to the average life expectancy increasing, new legislation (Obama Care), and technological advances in medicine. According to Association of American Medical Colleges or AAMC Between 2013 and 2025, the nation’s population is projected to grow from 316.5 million to 347.3 million (IHS Inc., 2015). Also during this time, the population of persons aged 65 and over is estimated to grow 46%, while the population of persons under the age of 18 is projected to grow only 5% (IHS Inc., 2015). This illustrates a rapid population growth among the two major demographics that physicians take care of that is pediatric service and elderly health care.
According to the price elasticity of demand in the physicians market, the slope of the demand curve would determine the changes in the demand of the physicians. If the demand curve of physicians is less elastic then a small change in the fees of physicians will change the demand of these physicians by small amount. Also, if the demand curve is more elastic then a slight rise in physicians fees will lead to large reduction in the demand of the physicians. The elasticity of demand depends on several factors such as aging of the population, growth rate of the population in U.S., health care coverage which adds to the overall rise in the demand of the physicians.
Another determinant of the demand of physicians is the number nurses and other medical professional in the near future. There is currently a need for nurses, physician assistants, and nurse practitioner in the United States as well. If this number was to increase the demand of physicians would be less, because many of the routine duties that physicians performed can be done by nurses, physician assistants, and nurse practitioner. Also, by utilizing nurses, physician assistants, and nurse practitioners this will reduce the cost at hospitals and medical facilities. The last determinant of the demand of physician is the change in health care reimbursement policies. Most companies offer a cafeteria benefit of using flexible spending accounts that offers employees a way to combat raising medical costs. Consumers may demand fewer physician services and go towards a more holistic medicine if health care coverage causes a rise in out of pocket expenses. On the other hand with Obama care and the possibility of