COVID’s effects on doctor supply and demand, according to experts

By Alistair Gardiner
Published January 28, 2021

Key Takeaways

For years now, the United States has faced a physician shortage—but, over the course of a year, the COVID-19 pandemic spurred a profound shift in the job market for doctors. In short, the nation went from a market in which physicians enjoyed an abundance of opportunities to one where doctors face furloughs, pay cuts, stiff competition for new jobs, and even unemployment.

So, what changes has this shift in supply and demand caused, and why? A white paper from the healthcare recruiting firm Merritt Hawkins breaks down those issues—and together with other sources, lays out the new reality with which every doctor must now grapple. 

Looking back at physician demand

For decades, the country has been bracing for a physician shortage. In April 2019, the Association of American Medical Colleges (AAMC) predicted that by 2033, the country would lack as many as 55,000 primary care physicians, 23,000 surgical specialists, 67,000 specialists, and 39,000 subspecialists such as internists. Taking both primary and specialty care into account, the AAMC estimated a shortfall of up to 139,000 physicians in the United States by that same year. 

In fact, the concern was so great that bills aiming to lift the cap on how much the federal government spends on training physicians were submitted to Congress biannually from 2007 through 2019. None of these, however, were passed into law.

There were several reasons for the projected shortage. By 2032, seniors are expected to outnumber children and teens for the first time in US history, according to the Merritt Hawkins white paper. By the same time, it’s estimated that 78 million seniors will live in the country, compared with 77 million youths (aged 17 and younger). The report notes that by CDC estimates, seniors account for 37.4% of diagnostic tests and 34% of inpatient procedures. They also average three times more annual doctor visits than young people.

Doctors are also getting older. The white paper refers to this as the “retirement cliff,” noting that nearly a third of practicing physicians are over 60. And it’s not just older doctors who are leaving the field. Even before the pandemic, a majority of doctors were experiencing high levels of stress and burnout, as well as increasing regulatory burdens (think clinical paperwork, compliance, and data input). Not only do these tasks force physicians to see fewer patients, up until recently the physician turnover rate hovered at 12%-17%, depending on specialty.

On top of that, a funding gap has sapped the number of residency positions open to medical school graduates, meaning that new doctors have a harder time entering the field just when we need them most.  

Other factors that contributed to the demand for physicians included overall population growth (which is estimated to hit 458 million by 2050); high levels of chronic disease, drug overdoses, and suicides; and expanded access to healthcare.

These factors created a “buyer’s market” for physicians—and not just for primary care doctors. In the white paper, neurology topped the list of the most in-demand specialties, followed by psychiatry and gastroenterology.

But that was all before the pandemic hit. 

COVID flips the script

COVID-19 has changed life in so many ways, and its impact has extended to the physician employment market. Sheltering at home and financial strain means fewer patients are going to doctor’s offices.  

News outlets across the nation covered the fallout, reporting that thousands of healthcare workers abruptly found themselves out of work, while hospitals and doctors’ offices lost billions in revenue. According to federal labor statistics, pandemic-related job losses in the healthcare sector were second only to those in the restaurant industry.

In response to a survey conducted by Merritt Hawkins last April, one in five physicians said they had been furloughed or experienced a pay cut, the white paper noted. And 16% of respondents said the pandemic had resulted in reduced staffing levels. Similarly, a survey conducted by McKinsey & Company near the beginning of the pandemic found that over half of all responding physicians were worried about their practices closing. Almost half of all independent physician practices that responded to the survey reported having only enough money to operate for the next 4 weeks. 

Almost 50% of respondents to the Merritt Hawkins survey said they were treating patients via telemedicine, more than double the 18% who reportedly did so in 2018. While it provides a safe way to see patients, telemedicine doesn’t benefit physicians who do surgeries and other services that can’t be conducted remotely, leaving many in a tough spot, according to the white paper. 

Patients who lost jobs during the pandemic also lost their health insurance. What’s more, hospitals and clinics have taken, at various times, to suspending elective procedures. According to the white paper, a majority of private practices that perform “non-essential procedures” are no longer hiring. Due to low patient numbers, small- to mid-sized dermatology groups and ophthalmology groups are also unable to add to their staff.

Demand is down for routine procedures, like colonoscopies, which reduces the need for certain specialists. Due to COVID-19 lockdowns, which have resulted in fewer people commuting or travelling, demand for trauma surgery and ER treatment has slumped, too.

Merritt Hawkins claims it has seen record levels of physicians inquiring about opportunities. At the same time, from last March to July, recruitment searches sank by 30%.

But which physicians are the worst off? Turns out it’s medical residents—because experienced doctors are becoming so desperate that they’re willing to accept less pay, which used to be one of the advantages of seeking a placement as a resident, according to the paper. One estimate suggests that the average signing bonus for a new physician dropped from roughly $32,700 to a little under $27,900—a decline of 14.7%.

The authors referred to the sudden shift in the market as “unprecedented in Merritt Hawkins’ 32-year history.”

What’s next?

When the pandemic subsides, demand for physicians will likely increase again, according to Merritt Hawkins. The fallout of the pandemic could, in fact, further drive up demand, as the physical and mental health of the public could be worse than before the virus hit, the authors noted. 

In December, AMA industry experts predicted increased demand in specialties like emergency medicine, pulmonology, critical care, and infectious disease. Other sources have compiled their own lists of physician specialties that have the brightest future, based on a variety of factors including pay, supply and demand, and even the happiness quotient.

The pandemic has also disrupted medical education, with students unable to properly complete aspects of their education due to temporary shelter-in-place laws, canceled medical exams, and residents who can’t undergo training. This, in turn, has put a squeeze on the supply of new doctors entering the market.

Still, Merritt Hawkins noted that some physicians are considering making permanent changes to their practices, while others are seeking different jobs or opting out of patient care altogether. They point to the stresses and uncertainty induced by dealing with a relentless deluge of COVID-19 patients. 

MDLinx conducted a survey of doctors last year to gauge how the pandemic has affected them. Based on more than 1,250 responses, MDLinx learned that roughly half of healthcare workers are seriously rethinking their careers or practice. 

Demand for doctors, therefore, is likely to rise. As such, Merritt Hawkins suggests that hospitals, medical groups, and other healthcare organizations focus on physician retention strategies, so they’re fully staffed when the pandemic begins to subside. Likewise, the firm recommends that medical schools consider measures like accelerated programs and increased class sizes, in an effort to increase their output of physicians 

Ultimately, demand for physician services is expected to eventually outpace supply. So, for physicians who are currently struggling, there will be opportunities on the horizon. And their employers might come to realize that COVID-19 has demonstrated the need for a substantial supply of physicians—and that need will only become greater in the months and years ahead.

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