Effects of a global budget payment scheme on medical specialty workforces

Abstract

Containing rising health care costs by a global budget offers promise, but might have unintended effects on the composition of medical specialty workforces. When a budget is given to a group of medical providers and the physician/population ratio is growing, the ex-post total sum of fee units would exceed the ex-ante budget, thereby reducing the reimbursement for all services for all providers. Furthermore, the profit of high revenue services drops more than the profit of low revenue services. Thus, medical school graduates are less likely to choose a specialty with high revenue in response to the global budget scheme and physicians may leave labor force earlier because of lowered profit. The author provides empirical evidence by a synthetic control method that the number of surgeons in Taiwan has exhibited a decrease of 25% after 11 years of Taiwan's global budget scheme. During that same period of time, the total number of practicing physicians decreased only 13%.

Keywords: Global budget payment; Physician labor supply; Specialty composition.