Forecasting imbalances in the global health labor market and devising policy responses

Abstract

Background

The High-Level Commission on Health Employment and Economic Growth released its report to the United Nations Secretary-General in September 2016. It makes important recommendations that are based on estimates of over 40 million new health sector jobs by 2030 in mostly high- and middle-income countries and a needs-based shortage of 18 million, mostly in low- and middle-income countries. This paper shows how these key findings were developed, the global policy dilemmas they raise, and relevant policy solutions.

Methods

Regression analysis is used to produce estimates of health worker need, demand, and supply. Projections of health worker need, demand, and supply in 2030 are made under the assumption that historical trends continue into the future.

Results

To deliver essential health services required for the universal health coverage target of the Sustainable Development Goal 3, there will be a need for almost 45 million health workers in 2013 which is projected to reach almost 53 million in 2030 (across 165 countries). This results in a needs-based shortage of almost 17 million in 2013. The demand-based results suggest a projected demand of 80 million health workers by 2030.

Conclusions

Demand-based analysis shows that high- and middle-income countries will have the economic capacity to employ tens of millions additional health workers, but they could face shortages due to supply not keeping up with demand. By contrast, low-income countries will face both low demand for and supply of health workers. This means that even if countries are able to produce additional workers to meet the need threshold, they may not be able to employ and retain these workers without considerably higher economic growth, especially in the health sector.

Appendix

A graphical depiction of need, demand, and supply

Figure 2 shows the demand and supply of doctors though this could apply to nurses or other health workers as well. Demand is related to the spending on health by the government, private insurance, and out-of-pocket payments. The supply of health workers is a function of the training capacity in a country, net migration, deaths, and retirements. In a perfectly functioning labor market, the market clears when the supply of health workers equals the demand at point E. When this happens, the wage would be W* and N* doctors would be employed. However, countries, particularly in resource-constrained low- and middle-income settings, often face binding constraints on the amount of financing that is available for paying health workers as well as rigidities such as government salaries that are set by law across civil servant categories and often do not fully relate to the value of a health worker’s productivity. Thus, the wage offered will be lower, W^L rather than W*, resulting in a shortage of doctors represented by length AB. The supply of doctors willing to work at W^L is A while the demand for doctors at this wage is B. If the lack of government resources and/or policy prevent wages from rising to W*, the shortage will persist.

Fig. 2

How the labor market for health professionals relates to a country’s education and health care system. Source: [15]

The need for doctors is shown as the vertical line which passes through point C though it could be further to the right of C—which is the case in very low-income countries. At a wage W^L, the number of doctors employed will be A but the need is C, so the needs-based shortage is length AC. In this case, the needs-based shortage is larger than the demand-based shortage by BC (AC minus AB). For high-income countries and upper-middle-income countries, the situation is often reversed. The need line moves to the left inside the demand curve, and the demand-based shortage is often larger than the needs-based shortage (Fig. 3).

Fig. 3

Demand and supply of doctors

Regression equations used to estimate need, demand, and supply

Need

$$ \mathrm{SDG}\ \mathrm{composite}\ {\mathrm{score}}_i={\beta}_0+{\beta_1}^{\ast}\mathit{\ln}\left(\mathrm{health}\ \mathrm{workers}\ \mathrm{per}\ 1000\ {\mathrm{population}}_i\right)+{\xi}_i $$

(1)

where ξ _i is the disturbance term, and β₀ and β₁ are unknown parameters to be estimated from the model.

Demand

$$ {\displaystyle \begin{array}{l}\mathit{\ln}\left(\mathrm{physicians}\ \mathrm{per}\ 1000\ {\mathrm{population}}_{it}\right)={\beta}_0+{\beta_1}^{\ast}\mathit{\ln}\left(\mathrm{GDP}\ \mathrm{per}\ {\mathrm{capita}}_{it-1}\right)+\\ {}{\beta_2}^{\ast}\mathit{\ln}\left(\mathrm{GDP}\ \mathrm{per}\ {\mathrm{capita}}_{it-4}\right)+{\beta_3}^{\ast}\mathit{\ln}\left(\mathrm{GDP}\ \mathrm{per}\ {\mathrm{capita}}_{it-5}\right)+{\beta_4}^{\ast}\mathit{\ln}\left({\mathrm{OOPPC}}_{it-2}\right)+\\ {}{\beta_5}^{\ast}\mathit{\ln}\left( Pop{65}_{it-3}\right)+{\mu}_i+{\xi}_{it}\end{array}} $$

(2)

where μ _i represents a vector of country fixed effects, ξ _it is the disturbance term, and β coefficients are unknown parameters to be estimated from the model. A generalized linear model (GLM) with a normal distribution and identity link function was used to fit a linear regression using a maximum likelihood estimator. Predicted values of logged physician densities from this model were then transformed with an antilog and multiplied by a correction factor ${e}^{\sigma^2/2}$ to account for the skewed distribution.

To avoid endogeneity, GDP per capita, OOP spending per capita (OOPPC), and the size of the population aged 65 or over (Pop65) were all lagged up to 5 years to allow time for such factors to work through the economy and affect the labor market, as other authors have done in previous projection exercises [18, 29]. A stepwise approach was used to select the specific combination of year lags that maximized the predictive power of each variable. Lagged variables that achieved a minimum 1% level of significance after repeated iteration were kept within the model.

Supply

WHO separately estimated the growth rate of physician and nurses/midwives density for each country from 1990 to 2013 using the following equations:

$$ \mathrm{Physicians}\ \mathrm{per}\ 1000\ {\mathrm{population}}_t={\alpha}_0+{\alpha_1}^{\ast }{\mathrm{year}}_t+{\varepsilon}_t $$

(3)

$$ \mathrm{Nurses}/\mathrm{midwives}\ \mathrm{per}\ 1000\ {\mathrm{population}}_t={\beta}_0+{\beta_1}^{\ast }{\mathrm{year}}_t+{\varepsilon}_t $$

(4)

where ε _t is the random disturbance term and α₀, β₀, α₁, and β₁ are unknown parameters, with the last two parameters representing the linear growth rates to be estimated from the model.

Strengths and weaknesses of the demand and supply model

Demand model:

• Strengths:

  • Builds on previous models of health worker demand (see [18]) and adds in two factors not previously accounted for but that can have a large effect on demand: out-of-pocket expenditures (i.e., as an indicator for the generosity of health insurance, and thus social protection against catastrophic healthcare spending) and the size of the population aged 65 or over (as an indicator for population aging, which is likely to drive greater demand for care).

  • Inclusion of country fixed effects to account for time-invariant unobservable heterogeneity across countries (i.e., differences in baseline characteristics between countries).

  • Sensitivity analyses showed that the final specification yielded the best predicted values in terms of having the lowest mean error compared to alternative specifications using differently calculated input variables (i.e., percentage of the population aged 65+, out-of-pocket expenditures as a percentage of total per capita health expenditures).

  • Predicted values were also relatively stable using alternative estimates of future values of GDP per capita and size of the population aged 65 or over.

• Weaknesses

  • Cannot take other factors into account that also affect demand, such as changing epidemiology of disease (e.g., epidemiological transition from infectious diseases to non-communicable diseases in many lower-income countries), increased productivity (through technological advance, which can also affect skills mix), changes in the organization of health care delivery

  • Only had sufficient data for physicians to do predictions, had to make global assumptions about nurses/midwives and other types of health care workers. Can build these other cadres in as more data become available.

Supply model:

• Strengths:

  • Maximizes use of historical data for each country to predict future trends

  • Assumes a conservative linear relationship in yearly growth rather than a more aggressive exponential relationship.

• Weaknesses

  • Assumes no change in either the entry or exit of workers into the market, which may be unrealistic (as reviewer mentions example about the aging workforce). Linear trend assumes rate of aging will stay the same when it actually may be increasing, resulting in an overestimate of future supply.

  • Other factors, such as changes in certification/licensing rules, migration, and education capacity could also affect the supply. In many countries, these policy and programmatic changes are enacted to augment the production of health workers, some of which may actually become employed in service delivery. Ignoring these factors would likely result in underestimating future supply.

  • In the end, it is not known what the net effect of these various factors might be on supply without more detailed data on graduation rates, in/out migration of health workers across countries, and retirement to include in the model.