Valuation of Internal Medicine Services: Competition

Internists are considered part of the primary care industry, a service sector of growing importance to the healthcare delivery system despite increasing physician shortages. According to data from the American Board of Medical Specialties (ABMS), there are nearly 245,000 board-certified physicians in internal medicine.1 This third installment of the five-part series on the valuation of internal medicine services will discuss the competitive landscape of the providers of internal medicine.

Supply of Internists

Over the next two decades, physician demand is anticipated to grow faster than supply, leading to a projected overall total shortage between 37,800 and 124,000 physicians by 2034.2 A large proportion of the overall physician workforce is nearing traditional retirement age, indicated by the fact that more than two of every five active physicians in the U.S will be 65 or older in the next decade.3 Combined with the strong growth in demand from the number of Americans over the age of 65 and the number of Americans with multiple chronic conditions, this indicates that the U.S. may soon face a serious shortage of internists. While the number of medical students in primary care is increasing, it is not sufficient to replace the number of retiring physicians, which means that there likely not be enough primary care (including internal medicine) physicians to treat the aging Baby Boomer population.4 In fact, only about 25% of medical school graduates every year go into primary care fields.5 Consequently, by 2034, the shortfall of primary care physicians, including internists, is estimated to be somewhere between 17,800 and 48,000 full-time equivalents (FTEs).6

In 2017, there were 2,758 individuals per internal medicine physician in the U.S.7 Family and general practice physicians had a similar ratio of 2,804 patients per physician, while pediatricians had a much lower ratio of 1,429 patients per physician.8 Recent studies indicate that primary care physicians generally have patient panel sizes ranging from 1,200 to 1,900 patients per physician.9 This estimate is much lower than the 2,500 patients per physician often previously cited as the standard for panel size, and indicates a need for, and lack of, internal medicine and other primary care physicians to achieve optimum coverage of patients.10 Further, the number of U.S. adults with a primary care physician has been falling in recent years, from 77% in 2002 to 75% in 2015, resulting in millions of Americans without a primary care physician.11 The issue is much more pronounced in the younger adult population, where the rate declined from 71% to 64% over those years.12

The physician shortage has impacted those living in rural areas the most. Health Professional Shortage Areas (HPSAs) identify areas and populations that have a shortage of primary, dental, or mental healthcare providers primarily based on the number of healthcare professionals relative to the population.13 Medically underserved areas/populations;(MUA/P);are areas or populations designated by the Health Resources Services Administration (HRSA) as having too few primary care health services or having “economic, cultural, or language barriers” to healthcare.14;As of December 2021, there were over 7,500 primary care HPSAs in the U.S. with California, Texas, Missouri, and Alaska having the greatest number of those designations.15 Additionally, there were over 3,400 MUAs and 482 MUPs, which were concentrated in California, Texas, Illinois, Georgia, and Pennsylvania.16

In order to ameliorate the primary care shortage and meet the growing demand for healthcare services, healthcare enterprises are increasingly relying upon non-physician practitioners (NPPs), and have lobbied for an expansion in the role of the non-physician workforce to provide services that support, supplement, and parallel physician services. In light of the fact that the gap between the supply and demand for physician services is projected to increase significantly, as the sources of physician manpower remain insufficient, and as the drivers of demand (i.e., the aging Baby Boomer population and the increased number of insured individuals) intensify, the NPP workforce is expected to see continued growth in both scope and volume in the future, as enterprises adopt care models that strategically allocate physician and non-physician manpower resources. According to the U.S. Bureau of Labor Statistics, nurse practitioner job growth is expected to be 45% from 2020 to 2030, much faster than the average for all occupations.17 As of 2021, 24 states, including the District of Columbia, allow nurse practitioners full independent practicing authority, which includes the ability to: “evaluate patients; diagnose, order and interpret diagnostic tests; and initiate and manage treatments, including prescribing medications and controlled substances, under the exclusive licensure authority of the state board of nursing.”18 Those states effectively allow nurse practitioners the same scope of practice as physicians, showcasing the potential of NPPs to help ameliorate the coming physician shortage.19

Demand Drivers for Internal Medicine

The growing elderly patient population utilizes a greater proportion of (and expenditures related to) medical services relative to the rest of the general population, and as such may comprise a growing part of the patient population in future years. Specifically, the demand for internal medicine services come primarily from older adults (with internal medicine constituting a major share of visits for those over age 45) and those with multiple, complex, chronic conditions. As of 2018, the number of Americans age 45-64 increased by 7%, reaching a total of 83.9 million.20 The prevalence of chronic disease nationwide has also been on the rise, with 60% of adults having one chronic disease and 40% having two or more chronic conditions.21

Increasing attention is also being paid to primary care, on both a research and legislation level, as a way to reduce costs and improve patient outcomes. U.S. health outcomes lag behind those of other wealthy countries, despite spending far more on healthcare than those countries.22; Currently, only 5 - 7% of healthcare spending is devoted to primary care, with less than 5% of Medicare fee-for-service spending (i.e., spending related to patients aged 65+) going to primary care costs.23 In contrast, countries with better health outcomes often spend two to three times more on their primary care systems.24 Studies have shown that primary care significantly lowers patients’ odds of premature death and save money by reducing unnecessary hospitalizations and by diagnosing and treating medical issues earlier.25 With the U.S. healthcare industry’s increasing focus on value-based reimbursement (VBR), which incentivizes the provision of higher-quality care at lower cost, some of this discrepancy between low spending and high proportions of office visits for primary care may ultimately be eliminated.26


“ABMS Board Certification Report 2019-2020” American Board of Medical Specialties, November 2020, available at: https://www.abms.org/wp-content/uploads/2020/11/ABMS-Board-Certification-Report-2019-2020.pdf (Accessed 11/29/21), p. 3.

“The Complexities of Physician Supply and Demand: Projections from 2019 to 2034” Association of American Medical Colleges, June 2021, p. viii.

“AAMC Report Reinforces Mounting Physician Shortage” Report for the Association of American Medical Colleges, June 11, 2021, https://www.aamc.org/news-insights/press-releases/aamc-report-reinforces-mounting-physician-shortage (Accessed 11/29/21).

“Physician workforce in the United States of America: forecasting nationwide shortages” By Xiaoming Zhang, et al., Human Resources for Health, Vol. 18, No. 8 (2020) available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7006215/ (Accessed 12/18/21).

“The Case for Primary Care” Primary Care Progress, https://www.primarycareprogress.org/primary-care-case/ (Accessed 11/29/21).

Association of American Medical Colleges, June 2021, p. 7.

“Number of People per Active Physician by Specialty, 2019” Association of American Medical Colleges, January 2021, https://www.aamc.org/what-we-do/mission-areas/health-care/workforce-studies/interactive-data/number-people-active-physician-specialty-2019 (Accessed 11/29/21).

Ibid.

“A Primary Care Panel Size of 2500 Is neither Accurate nor Reasonable” By Melanie Raffoul, Miranda Moore, Doug Kamerow, and Andrew Bazemore, Journal of the American Board of Family Medicine, Vol. 29, No. 4 (July 2016), p. 496-497.

Ibid.

“Declining numbers of Americans have a primary care provider” By Linda Carroll, Reuters, December 16, 2019, https://www.reuters.com/article/us-health-pcp-trends/declining-numbers-of-americans-have-a-primary-care-provider-idUSKBN1YK1Z4 (Accessed 11/29/21).

Ibid.

“What is Shortage Designation?” Health Resources and Services Administration, https://bhw.hrsa.gov/workforce-shortage-areas/shortage-designation (Accessed 12/18/21).

Ibid.

“Explore HPSAs” Health Resources Services Administration, December 17, 2021, https://data.hrsa.gov/topics/health-workforce/shortage-areas (Accessed 12/18/21).

Ibid.

“Occupational Outlook Handbook, Nurse Anesthetists, Nurse Midwives, and Nurse Practitioners” Bureau of Labor Statistics, U.S. Department of Labor, September 8, 2021, https://www.bls.gov/ooh/healthcare/nurse-anesthetists-nurse-midwives-and-nurse-practitioners.htm (Accessed 11/29/21).

“State Practice Environment” American Association of Nurse Practitioners, January 1, 2021, https://www.aanp.org/advocacy/state/state-practice-environment (Accessed 11/29/21).

Ibid.

“2019 Profile of Older Americans” Administration for Community Living, May 2020, https://acl.gov/sites/default/files/Aging%20and%20Disability%20in%20America/2019ProfileOlderAmericans508.pdf (Accessed 11/29/21).

“Chronic Diseases in America” Centers for Disease Control and Prevention, January 12, 2021, https://www.cdc.gov/chronicdisease/resources/infographic/chronic-diseases.htm (Accessed 11/29/21).

“The Importance Of Primary Care—And Of Measuring It” By Hoangmai Pham and Anne Greiner, Health Affairs, August 6, 2019, https://www.healthaffairs.org/do/10.1377/hblog20190802.111704/full/ (Accessed 11/29/21).

Ibid.

Ibid.

Primary Care Progress,” https://www.primarycareprogress.org/primary-care-case/ (Accessed 11/29/21).

For more information on VBR, see “Valuation of Internal Medicine Services: Reimbursement,” Health Capital Topics, Vol. 14, No 10 (October 2021), https://www.healthcapital.com/hcc/newsletter/10_21/HTML/INTERNAL/convert_internal-med-reimbursement-topics.php (Accessed 11/29/21).

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