Workforce Shortage and Wage Bill Forecasts: Effect of Skill Mix Changes (Lecture B2)

1. Workforce Shortage and Wage Bill Forecasts: Effect of Skill Mix Changes (Lecture B2) Richard M. Scheffler, PhD Distinguished Professor of Health Economics & Public Policy Director, Global Center for Health Economics and Policy Research School of Public Health University of California, Berkeley

2. Learning Objectives • Forecast workforce shortages and surpluses • Estimate economic demand • Forecast supply using a trendline • Estimate requirements using different utilization measures and controlling for country-level factors • Estimate scaling-up costs • Wage bill • Training • Non-wage bill • Illustrate workforce and wage bill shortages under different skill mixes

3. Overview • Forecast workforce shortages and surpluses • Estimate scaling-up costs • Illustrate workforce and wage bill shortages under different skill mixes

4. Two types of shortages Need-based shortage: Need – Supply = Shortage Economic demand-based shortage: Economic Demand – Supply = Shortage

6. WHR 2006 found 2.28 workers per 1,000 population are required to achieve 80% coverage of births

7. WHR 2006 country-level model • Regression model: arcsine(percent coverage) =β0 + β1* ln(health workers per 1,000 pop) + ε

8. Extensions • Time period: 2015 • Estimate need for doctors versus nurses and midwives separately • Estimate economic demand for doctors • Needs-based extensions • Use different needs-based health utilization measures • Use additional co-variates

9. Conceptual Framework Demand Scheffler, RM, Liu, JX, Kinfu, Y, Dal Poz, MR. “Forecasting the Global Shortages of Physicians: An Economic- and Needs-based Approach.” April 2008, The Bulletin of the World Health Organization. Available at: http://www.who.int/bulletin/volumes/86/7/07-046474.pdf

10. Needs-based model projection arcsine(percent coverage) =β0 + β1* ln(physicians per 1,000 populationi,t) +μi +ηt + εi,t Where: μi : Country fixed effects ηt : Time fixed effects εi,t : Random disturbance term Scheffler, RM, Liu, JX, Kinfu, Y, Dal Poz, MR. “Forecasting the Global Shortages of Physicians: An Economic- and Needs-based Approach.” April 2008, The Bulletin of the World Health Organization. Available at: http://www.who.int/bulletin/volumes/86/7/07-046474.pdf

11. Demand-based model projection ln(physicians per 1,000 populationi,t) =γ0 + γ1*ln(GNP per capitai,t-5)+ γ2*IncomeDummyi + μi +ηt + εi,t Where IncomeDummyi: low-income and middle-income dummies μi : country fixed effects ηt : Time fixed effects εi,t : random disturbance term Scheffler, RM, Liu, JX, Kinfu, Y, Dal Poz, MR. “Forecasting the Global Shortages of Physicians: An Economic- and Needs-based Approach.” April 2008, The Bulletin of the World Health Organization. Available at: http://www.who.int/bulletin/volumes/86/7/07-046474.pdf

12. Needs-based and demand-based regression modeling results Source: Scheffler et al., 2008 The Bulletin of the World Health Organization

13. Found 0.55 doctors per 1,000 population are required to achieve 80% coverage of births

14. Supply projection ln(doctors per 1,000 populationt) =α0 + α1*Yeart + εt Where t = index {1980,…,2001} Yeart: year dummy variables εt random disturbance term Scheffler, RM, Liu, JX, Kinfu, Y, Dal Poz, MR. “Forecasting the Global Shortages of Physicians: An Economic- and Needs-based Approach.” April 2008, The Bulletin of the World Health Organization. Available at: http://www.who.int/bulletin/volumes/86/7/07-046474.pdf

15. Number of countries with projected shortages of doctors in 2015 Note: A country was defined to have a shortage if the projected supply of doctors met less than 80% of the projected demand or need. Scheffler, RM, Liu, JX, Kinfu, Y, Dal Poz, MR. “Forecasting the Global Shortages of Physicians: An Economic- and Needs-based Approach.” April 2008, The Bulletin of the World Health Organization. Available at: http://www.who.int/bulletin/volumes/86/7/07-046474.pdf

16. Significant doctor shortages projected for Africa and Asia in 2015 Source: Scheffler et al., 2008 The Bulletin of the World Health Organization

17. Summary of Findings for Africa • Over 30 countries with projected doctor shortages in 2015 • Shortage totals 257,000 doctors • Needs-based demand: 369,000 • Projected supply: 112,000

18. Doctor Shortages in Africa in 2015 Scheffler, RM, Liu, JX, Kinfu, Y, Dal Poz, MR. “Forecasting the Global Shortages of Physicians: An Economic- and Needs-based Approach.” April 2008, The Bulletin of the World Health Organization. Available at: http://www.who.int/bulletin/volumes/86/7/07-046474.pdf

19. Doctor Shortages in Africa in 2015 (cont.) Countries with no doctor shortages: Botswana, Congo, Namibia, Mauritius, South Africa and Algeria Scheffler, RM, Liu, JX, Kinfu, Y, Dal Poz, MR. “Forecasting the Global Shortages of Physicians: An Economic- and Needs-based Approach.” April 2008, The Bulletin of the World Health Organization. Available at: http://www.who.int/bulletin/volumes/86/7/07-046474.pdf

20. Overview • Forecast workforce shortages and surpluses • Estimate requirements using different utilization measures and controlling for country-level factors • Estimate scaling-up costs • Illustrate workforce and wage bill shortages under different skill mixes

21. World Health Survey (WHS) 2002 53 countries used for this analysis, including 18 in Africa Approximately 4,000 adults per country surveyed Household and individual surveys 21

22. Descriptive Statistics for Africa (n=18)

23. Extended needs-based model percent of need met =β0 + β1* log(health care professionals per 1,000 population) +x + ε Where: percent of need met: is for a particular health care utilization measure x: country-level factors (land area per capita, percent population that is urban) ε: Random error term

24. Number of Required Workers Varies Based on Health Utilization Measure Source: Fulton and Scheffler, forthcoming. Do not cite or distribute.

25. Number of Required Workers Varies Based on Countries’ Geographic Characteristics Source: Fulton and Scheffler, forthcoming. Do not cite or distribute.

26. Overview • Forecast workforce shortages and surpluses • Estimate scaling-up costs • Illustrate workforce and wage bill shortages under different skill mixes

27. Components of scaling-up • Human resources • Wage bill for health care professionals • Wage bill for support staff • Training • Other inputs • Facilities • Equipment • Supplies • Pharmaceuticals

28. Annual wage bill required to remove health worker shortage in Africa for 2015 Note: Numbers are based on rounded numbers. Source: Scheffler et al., 2009 Health Affairs

29. Annual wage bill required to remove health worker shortage in Africa for 2015 (millions $US 2007) Note: Numbers are based on rounded numbers. Source: Scheffler et al., 2009 Health Affairs

30. Annual wage bill required to remove health worker shortage in Africa for 2015 (millions $US 2007) (cont.) Note: Numbers are based on rounded numbers. Source: Scheffler et al., 2009 Health Affairs

31. Wage bill only represents fraction of scaling-up costs, 31 SSA Countries Training Non-wage bill Wage bill Data Sources: World Health Report 2006, and Effective Aid Better Heath (2008) Source: Scheffler et al., 2009 Health Affairs

32. Overview • Forecast workforce shortages and surpluses • Estimate scaling-up costs • Illustrate workforce and wage bill shortages under different skill mixes

33. Optimal skill mix • Duality: • For a given budget, what is the mix of workers that produce the maximum output? • For a given output, what is the mix of workers that produce that output for the lowest budget (or cost)?

34. Example: If you had $15 more budget, would you want to hire more doctors or nurses, given this situation? • Hire 3 doctors for 30 visits. • Hire 5 nurses for 45 visits.

35. Annual wage bill required to remove health worker shortage in 12 non-African countries for 2015 ($USD 2007 mn) Note: Numbers are based on rounded numbers. Preliminary results. Do not cite.

36. Adjusting the skill mix: elements of the simulation • Substitution level • Substitute nurses for doctors (increase nurse:doctor ratio) • Substitute community health workers (CHW) for nurses (0 to 20%) • Relative wages • Nurse wage relative to doctor’s--Occupational Wages around the World (OWW) Database • CHW wage relative to nurse’s (0.2) • Relative productivity • Nurse productivity relative to doctor’s (0.7-0.9) • CHW productivity relative to nurse’s (0.3) Note: simulation includes midwives, but the text in this and following slides only uses the term nurses.

37. Nurse+Midwife:Doctor Ratio Significantly Varies Across Projected Shortage Countries

38. Nurse:Doctor Wage Ratio Significantly Varies Across Projected Shortage Countries *Indicates wage was predicted by gross national income per capita.

39. Bangladesh Example Numbers may not add due to rounding.

40. Bangladesh Example Numbers may not add due to rounding.

41. Bangladesh Example Numbers may not add due to rounding.

42. Changing the skill mix has the potential to reduce the wage bill costs A Notes: based on 12 non-African low- and middle-income countries with projected shortages in 2015; $1.8bn (USD 2007) shortfall. Preliminary results. Do not cite.

43. Wage bill reduction depends on relative productivity of workers B Notes: based on 12 non-African low- and middle-income countries with projected shortages in 2015; $1.8bn (USD 2007) shortfall. Preliminary results. Do not cite.

44. Adding CHW to the skill mix has an even greater potential to reduce wage bill C Notes: based on 12 non-African low- and middle-income countries with projected shortages in 2015; $1.8bn (USD 2007) shortfall. Assumes one nurse equals 0.8 doctors. Preliminary results. Do not cite.

45. Wage bill shortage is reduced under new skill mix, but varies by country (2007 $USD million) Assumes one nurse equals 0.8 doctors, nurse:doctor ratio increases 50%, and 20% of nurses are replaced with CHW. Preliminary results. Do not cite.

46. Implications of adjusting the skill mix • Substitute lower skilled workers for higher skilled • Reduce wage bill • Reduce training costs • Reduce time to scale up • Need to maintain quality

47. Learning Objectives • Forecast workforce shortages and surpluses • Estimate economic demand • Forecast supply using a trendline • Estimate requirements using different utilization measures and controlling for country-level factors • Estimate scaling-up costs • Wage bill • Training • Non-wage bill • Illustrate workforce and wage bill shortages under different skill mixes

48. Global Center for Health Economics and Policy Research (UC Berkeley) publications • Scheffler RM, Liu JX, Kinfu Y, Dal Poz MR. “Forecasting the Global Shortages of Physicians: An Economic- and Needs-based Approach.” The Bulletin of the World Health Organization 86, 2008:516-523. Available at: http://www.who.int/bulletin/volumes/86/7/07-046474.pdf • Scheffler, RM. Is There a Doctor in the House? Market Signals and Tomorrow’s Supply of Doctors. Palo Alto, Calif.: Stanford University Press, 2008. • Scheffler RM, Mahoney CB, Fulton BD, Dal Poz MR, Preker AS. “Estimates of Sub-Saharan Africa Health Care Professional Shortages by 2015,” Health Affairs 28, 2009: w849-w862. • Fulton BD, Scheffler RM, “Health Care Professional Shortages and Skill-Mix Options Using Community Health Workers: New Estimates for 2015,” forthcoming chapter in a book being published from papers selected from The Performance of National Health Workforce Conference, sponsored by World Health Organization, Neuchatel, Switzerland, October 2009. • Scheffler RM, Fulton BD, “Needs-Based Health Workforce Analysis: Methods and Empirical Estimates in Selected African Countries,” forthcoming chapter in HRH in Africa: A New Look at the Crisis, Washington, DC: The World Bank.

49. Questions? End of Presentation

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