[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
                       FULL COMMITTEE HEARING ON 
                    THE PROJECTED PHYSICIAN SHORTAGE 
                      AND HOW HEALTH CARE REFORMS 
                        CAN ADDRESS THE PROBLEM 

=======================================================================

                                HEARING

                               before the


                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                              July 8, 2009

                               __________
                               
            Small Business Committee Document Number 111-034
Available via the GPO Website: http://www.access.gpo.gov/congress/house

                    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

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                   HOUSE COMMITTEE ON SMALL BUSINESS

                NYDIA M. VELAZQUEZ, New York, Chairwoman

                          DENNIS MOORE, Kansas

                      HEATH SHULER, North Carolina

                     KATHY DAHLKEMPER, Pennsylvania

                         KURT SCHRADER, Oregon

                        ANN KIRKPATRICK, Arizona

                          GLENN NYE, Virginia

                         MICHAEL MICHAUD, Maine

                         MELISSA BEAN, Illinois

                         DAN LIPINSKI, Illinois

                      JASON ALTMIRE, Pennsylvania

                        YVETTE CLARKE, New York

                        BRAD ELLSWORTH, Indiana

                        JOE SESTAK, Pennsylvania

                         BOBBY BRIGHT, Alabama

                        PARKER GRIFFITH, Alabama

                      DEBORAH HALVORSON, Illinois

                  SAM GRAVES, Missouri, Ranking Member

                      ROSCOE G. BARTLETT, Maryland

                         W. TODD AKIN, Missouri

                            STEVE KING, Iowa

                     LYNN A. WESTMORELAND, Georgia

                          LOUIE GOHMERT, Texas

                         MARY FALLIN, Oklahoma

                         VERN BUCHANAN, Florida

                      BLAINE LUETKEMEYER, Missouri

                         AARON SCHOCK, Illinois

                      GLENN THOMPSON, Pennsylvania

                         MIKE COFFMAN, Colorado

                  Michael Day, Majority Staff Director

                 Adam Minehardt, Deputy Staff Director

                      Tim Slattery, Chief Counsel

                  Karen Haas, Minority Staff Director

        .........................................................

                                  (ii)

  


                         STANDING SUBCOMMITTEES

                                 ______

               Subcommittee on Contracting and Technology

                     GLENN NYE, Virginia, Chairman


YVETTE CLARKE, New York              AARON SCHOCK, Illinois, Ranking
BRAD ELLSWORTH, Indiana              ROSCOE BARTLETT, Maryland
KURT SCHRADER, Oregon                TODD AKIN, Missouri
DEBORAH HALVORSON, Illinois          MARY FALLIN, Oklahoma
MELISSA BEAN, Illinois               GLENN THOMPSON, Pennsylvania
JOE SESTAK, Pennsylvania
PARKER GRIFFITH, Alabama

                                 ______

                    Subcommittee on Finance and Tax

                    KURT SCHRADER, Oregon, Chairman


DENNIS MOORE, Kansas                 VERN BUCHANAN, Florida, Ranking
ANN KIRKPATRICK, Arizona             STEVE KING, Iowa
MELISSA BEAN, Illinois               TODD AKIN, Missouri
JOE SESTAK, Pennsylvania             BLAINE LUETKEMEYER, Missouri
DEBORAH HALVORSON, Illinois          MIKE COFFMAN, Colorado
GLENN NYE, Virginia
MICHAEL MICHAUD, Maine

                                 ______

              Subcommittee on Investigations and Oversight

                 JASON ALTMIRE, Pennsylvania, Chairman


HEATH SHULER, North Carolina         MARY FALLIN, Oklahoma, Ranking
BRAD ELLSWORTH, Indiana              LOUIE GOHMERT, Texas
PARKER GRIFFITH, Alabama

                                 (iii)

  


               Subcommittee on Regulations and Healthcare

               KATHY DAHLKEMPER, Pennsylvania, Chairwoman


DAN LIPINSKI, Illinois               LYNN WESTMORELAND, Georgia, 
PARKER GRIFFITH, Alabama             Ranking
MELISSA BEAN, Illinois               STEVE KING, Iowa
JASON ALTMIRE, Pennsylvania          VERN BUCHANAN, Florida
JOE SESTAK, Pennsylvania             GLENN THOMPSON, Pennsylvania
BOBBY BRIGHT, Alabama                MIKE COFFMAN, Colorado

                                 ______

     Subcommittee on Rural Development, Entrepreneurship and Trade

                  HEATH SHULER, Pennsylvania, Chairman


MICHAEL MICHAUD, Maine               BLAINE LUETKEMEYER, Missouri, 
BOBBY BRIGHT, Alabama                Ranking
KATHY DAHLKEMPER, Pennsylvania       STEVE KING, Iowa
ANN KIRKPATRICK, Arizona             AARON SCHOCK, Illinois
YVETTE CLARKE, New York              GLENN THOMPSON, Pennsylvania

                                  (iv)

  















                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page

Velazquez, Hon. Nydia M..........................................     1
Graves, Hon. Sam.................................................     2

                               WITNESSES

Harbaugh, Dr. Robert E., Professor and Chair, Department of 
  Neurosurgery, Penn State University, On behalf of the American 
  Association of Neurological Surgeons & Congress of Neurological 
  Surgeons, Hershey, PA..........................................     3
Sheldon, Dr. George F., Professor of Surgery and Social Medicine, 
  Department of Surgery, The University of North Carolina at 
  Chapel Hill, On behalf of the American College of Surgeons, 
  Chapell Hill, NC...............................................     5
DiMarco, Dr. Carlo, Professor and Regional Dean of Clinical 
  Medicine, Lake Erie College of Osteopathic Medicine, President, 
  American Osteopathic Association, Erie, PA.....................     7
Heim, Dr. Lori, President Elect, American Academy of Family 
  Physicians, Laurinburg, NC.....................................     9
Kauk, Dr. Bruce A., Northland Internal Medicine, Gladstone MO....    11

                                APPENDIX


Prepared Statements:
Velazquez, Hon. Nydia M..........................................    25
Graves, Hon. Sam.................................................    27
Harbaugh, Dr. Robert E., Professor and Chair, Department of 
  Neurosurgery, Penn State University, On behalf of the American 
  Association of Neurological Surgeons & Congress of Neurological 
  Surgeons, Hershey, PA..........................................    29
Sheldon, Dr. George F., Professor of Surgery and Social Medicine, 
  Department of Surgery, The University of North Carolina at 
  Chapel Hill, On behalf of the American College of Surgeons, 
  Chapell Hill, NC...............................................    35
DiMarco, Dr. Carlo, Professor and Regional Dean of Clinical 
  Medicine, Lake Erie College of Osteopathic Medicine, President, 
  American Osteopathic Association, Erie, PA.....................    45
Heim, Dr. Lori, President Elect, American Academy of Family 
  Physicians, Laurinburg, NC.....................................    50
Kauk, Dr. Bruce A., Northland Internal Medicine, Gladstone MO....    59

Statements for the Record:
American College of Physicians...................................    62
Metropolitan Medical Society of Greater Kansas City..............    79
National Rural Health Association................................   106
American Academy of Physician Assistants.........................   109

                                  (v)

  


                       FULL COMMITTEE HEARING ON
                         THE LOOMING CHALLENGE
                      FOR SMALL MEDICAL PRACTICES:
                    THE PROJECTED PHYSICIAN SHORTAGE
                      AND HOW HEALTH CARE REFORMS
                        CAN ADDRESS THE PROBLEM

                              ----------                              


                        Wednesday, July 8, 2009

                     U.S. House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 9:35 a.m., in Room 
2360, Rayburn House Office Building, Hon. Nydia M. Velazquez 
[Chair of the Committee] presiding.
    Present: Representatives Velazquez, Moore, Dahlkemper, 
Altmire, Bright, Griffith, Graves, Bartlett, Luetkemeyer, and 
Thompson.
    Chairwoman Velazquez. Good morning, everyone. This hearing 
is now called to order.
    American health care is a complex system. To properly 
function, it requires a myriad of interworking components, from 
hospital infrastructure to insurance companies and drug 
researchers. But the most critical element cannot be built or 
tested in a laboratory. It is the men and women who make the 
system run.
    General practitioners are the backbone of the medical 
field. They offer basic care and are responsible for half of 
all patient visits. But in many parts of the country these 
small business practices are becoming an endangered species.
    Today, we will examine the current physician workforce 
shortage and discuss its potential impact on health care 
reform. This issue is of particular concern to our Committee, 
not just because most general practices are small firms. For 
one, it affects doctors in all areas, from surgeons to 
pediatricians. Physician shortfalls also hinder our efforts to 
control costs for entrepreneurs and have the potential to 
undermine our work towards universal coverage.
    In overhauling health care, we are looking to provide 
coverage that is both affordable and accessible, but we cannot 
do that without the necessary workforce.
    In the last decade the availability of doctors has dropped 
off considerably, even for those with gold-plated policies. If 
current trends continue, the gap between supply and demand may 
reach 125,000 by the year 2025. Fewer physicians mean longer 
lines in waiting rooms, greater difficulties scheduling 
appointments, and less time with the doctors themselves. These 
challenges are more than an inconvenience. Some patients may 
choose to avoid checkups all together. That will be a dangerous 
consequence, one that could blunt the benefits of universal 
coverage and drive up costs over time.
    Primary care is preventative care and an effective means 
for reining in costs. That is because a person who gets regular 
checkups is less likely to develop serious conditions down the 
road; and, considering that 75 percent of health care 
expenditures go towards treating chronic illnesses, primary 
care is critical.
    The current physician shortage is already posing a 
significant threat to reform. Reform will bring more uninsured 
Americans into the fold, but it will not create more doctors to 
treat them. Take the 46 million newly insured, add an aging 
baby boomer population, and that could very well be a recipe 
for disaster.
    As with anything related to health care, there is no silver 
bullet solution. Still, a number of possible fixes are under 
consideration, including provisions to expand health services 
in underserved communities, the regions suffering most from the 
current shortage.
    This body will soon take steps to transform our broken 
health care system. I think most of us will agree that it is 
about time. But in moving towards reform, we need to be sure 
our foundation is strong. It is critical that we have a solid 
pool of medical professionals to see the process through. 
Today, I hope we can look for ways to make that happen.
    I would like to thank all of today's witnesses in advance 
for their testimony, and I am so pleased that they could join 
us and look forward to hearing from all of you.
    And let me say the hearing was scheduled to start at 10, 
but the Small Business Committee has a bill on the floor, and 
they sent a late note last night that the hearing needed to be 
much earlier.
    With that, I will yield to Ranking Member Graves for his 
opening statement.
    Mr. Graves. Thank you, Madam Chair, and thank you for 
calling this hearing on the supply of physicians here in the 
United States. And I want to extend a special thanks to all of 
our witnesses who are here today.
    A 2008 University of Missouri study found that the U.S. 
Could face a shortage of up to 44,000 family physicians, 
general internists, and general pediatricians in the next 20 
years. Many of these professionals operate solo or in small 
group practices, small businesses. It is underserved urban and 
rural areas, such as parts of my district in Missouri.
    With our growing and aging population, there is an 
increasing demand for health care services, and there is a 
trend towards the coordinated and continuous care provided by 
primary care physicians and internists. However, during the 
past decade the supply of generalist physicians has fallen by 
22 percent, partly due to the reliance on physician 
specialists, which makes our health care more expensive and 
less efficient. The decline in generalists continues as fewer 
medical students are choosing to practice in family care. In 
addition, there is evidence that physician assistants and nurse 
practitioners may also be choosing to specialize in fields such 
as cardiology and oncology.
    According to the Government Accountability Office, 
conventional payment systems undervalue primary care compared 
to specialty care. There is a growing income gap between 
primary care physicians and specialists. Several physicians' 
organizations have recommended altering compensation structures 
to encourage medical students to become generalists.
    The Kaiser Family Foundation reported that in 2007 U.S. 
health care expenditures exceeded $7,026 per person. Yet 
surveys on satisfaction with health care are mixed. Some 
experts believe that there is an over-reliance on specialists 
and a greater use of primary care providers and internists 
would lead to better outcomes at lower costs. These physicians 
focus on prevention, wellness, coordinated care, and chronic 
disease coordination. Studies show that these services can save 
money over the long term.
    I want to add a final word about health care reform. I 
strongly oppose employer mandates and a government-run health 
care system. These alternatives could cause as many as 120 
million Americans to lose their current coverage, drive 
companies out of the market, and require substantial tax 
increases on the small businesses we are depending on to create 
jobs. I hope Congress will consider these points during our 
debate.
    Again, Madam Chair, thank you for holding this hearing. I 
look forward to hearing from our panelists.
    Chairwoman Velazquez. Thank you, Mr. Graves.
    Chairwoman Velazquez. Let me welcome Dr. Robert Harbaugh. 
He is a neurosurgeon at Penn State University in Hershey, 
Pennsylvania. He serves as the Director of the Penn State 
Institute of Neurosciences. Dr. Harbaugh is testifying on 
behalf of the American Association of Neurological Surgeons and 
the Congress of Neurological Surgeons. The Association is 
dedicated to advancing the specialty of neurological surgery.
    Welcome, sir. You have 5 minutes to make your presentation.

             STATEMENT OF ROBERT E. HARBAUGH, M.D.

    Dr. Harbaugh. Good morning, Chairwoman Velazquez, Ranking 
Member Graves, members of the Committee. Thank you for inviting 
me to appear today to discuss the current workforce shortage 
that is facing surgical specialty medicine and, specifically, 
neurosurgical care.
    Recently and understandably, a great deal of attention has 
been paid to the shortage of primary care physicians, but 
little attention has been paid to the shortage of surgeons. The 
Association of American Medical Colleges estimates a shortage 
of 46,000 primary care physicians and 41,000 surgical 
specialists by 2025; and while plans are being considered to 
address the primary care deficit, little is being done to 
address the shortage of surgical specialists.
    The Bureau of Health Professions projects a 19 percent 
increase in primary care physicians by 2020, based on some of 
the actions that are planned, but continued and significant 
decreases in the number of surgical specialists over the same 
time.
    At present, there are fewer than 3,500 practicing board 
certified neurosurgeons in the United States serving a 
population of more than 300 million people. And as the 
population ages, more of our citizens face devastating problems 
such as stroke, degenerative spine disease, Parkinson's 
Disease, and brain tumors that neurosurgeons treat. This 
supply/demand mismatch will become ever more acute.
    In addition, the effectiveness of things like deep brain 
stimulation for treating movement disorders and obsessive 
compulsive disorders makes it very likely that we are on the 
verge of a minimally invasive and effective neurosurgical 
treatment for things like obesity and addiction; and because of 
the prevalence of these disorders, many more neurosurgeons will 
be needed to meet the demand for their neurosurgical 
treatments.
    We already have an acute neurosurgical workforce problem in 
the subspecialty areas of pediatric neurosurgery and trauma and 
emergency neurosurgery. There are less than 200 surgeons 
certified by the American Board of Pediatric Neurological 
Surgery, and within the next 10 years more than 40 percent of 
the current pediatric neurosurgical workforce is likely to 
retire.
    On the supply side, there are less than 10 trainees who 
enter pediatric neurosurgery fellowship training each year. 
There is also a shortage of neurosurgeons to provide 
neurosurgical emergency and trauma care. Closure of trauma 
centers in Pennsylvania, Tennessee, Missouri, Illinois, Texas, 
and Florida were due in part to shortages of neurosurgeons. And 
the National Foundation For Trauma Care reports that, after 
trauma surgeons, neurosurgeons are the specialists with the 
highest percentage of trauma care.
    According to this same report, physician shortages, caused 
by a variety of factors, including medical liability expense, 
decreasing reimbursement, represent one of the major reasons 
for the closure of trauma centers. And with estimates that 10 
to 20 percent of the Nation's 600 regional trauma centers may 
be forced to close within 3 years, it appears that neurosurgeon 
shortages are affecting the availability of trauma care in the 
United States, despite the fact that more than 90 percent of 
practicing neurosurgeons participate in emergency call 
coverage.
    Many neurosurgeons must provide emergency care at more than 
one hospital at a time, and that places our citizens at risk of 
delayed care for neurological emergencies such as head, spine, 
and nerve trauma and cerebral hemorrhage from ruptured 
intercranial aneurysm and other causes.
    While there are many complex factors that lead medical 
students to select one specialty over another, there are 
several reasons for the present and impending shortages in the 
neurosurgical workforce. One of these is medical liability. 
Neurosurgeons continue to face increased professional liability 
insurance costs, which in some areas of the country now 
approach $300,000 per year.
    According to a survey we conducted a few years ago, medical 
liability issues contributed substantially to neurosurgeons 
limiting their availability for emergency and trauma care and 
eliminating treatment of high-risk patients; and medical 
liability reform would clearly help address this part of the 
physician workforce shortage.
    Lifestyle issues must also be considered as a contributing 
factor in the shortage of surgical specialists. The AMC 
projects that physician practice patterns are likely to be 
different in the future because of a greater concern for 
lifestyle issues among young physicians and because of the 
intensity of the neurosurgical practice. With frequent 
emergencies requiring long hours of neurosurgical care, 
lifestyle issues will contribute to a shortage of available 
neurosurgeons.
    In some areas of medicine, physicians assistants and 
advanced practice nurses may be able to address a shortage of 
physicians, but there is no good substitute for well-trained 
neurosurgeons for patients with head, spine, and nerve 
injuries, brain tumors, stroke, hydrocephalus, and other 
neurosurgical emergencies.
    After graduating from medical school, most neurosurgeons 
train for 7 years or more before entering practice; and there 
are less than 100 neurosurgical training programs in the United 
States, with many programs training only one resident per year.
    Compounding this problem, the Accreditation Council for 
Graduate Medical Education has established work hour 
restrictions for residents; and due to the time and intensity 
required to adequately train a neurosurgeon, restricting weekly 
work hours will require lengthening the period of training if 
we want to continue to have well-trained neurosurgeons.
    Over the past several years, we have heard repeatedly that 
reimbursement is contributing to the shortage of primary care 
physicians because more medical students choose higher-paid 
specialties rather than primary care. However, there is also a 
risk that reducing surgical specialty reimbursement in the face 
of medical liability and lifestyle issues that inhibit students 
from entering a surgical specialty will exacerbate the current 
shortage of surgical specialists.
    In conclusion, the convergence of declining reimbursements, 
rising practice expense, less time for non-work-related 
activities may deter young physicians from becoming 
neurosurgeons. This will exacerbate already acute problems with 
access to neurosurgical care, and I think these problems will 
be compounded by effective neurosurgical treatments for common 
disorders and an aging population that requires more 
neurosurgical services.
    Thank you for this opportunity to speak with you today. I 
would be happy to answer any questions.
    Chairwoman Velazquez. Thank you, Dr. Harbaugh.
    [The statement of Dr. Harbaugh is included in the 
appendix.]
    Chairwoman Velazquez. Our next witness is Dr. George 
Sheldon. Dr. Sheldon is a Professor of Surgery and Social 
Medicine in the Department of Surgery at the University of 
North Carolina in Chapel Hill. He is also the Director of the 
American College of Surgeons Health Policy Research Institute.
    Dr. Sheldon is testifying on behalf of the American College 
of Surgeons. The ACS is a scientific and educational 
Association of surgeons that was founded in 1913.
    Welcome.

              STATEMENT OF GEORGE F. SHELDON, M.D.

    Dr. Sheldon. Thank you very much, Chairman Velazquez and 
Mr. Graves, ranking member, members of the Committee. We are 
also pleased to be here, and I would make several points on the 
going in.
    Neither candidate during the last election could put 
forward any of the details about one of the big problems in 
health care that has already been mentioned by Dr. Harbaugh is 
a shortage. And I think if we pick just one specialty to try to 
stimulate, it is sort of like putting a finger in a dyke that 
has got 10 holes leaking. We have got to do it for everybody.
    And I know we hear a lot about the problems with American 
medicine and all the things, and we all agree, and we are all 
committed to health reform. But I would call your attention to 
a July 4 publication of Lancet, the respected British medical 
journal. They published a comparison of cancer deaths in the 
United Kingdom, 11 countries, and the United States, using 
World Health Organization databases. Cancer mortality in the 
United Kingdom, which has a federal program, as everybody 
knows, were 23 percent higher than six European countries and 
31 percent higher than in the United States. So my hope, among 
other things, is that whatever we do for health reform, we 
don't throw the baby out with the bath water. There have been 
some good things happen over the years.
    We are encouraged by the book by Ezekiel Emanuel. Dr. 
Ezekiel Emanuel, who is a White House advisor, has a very good 
outline of a plan that might be done.
    In a similar void and on the other side, the June 2 
publication by the Council of Economic Advisors of the White 
House embraced the concept of a 30 percent overage that could 
be money saved in health care costs by reduction in regional 
variation by what they call input changes and also by using the 
False Claims Act. This is, of course, based on the Dartmouth 
work, respected investigators.
    But there is four other groups, including ours, that find 
different types of data. And that would be Dr. Robert Berenson 
of the Urban Institute, Dr. Richard Cooper of the Wharton 
School of Business for the University of Pennsylvania, and our 
data from Dr. Ricketts. In short, while there is some regional 
variation, they are only comparing Medicare; and Medicare is 
only 50 percent of the payers. So it is like comparing apples 
and oranges. It is not agreed upon enough to be a premise for 
health care reform.
    The rest of my comments will deal with shortage of 
surgeons. There are shortages in every specialty of surgery 
today. We have done population maps and showed that some States 
are worse off than others, but there is not a single State in 
the Union that has more surgeons than they did 10 years ago, 
and that's also shown in the Dartmouth atlas.
    One-third of all surgeons are over 55 years of age; and 
specialization of surgery, as instrumentation and other types 
of technology increased, has been monumental. But to give some 
data, the general surgeon is sort of the generalist in the 
group. He is usually head of the trauma centers, does a lot of 
the transplant surgery, does a lot of the cancer surgery.
    And we have fewer general surgeons now practicing than we 
did in 1980. The American Board of Surgery, of which I was 
chairman at one time, in 1981 certified 1,047 people. Last 
year, it was 1,032. And, in the meantime, the population of the 
country has grown by 25 million each decade.
    Rural America, with about 20 percent of the population, 59 
million people, require on surgical services to keep their 
hospitals open. That is what allows the hospital to provide the 
other services. It is the backbone of the rural hospital.
    There is 1,300 critical access hospitals in the United 
States, and 300 of them don't even have a surgeon living in the 
county. If a surgeon is not available, the other services 
pretty much go away.
    A further example of the shortage is cardio-thoracic 
surgery. Cardiac disease is the commonest killer in the 20th 
century and will predictably be for the first part of the 21st.
    Only 50 U.S. medical school graduates applied for training 
in cardio-thoracic surgery this past year. So who is going to 
do our heart surgery as we go forward? There aren't going to be 
people around to do it.
    My closing comments would just say that I would believe 
that we have a shortage in all specialties, primary care and 
all the surgical fields. And we think that there ought to be 
access to the public programs like Title VII, the National 
Health Service Corps, of the dish provisions that are provided 
for primary care and others. These things ought to be made 
available for all specialties, not just primary care.
    Thank you very much for your attention, and I am certainly 
available to provide maps of all these States and everything if 
you would like to see them. In fact, you have one map with you, 
I think.
    Chairwoman Velazquez. Thank you, Dr. Sheldon.
    [The statement of Dr. Sheldon is included in the appendix.]
    Chairwoman Velazquez. Now the Chair recognizes the 
gentlelady from Pennsylvania, Mrs. Dahlkemper, for the purpose 
of introducing our next witness.
    Mrs. Dahlkemper. Thank you, Madam Chair.
    It is my pleasure to welcome Dr. Carlo DiMarco to the Small 
Business Committee today. Dr. DiMarco is from my hometown of 
Erie, Pennsylvania. He is the 112th President of the American 
Osteopathic Association. He is also a Professor and Regional 
Dean of Clinical Medicine and Director of Ophthalmology 
Residency Program at the Lake Erie College of Osteopathic 
Medicine in Erie, which we call LECOM.
    Aside from his duties at LECOM, Dr. DiMarco is part of 
Medical Associates of Erie, a network of multi-specialty 
physicians who practice throughout Erie County and teach in 
affiliation with LECOM.
    Welcome, Dr. DiMarco.

              STATEMENT OF CARLO J. DiMARCO, D.O.

    Dr. DiMarco. Thank you, Chairman Velazquez and Ranking 
Member Graves and Representative Dahlkemper and members of the 
Committee. I thank you for the opportunity to testify today.
    As President of the American Osteopathic Association, which 
represents 67,000 osteopathic physicians across the country, 
and as Professor and Regional Dean of the Lake Erie College of 
Osteopathic Medicine, I am acutely aware of the challenges of 
addressing our Nation's physician workforce shortage, 
particularly in the field of primary care.
    At LECOM, our mission is to educate physicians in the 
osteopathic tradition of competent and compassionate whole 
person care. The percentage of our graduates who pursue careers 
in primary care is 67 percent, placing LECOM at eighth in the 
Nation for training primary care physicians. But despite this 
commitment to primary care, the challenges facing our 
profession and our students are increasingly prohibitive.
    Three central factors contribute to our current and 
projected primary care workforce shortage, and these factors 
also apply to general surgery: the Medicare physician payment 
system, graduate medical education, reimbursement policies and 
time-consuming administrative burdens that shift attention away 
from patient care.
    With respect to physician reimbursements, studies show that 
income disparities have a significant negative impact on the 
choice of primary careers over specialties among the Nation's 
young physicians. This is not surprising, given that the 
average of income of a primary care physician is approximately 
one-third of a specialist, while practice costs are often even 
higher.
    Unless Congress takes immediate action to establish a more 
equitable physician payment system, a predicted workforce 
shortage can only worsen. We urge Congress to enact financial 
incentives for primary care physicians to provide a bonus of at 
least 10 percent for primary care services, with mandated 
annual increases to achieve market competitiveness.
    As you know, the instability of the current physician 
payment system stemming from the flawed sustainable growth rate 
formula results in the threat of annual costs and cuts. We 
appreciate Congress's yearly interventions to avert these 
drastic cuts, but a Band-Aid approach does nothing to alleviate 
the underlying systemic problems driving physicians out of 
medical practice. The unpredictability forces small primary 
care practices with limited revenues and narrow margins to make 
difficult decisions about whether to lay off staff, reduce 
their Medicare patient population, defer investments or retire 
early.
    Medicine is calling, but the business of medicine, in 
general, is a small business. No business can survive when its 
expenses exceeds its revenues.
    Administrative burdens create additional strains on primary 
care physicians, resulting in the significant decline in 
professional satisfaction and hampering recruitment efforts. In 
fact, 60 percent of primary care physicians would not recommend 
a career in medicine.
    While physicians in all other specialties face unnecessary 
and costly administrative hassles, the burden on primary care 
physicians in small practices is particularly excessive, 
detracting from the time available for patient care. Primary 
care physicians' role in coordinating care and making needed 
referrals to specialists typically involves frequent 
interaction with Medicare and other third-party payers to 
obtain required approvals, services, and payments, and 
resulting in paperwork and overhead expenses at almost twice 
that of other physicians.
    A typical primary care physician must coordinate care for 
Medicare patients with 229 other physicians working in 117 
different offices, yet receives no compensation for these care 
coordination services. The AOA supports the development of a 
new delivery and payment model such as the patient centered 
medical home that will allow primary care physicians to provide 
comprehensive, continuous patient care.
    Reforms to the graduate medical education training system 
are also an essential component of workforce development.
    First, the current graduate medical education system is not 
capable of meeting increases in enrollment in the Nation's 
colleges of osteopathic medicine and colleges of medicine. We 
support a modification of current limits on the number of 
funded residency training positions through a one-time increase 
in the number of funded positions by 15 percent.
    Additionally, we support modifications that allow for 
collaboration through consortiums, such as the Osteopathic 
Postgraduate Training Institutes, or OPTIs. These consortiums 
allow several teaching locations to share resources, thus 
enhancing the educational opportunities for the resident 
physician.
    Finally, research has shown that physicians who are trained 
in the community health centers, for example, are twice as 
likely to work in underserved settings and four times more 
likely to work in health centers after completing their 
residencies. However, Medicare does not reimburse for most time 
spent in outpatient settings. We urge Congress to enact 
legislation that will create new training opportunities in non-
hospital settings and clarify existing regulations governing 
such training.
    Providing residents with the opportunities in real-world 
settings offers greater exposure to primary care specialties 
and increases the likelihood that residents will choose to 
practice in these settings and in small physician practices 
that make up the backbone of our primary care system.
    On behalf of the AOA, I would like to thank you for drawing 
attention to this important issue, and we look forward to 
continuing to work with you in addressing the physician 
workforce shortage. Thank you very much.
    Chairwoman Velazquez. Thank you, Dr. DiMarco.
    [The statement of Dr. DiMarco is included in the appendix.]
    Chairwoman Velazquez. Our next witness is Dr. Lori Heim. 
She is President-elect of the American Academy of Family 
Physicians. Dr. Heim advocates on behalf of family physicians 
and patients nationwide to inspire positive changes in the U.S. 
health care system. The American Academy of Family Physicians 
is one of the largest national medical organizations, with more 
than 93,000 members.
    Welcome.

                  STATEMENT OF LORI HEIM, M.D.

    Dr. Heim. Thank you, Chairwoman Velazquez and 
Representative Graves and members of the Small Business 
Committee.
    I am Lori Heim, President-elect of the American Academy of 
Family Physicians, which now represents over 94,000 members 
across the U.S.; and I am pleased to be here to testify on 
physician workforce needs as Congress considers health care 
reform.
    As you know, the vast majority of family physicians 
themselves are small businesses, delivering care in communities 
across the Nation. Nearly 38 percent of family doctors practice 
in solo or two-physician practices. Studies indicate that more 
Americans depend on family physicians than on any other 
specialty. We see up close the hardship of the uninsured, and 
we struggle along with those patients who are insured but then 
who face coverage denials.
    We consider an expanded primary care physician workforce 
essential to the success of health reform. Unfortunately, while 
the supply of primary care physicians is far from adequate, the 
projections are truly alarming. Primary care has been described 
as the base of the health care workforce pyramid. But the U.S. 
physician profile is only 31 percent primary care and 69 
percent specialty.
    The AAFP supports the steps necessary to build the primary 
care workforce to at least 45 percent of all practicing 
physicians. To restore stability, we must adopt workforce 
policies that ensure an adequate number of primary physicians 
who are trained to practice in the comprehensive patient-
centered primary care medical home model. That model of care 
provides patients with preventive care, as well as coordinates 
their chronic disease and appropriate care for acute illness.
    To realize the quality and efficiency benefits of the 
patient-centered medical home, we must have an adequate supply 
of primary care doctors, particularly family physicians.
    The reasons for the inadequate supply of primary care are 
many, and we must address each one of these. The first and most 
critical step has already been mentioned, and that is to 
increase the payment for primary care. This will encourage more 
student interest in primary care, as well as allow for the 
redesign of existing practices to improve quality and access.
    Next, Congress should provide targeted incentives such as 
scholarships, loan forgiveness or other forms of debt relief 
for medical students who choose primary care and family 
medicine.
    Also, we are recommending opportunities in programs such as 
the National Health Service Corps. Congress should reauthorize 
and adequately fund Title VII health professions training grant 
programs for primary care medicine.
    AAFP has also called for reforms to graduate medical 
education payments to ensure that we are training the primary 
care physician workforce that we need. However, we would 
suggest caution with respect to the expansion of residency 
slots. We recommend that unused residency slots be dedicated to 
primary care before an overall expansion of the number of 
residency slots is considered.
    We are grateful to the House discussion draft that 
addresses the primary care physician workforce shortage with 
provisions including the bonus payment for primary care 
services provided in health profession shortage areas, 
reauthorization and mandatory funding for Title VII section 
747, the Health Professions Primary Care Medicine Training 
Program, and the National Healthcare Workforce Commission to 
study and recommend appropriate numbers and distribution of 
physicians.
    We look forward to continuing to work on workforce and 
other key elements of health care reform. Now is the time to 
provide affordable, high-quality health care coverage. The 
status quo is not working, neither for the physicians nor for 
the patient. We urge Congress to invest in the health care 
system that we want, not the one that we have now.
    Thank you very much.
    Chairwoman Velazquez. Thank you, Dr. Heim.
    [The statement of Dr. Heim is included in the appendix.]
    Chairwoman Velazquez. The Chair recognizes the ranking 
member, Mr. Graves, for the purpose of introducing our next 
witness.
    Mr. Graves. Thank you, Madam Chair.
    Madam Chair, I am pleased to introduce Dr. Bruce Kauk, M.D. 
He is a fellow Missourian from Gladstone. Dr. Kauk has been in 
private practice with Northland Internal Medicine in Gladstone 
since 1979. He is board certified in internal medicine and 
geriatrics. A graduate of the University of Nebraska Medical 
Center in Omaha, Dr. Kauk served his internship and residency 
at Southern Illinois University in Springfield.
    Dr. Kauk has been President of the Clay County Medical 
Society and President of the North Kansas City Hospital Medical 
Staff Credentials Committee, and he is a founding member and 
chairman of the Clay County Senior Services in Gladstone.
    Thanks, Doctor, for coming in all the way from Missouri.

                STATEMENT OF BRUCE A. KAUK, M.D.

    Dr. Kauk. Good morning. Thank you.
    Madam Chairman, Ranking Member Graves, members of the 
Committee, I appreciate this opportunity to talk to you. I do 
not represent any society or any other specialty group. I think 
I come to give you the passion and the soul of what we all do 
every day, which is not quite the flavor of what my other 
colleagues have told you. They are more concerned about the 
facts, and there are other issues to this issue.
    I am particularly glad to come to this Committee because 
most physicians traditionally have been small businessmen. One 
of the issues is, though, that we are seeing that change 
dramatically. In my community, we are down to about a 50/50 mix 
of internal medicine and family practice being self-employed. 
Most of them have joined some organization.
    Again, I say I am a traditional internist. That means I do 
everything. I go to the hospital. I have an office practice. I 
have a nursing home practice. Recently, because of some of the 
budget issues, I have added a long-term acute care practice.
    So I know you are all aware that physicians are in 
evolution and internists are in evolution, particularly. We 
have hospitalists. We have people who just do office work. We 
have people who do none of that, who don't practice active 
care. There are many things that physicians can do now. There 
are many other opportunities competing for active practice.
    Again, I think it is important to focus that we 
traditionally have been businessman, that we employ four to 
five people per practice. We pay taxes. We pay insurance for 
those people. For a two-man practice, my health insurance costs 
for my employees are $72,000 a year.
    I bring evidence to you that this shortage has been going 
on since the 1950s, when my retired partner got a call after 
the funeral of one of his patients saying, one of your patients 
died. Can I come to your practice?
    So that brings us to the shortage. I think we all agree 
there is a shortage--I am happy to hear that--in all parts of 
medicine but particularly primary care.
    Why has that happened? I think there are a number of 
factors: the evolution, the competition, other venues, the 
number of hours worked. I would give you mine, but you wouldn't 
believe them.
    Quality of life becomes an extremely important issue for 
all of us. We look at comparison to medical peers. That has 
been talked about. The difference between primary care and such 
specialty reimbursement is $3.5 million over your working 
lifetime.
    You look at comparison of my neighbors. They all work a 40-
hour week. I work a 60-hour week, and then I am on call. I am 
responsible every minute, 80 hours. That is a great difference 
in quality of life. Then we wonder why people don't want to go 
to medicine, don't want to go into primary care.
    On top of that, we are asking people in primary care to do 
a great deal of gate-keeping. I have to personally sign 
numerous documents allowing other people to be paid. This takes 
approximately 30 minutes every day. I have to employ one full-
time employee to take care of medicine issues, pre-
authorization with insurance companies. A study has been done 
that shows each primary care physician expends $60,000 to deal 
with these kind of issues. That is one-third of my salary. It 
cost me 1 percent of my salary to come here today on my own 
dime.
    So how do we fix that? What do we do about it?
    We have said that physician extenders haven't been helpful. 
They go on into subspecialties. We are working on equalizing 
reimbursement, but the budget is an issue.
    How do we retain present physicians? One of the things is 
decreasing costs. Primary care can do that. They have been 
shown to do that. Maintaining quality, again, primary care has 
been shown to do that. There are multiple studies documenting 
that, that those communities with more primary care physicians 
have a longer life span, fewer re-admissions, all the things 
that increase costs.
    Prevention is another major issue in our society, in our 
country. I listened to Tommy Thompson, previous Health and 
Human Services Secretary, some 10 to 12 years ago say, we are 
missing the boat. We have got to do preventive care. Well, we 
are still missing the boat. There is a lot of work to be done 
there; and, from my point of view, that is the major area where 
cost savings can be entertained.
    Chairwoman Velazquez. Dr. Kauk, time has expired. And since 
we have a bill on the floor, I would like to go to the 
questions. And then in the question and answer period, if you 
want to expand on any thoughts that you might not have been 
able to share, you will be welcome to do so.
    Dr. Kauk. Thank you.
    [The statement of Dr. Kauk is included in the appendix.]
    Chairwoman Velazquez. Thank you very much.
    I would like to address my first question, if I may, to Dr. 
Heim. You note that more medical training, must have greater 
flexibility if we are going to increase the presence of primary 
doctors in our health care system. How do we go about 
accomplishing this goal in a balanced way without creating new 
challenges for our medical education system?
    Dr. Heim. Thank you. If I understand your question, are you 
asking how do we balance the number of slots or the types of 
specialties that people go into, ma'am?
    Chairwoman Velazquez. Well, you are saying that we need 
more medical training and, in order to achieve that, that we 
must have greater flexibility if we are going to increase the 
presence of primary doctors. What I am asking is, how can we 
achieve that goal without impacting or dismantling or affecting 
or posing new challenges for our medical education system?
    Dr. Heim. The slots that we have right now, we have asked 
that those--the numbers of slots available for training in 
residency programs, those right now are, as you noted in your 
remarks, being--primarily, most of the education is done in the 
hospital. So there are a couple of factors.
    One is, we have to realign the actual slots for training so 
that more of those go to primary care. That is a redistribution 
issue.
    The other component is then paying for the care that is 
done in the community. Part of this is a regulation change that 
can occur at CMS having to do with voluntary preceptors.
    The third component is that we believe that, right now, 
funding for training is primarily through government products--
Medicare, Medicaid. Our policy is that everybody should 
contribute to that, whether or not it is funding for any of the 
GME slots; and in that way then I think it becomes much more 
balanced.
    Chairwoman Velazquez. Dr. Sheldon, do you have any thoughts 
on that?
    Dr. Sheldon. Well, I think the Balanced Budget Act of 1997 
froze reimbursement under Medicare, and that needs to be taken 
off.
    It is important to note that there are only four 
specialties that had more applicants than they do slots. And 
when you talk about unfilled slots, most of those are in 
primary care fields; and redistributing back to primary care, I 
don't know if that would solve it or not.
    Chairwoman Velazquez. Dr. Harbaugh, the shortage of 
physicians is expected to intensify if health reform passes. As 
we learned in Massachusetts, there is no guarantee that 
patients will be able to see a doctor if they have health 
insurance. How do we avoid these problems to ensure access to 
care doesn't become a major problem?
    Dr. Harbaugh. I think all of us have addressed that. There 
clearly is a shortage of physicians, and that includes primary 
care physicians but certainly is not restricted to primary care 
physicians. There are acute shortages of surgical specialists, 
and we can't simply say we have to shift everything to primary 
care and that will take care of the problem, because it will 
exacerbate the surgical shortages.
    Some of the things that I think would be very helpful, one 
would be to revise the cap on Medicare support for resident 
training, and that is an important issue. We are creating more 
medical students right now. There is a lot of investment going 
into new medical schools and enlarging medical school classes. 
But if we don't enlarge the residency training pool, we are 
simply going to take students that are trained in the United 
States and they will displace students that are trained in 
other countries' medical schools that now do their residency 
training here, and at the end of the pipeline we will have the 
same number of doctors coming out.
    So increasing the number of medical school slots without 
residency slots doesn't help, and I think we have to recognize 
that that increase must go across all specialties. We can make 
things worse by focusing solely on primary care and now having 
an exacerbated crisis in the surgical specialties, a crisis 
that already exists.
    Chairwoman Velazquez. There is no easy solutions, right?
    I would like for any of the members of the panel to respond 
to this question.
    Medical liability is a major concern for the medical 
profession. It seems clear the health reform cannot be achieved 
without addressing this issue. Short of placing a cap on 
medical claims, the President has stated he believes this 
should be addressed as part of reform. What measures should 
Congress consider to reduce the costs of malpractice insurance? 
Dr. DiMarco?
    Dr. DiMarco. Next to caps. Except for caps. Well, 
unfortunately, the caps are a great part, because industry knew 
right away in the early days that Workmen's Comp--they knew how 
to deal with the--set their prices the way they needed it for 
those injuries.
    But without caps, in Texas, for instance, when they passed 
a law on caps, the malpractice insurance dropped by 12-1/2 
percent the next day. Now it is down by 25 percent since the 
passage of caps. So I think that caps are an important part of 
physician liability reform, and that is necessary to attract 
students into specialties that reimburse less.
    Chairwoman Velazquez. Okay. Dr. Sheldon.
    Dr. Sheldon. I think the only answer is a cap like the 
California law. Three years ago, West Virginia's liability got 
so high that all the acute patients with trauma had to be 
transferred to Pennsylvania by helicopter. The same thing 
happened in Nevada. An emergency session of the legislature was 
called to provide some.
    It won't work unless you cap like California did. And we 
appreciate the House has passed this many times. It is the 
Senate that doesn't seem to like it.
    Dr. Harbaugh. I think the caps are an important piece. 
Other things that could be considered would be alternatives to 
civil litigation, early disclosure, compensation offers, 
administrative determination of compensation where you have a 
health court model that would determine compensation.
    I think we can also do things like provide medical 
liability protection for physicians who follow established 
evidence-based practice guidelines. If you are practicing to 
the standard of care, even if there is a bad outcome, then that 
shouldn't be a liability issue.
    Some minor things would be to protect physicians who 
volunteer their services in a disaster or local emergency 
situation. And I think, going back to the cap, some reasonable 
cap on noneconomic damages, not on the economic damages to the 
patient but a cap on noneconomic damages is a very important 
piece of the puzzle.
    Chairwoman Velazquez. Dr. Kauk.
    Dr. Kauk. The other piece is that, in Kansas, there is as 
equalization pool, my neighboring State. In Missouri, it is 
present but not funded. I pay as much doing no procedures as a 
gastroenterologist who is licensed in Kansas who does 
procedures all day long. There needs to be more equity in the 
way the premiums are determined.
    Chairwoman Velazquez. Thank you.
    Now I recognize Ranking Member Graves.
    Mr. Graves. To kind of dovetail on medical malpractice, is 
it--is medical malpractice insurance more expensive for--and 
anybody can answer this--for general practitioners than it is 
for specialists? No?
    Dr. Heim. No, it is not. But one of the things goes to also 
what you were saying. I used to do vasectomies in my practice. 
However, when I applied for medical malpractice they gave me 
the same rate, doing that one procedure, as if I were doing 
urology with very extensive urological operations in the OR. 
That made no sense. So I had to stop doing that service for my 
community because I simply couldn't afford it.
    So, in some ways, if we do the full gamut of what we have 
been trained to do, then, actually, we are bound by the higher 
cost, even though our rate of negative outcomes is obviously 
then far less.
    Dr. Harbaugh. I would like to address that from a local 
standpoint. I mean, the private practice model of neurosurgery 
in the Philadelphia area has gone away and it has gone away 
because neurosurgeons are asked to pay $300,000 per year for 
minimal liability coverage. That is their insurance fee. So by 
the time they pay office rent and secretarial help and nurses 
and record keepers and $300,000 off the top for an annual 
insurance fee, they can't make ends meet. So they have become 
hospital employees. They have joined large academic groups. 
There are ways that they have adjusted to this. But the 
malpractice premiums for some of the surgical specialties are 
truly astonishing.
    Mr. Graves. Next question. And, Dr. Harbaugh, you touched 
on it. But is the shortage for all doctors? Is it interest? Is 
it students? Or is it because what you said was it is 
residency. It doesn't matter if we have bigger medical schools. 
If we don't expand our residency programs, the outcome is going 
to be the same. But do we have the students or the kids that 
are interested in medicine out there? Do we have the numbers?
    Dr. Harbaugh. I think there are always a lot more people 
who apply to medical school than get accepted, so--and many of 
the people who don't get accepted I think would make very fine 
physicians and are qualified. So if we expand the number of 
medical school training spots, we will turn out more medical 
students who have gotten their M.D.
    The problem right now is, in order to practice 
independently, all of those students then need to go on and do 
a residency. If we don't increase the number of residency 
positions, we simply displace foreign medical graduates with 
American medical graduates, but the number of practicing 
physicians at the end of the day stays the same.
    Dr. Sheldon. We studied this when I was chairman of the 
Association of American Medical Colleges. Right now, only 64 
percent of the doctors practicing in the United States actually 
went to medical school here. There is 32 percent more position 
physicians in residency than there are graduates of U.S. 
medical students. Most of them come from India. The second 
commonest group come from our offshore Caribbean schools. Those 
eventually get licensed; and if they go to a health services 
underrepresented area, 3 years they can get citizenship.
    So if we leave the residency group alone right now, we 
will--and not get some of the funding changed--that is the 
bottleneck in the system at the moment.
    Mr. Graves. Dr. Kauk.
    Dr. Kauk. I think we have to make each subspecialty 
appealing to people. There have been studies done that show the 
amount of medical school debt implies one of the more 
likelihood to go to a subspecialty. Most physicians come out of 
medical school owing at least $100,000; and the kids these days 
are smart enough to figure that math out and do what works out 
economically, rather than maybe works for their heart.
    In internal medicine 10 years ago, the number of people 
going into primary care was 54 percent. Now it is down to 26 
percent. So that is a dramatic change in the last 10 years.
    How can we change the reimbursement, the quality of life, 
the hassle factors? You know, at my hospital now, I have to 
talk to two people before I can decide whether they can be 
admitted or an observation. That has nothing to do with what I 
do. It has to do with Medicare reimbursement. So it takes me 
about twice as long to make hospital rounds now as it used to.
    Mr. Graves. Dr. Heim.
    Dr. Heim. I think there are two other components when you 
are talking about students and medical school. One of it is we 
know from prior studies that there are certain types of medical 
students who are more likely to go into primary care and there 
is actually ways that States have incentivized more students 
going into primary care. Their demographics are known. Medical 
school admissions committees who are aware of this can, thus, 
increase the number of students who are interested in primary 
care.
    And, secondly, going to the mismatch, the currently 
unfilled slots in family medicine and in primary care is true. 
We have not been filling, which I think just highlights the 
fact that we need to turn around those incentives for students 
to go into primary care. But I would say that the current 
proposals are such that you have made changes that will start 
making students interested in primary care. So I would 
encourage you to continue to move those unfilled slots to 
primary care.
    You have created the incentive for them to want to be 
there. So don't then pull away the slots just at the time when 
you are telling them that they have a right to be interested 
and enthusiastic about primary care. Please keep those slots 
available for them to go into.
    Dr. Harbaugh. I appreciate the shortage in primary care, 
but we have acute shortages in surgical care as well, which 
will only get worse if we say that new residency spots must be 
restricted to primary care. We may make primary care better. I 
believe that would happen. But we will exacerbate what is 
already a shortage of surgical specialists. And if you look at 
the projections, the projected shortage of surgical specialists 
by 2025 is almost identical to the projected shortage of 
primary care physicians, and we can't make one problem 
dramatically worse at the expense of fixing another one.
    Chairwoman Velazquez. Mr. Griffith.
    Mr. Griffith. Listening to this--my mentors were 
neurosurgeons, David Klein and Peter Jannetta and George 
Tindall at Emory, et cetera, but I am a radiation oncologist, 
although I did 2 years of neurosurgery.
    I must say that you are pointing out a real sensitive area 
for me and where we as physicians have been asleep at the 
switch. We show up only in Congress to be sure our 
reimbursements are okay, but for the last three decades, we 
have said nothing about the fact that we were in charge of--not 
you, but we generic, us--have been in charge of recognizing 
that the baby boomers were going to come through the system. We 
were delivering them, but we didn't--it made no difference to 
us in our medical schools. We didn't increase our numbers; we 
didn't increase the number of medical schools, the number of 
kids coming out, and now we are faced with an acute shortage. 
We have got an acute shortage of general surgeons. We have got 
an acute shortage of neurosurgeons, orthopedic surgeons, 
because as they practice, they begin to cut back on their 
trauma, their quality of life, they are ready in their 50s to 
slow down a little bit. Our residency programs are full of non-
U.S. Graduates. And so we as a group, we M.D.s as a group, have 
let us all down by not making enough noise, not participating 
in the political system.
    I am through preaching. What I will say is this: I don't 
think we can pass any sort of health care reform without 
malpractice reform. There is always four people in your room 
when you are examining a patient. It is you, the patient, the 
nurse and the plaintiff's attorney unseen is there, and if we 
do not fix that, all of this reform, all of this reform, will 
be for naught because we will not control costs, because as 
Madam Chair said, if everyone has an insurance card, they still 
can't see a doctor, because if we don't reform the number of 
providers, and we continue to try to reform a system around a 
scarcity, we create the black market, or we create--we create 
the concierge medicine, and everybody else is over here 
fighting to see someone.
    So we have got a real problem on our hands, and I am afraid 
that this rush to meet an artificial deadline on health care 
reform may have some severe unintended consequences. So my 
question to you or my plea to you is when you go back to see 
your people that you represent, that have got to get interested 
in the political process, you have got to tell them to get 
interested because your fate is going to be sealed by those of 
us on a panel like this who know very little about what you do.
    But thank you each for coming. We really appreciate it.
    Chairwoman Velazquez. Mr. Thompson.
    Mr. Thompson. Well, first of all, I thank the Chairwoman 
and the Ranking Member for this hearing. This is extremely 
important. I came to Congress after 28 years as a health care 
manager. And I appreciate the words my colleague just shared in 
terms of the issue with medical liability, the cost of that out 
of pocket for physicians; but the cost of the system with 
frankly having a medical record to be able to defend yourself 
with; that plaintiff attorney that is not seen but always 
present; and the workforce issue, which is significant. And I 
appreciate the panel being here.
    It sounded a little bit like a family feud here the past 
couple of questions, and there is a lot of competition for 
future professionals, future providers.
    I will start with Dr. Harbaugh, and then we will see if any 
others have a good handle on--frankly, instead of competing--
right now it sounds like you are competing for these folks. 
What is the estimated shortfall over the next 10 years of the 
actual need of practitioners versus the supply given the 
current trends in enrollment that are out there?
    Dr. Harbaugh. Well, the numbers that I have heard is that 
if you look by 2025, there is an estimated 46,000-person 
deficit in primary care and about a 41,000 deficit in surgical 
specialties. And I think nobody here is questioning the need to 
support primary care physicians. The concern from the surgical 
specialties is that if that is done at the expense of the 
surgical specialties, which is what happens if you restrict 
residency training and give special relief of debt repayment, 
et cetera, et cetera, if you say we are only interested in 
primary care, primary care is where all the focus has to be, 
then I think you really run the risk of fixing that problem, 
great, but exacerbating another problem.
    And I think the surgical specialists are as important as 
primary care for the overall health of the Nation, particularly 
in areas like trauma, where it is not going to go away and you 
need surgical specialists to be there right away, you know, a 
life-threatening situation that to exacerbate the one problem 
to fix the other doesn't make sense to me.
    Dr. Sheldon. We had publications in Health Affairs about 2 
years ago, and the numbers go between 20- and 40,000 of doctors 
across the board. These numbers aren't going to be right 
looking back, because medical schools are a target of 13 
percent increase with now 130 medical schools as just the last 
few years.
    The problem, though, is at the residency level, because if 
we don't get something fixed there, changing the Balanced 
Budget Act and that, we are just going to be robbing countries 
that can't afford to give us their people. I have worked all my 
life in public hospitals, and that is what we are going to be 
doing, and we ought to be able to have our workforce funding be 
self-sufficient.
    Mr. Thompson. That is a good segue to kind of part two of 
my question, which is how do we fix this so we are not 
competing back and forth; that we are growing enough future 
professionals to meet all the needs? Because the need is 
significant with the aging baby-boomer population, the 
attrition of retirements that has been happening for some time 
now, and it is going to intensify, plus the amount of need that 
is going to be out there as the population ages.
    Dr. Sheldon. Let me make one more comment. Dr. Griffith's 
comments are germane in that if the number of medical schools 
and residency growth had continued beyond 1997 at the pace that 
it was before, we would probably be okay right now. But we 
froze everything at that period of time with the Balanced 
Budget Act and with the voluntary cap done by the medical 
schools.
    Mr. Thompson. Dr. DiMarco.
    Dr. DiMarco. Yes, the graduate medical education, no one 
has mentioned about the fact that Medicare--right now the 
residents are reimbursed through the hospital in its convoluted 
formula of direct and indirect payments. And meanwhile the last 
two decades, Medicare funds have been going through independent 
insurance companies, who don't contribute back to the graduate 
medical education system. It is only on the back of Medicare 
and Medicaid.
    And I think that would increase the GME slots tremendously, 
because at the medical school level we are all doing our job 
trying to increase the class sizes by 15 percent on the 
allopathic side, and we have doubled our schools on the 
osteopathic side. But if you can't place your residents when 
they are done--and the students vote with their feet. They are 
not stupid. They see what is going on. They know business a 
little bit. They can figure it out, and they say, I don't want 
to do this because I can't make ends meet, but I can do this. 
But if the GME slots were more available, some of the ones that 
don't get filled, there would be others that would get filled.
    Right now there is an understanding that the GME slots are 
dedicated to certain specialties. They are not. They belong to 
the hospital, and they can divvy them out any way they want. 
And if you don't use them in 3 years, you lose them.
    Mr. Thompson. Thank you, Madam Chairwoman.
    Chairwoman Velazquez. Mrs. Dahlkemper.
    Mrs. Dahlkemper. Thank you, Madam Chair. I want to thank 
you for holding this very important and timely hearing today. 
As we move towards universal coverage and health care reform, 
it is essential that we address this future physician workforce 
shortage.
    The Council on Graduate Medical Education has predicted a 
10 percent shortfall of physicians by 2020, and as we have seen 
in Massachusetts, health care reform will only exacerbate this 
impending decline. And health care reform must strive to not 
only to expand health insurance coverage, but also to provide 
everyone access to physicians.
    These physician shortages are particularly troublesome in 
rural areas such as my district in western Pennsylvania since 
less doctors tend to be attracted to fill those positions in 
the rural areas. In this vein I was pleased to see the 
additional funding for the National Health Services Corps, 
which was already mentioned today. And we also need to address 
the debt which the students carry, which we just talked about.
    But I wanted to ask you, Dr. DiMarco, if there is 2,500 
hospitals in the United States that do not have a teaching 
program, amenities are located in those rural and suburban 
communities. As a solution to our workforce shortage problems, 
the American Osteopathic Association recommends expanding the 
number of teaching programs. What steps should be taken to 
achieve this goal, and what kind of support would hospitals 
need to build these programs?
    Dr. DiMarco. Of course it is a brain-drain issue, but the 
thing is that in the country today, with six States that are 
responsible for 80 percent of the training, one of the 
advantages we have noticed in the osteopathic professions, we 
have opened schools in rural areas where there are hospitals 
that never had interns and residents. Fortunately there is a 
loophole in the Balanced Budget Act that says if it is a 
hospital that has never had an intern or a resident, you can 
cap that hospital at a new number first time, And that is what 
we are achieving at this time.
    We have hospitals in Colorado--in Colorado, in Denver; in 
Mississippi; Yakima, Washington; in California where there have 
never been residents and interns. And all our new schools have 
all their slots already preordained prior to the first 
graduating class, And that can be done across the whole 
country.
    Mrs. Dahlkemper. Would anyone else like to address this?
    Dr. Sheldon.
    Dr. Sheldon. I was a charter member of COGME, and, 
candidly, they have been a part of the problem. They have said 
there is a cap--there was a study done the second year of COGME 
that not only talked about the primary care shortage, but about 
six stress specialties, which included two in surgery. And 
COGME is late coming around to recognizing the projected needs 
for the future. There are a number of other groups that were 
way ahead of them on that.
    Mrs. Dahlkemper. Dr. Heim, did you want to--
    Dr. Heim. I practice in actually the poorest county in 
North Carolina right now and certainly appreciate the need to 
have more attention paid to the rural areas. When I discharge a 
patient from the hospital, I often cannot find anyone to take 
care of that patient. So simply having insurance, even if their 
bill gets paid, there is nobody there for me to refer to.
    We also, as part of the Patient-Centered Medical Home 
Demonstration Project, where we are looking with residencies in 
a demonstration project to see new ways of doing training, 
likewise have been moving residents from the traditional 
tertiary big hospital out to small community hospitals as an 
innovative way of improving their training, providing some 
workforce to the rural, and also decreasing costs.
    We also think that you have to change the payment system 
and make sure that health care insurance is available for all, 
because otherwise it is the small rural hospitals that are 
really struggling when you have a very high proportion of your 
population that gets admitted or comes to the emergency room 
for which there is no then adequate reimbursement for them.
    Mrs. Dahlkemper. Thank you.
    I have one last question. Dr. Harbaugh, you were talking 
about the foreign medical graduates, or maybe Dr. Sheldon was 
addressing this, too. What percentage of those who take these 
residency spots, what percentage of those are staying here, and 
what percentage are actually leaving?
    Dr. Harbaugh. To my knowledge, the vast majority stay in 
the United States. Dr. Sheldon may have more accurate--
    Dr. Sheldon. It is well over 60 percent. India now has more 
medical schools than we do, and they will often send people 
here with a plan to go back, and probably more of that is 
happening now. But the number is way, way up.
    Mrs. Dahlkemper. I was wondering just with the change in 
kind of the global climate, and some of these countries may be 
attracting more of their students back.
    Dr. Sheldon. Like, sub-Saharan Africa has a real problem. 
Guiana had, I believe, 1,200 graduates; half of them practice 
in the United States today. And their ratios, if you look at 
the World Health Organization chart, is just dismal. We 
shouldn't be robbing the other countries to fill our own 
residencies.
    Mrs. Dahlkemper. Thank you very much.
    Chairwoman Velazquez. Time has expired.
    Mr. Luetkemeyer.
    Mr. Luetkemeyer. Thank you, Madam Chairwoman.
    With regards to the proposed health care plan that is being 
discussed, part of that plan is rationed health care, and I was 
just curious as to whether you had an opinion on this or 
whether you would give us some insights as to what the feeling 
of your group, Dr. DiMarco, would be. Or I see Dr. Kauk held 
his hand up first. Why don't you go ahead.
    Dr. Kauk. That is fine.
    I work in internal medicine and geriatrics, so I deal with 
hospice patients all the time. I have had multiple patients 
tell me that this is not the American way. We do not limit 
care, we do not ration care. If I get sick--Mom, I had this, I 
want this--may have a revolt of our patients. I have had the 
strongest outpouring from patients about this, And this is an 
issue I deal with every day with my patients. Sixty-five 
percent of my patients are on Medicare, and they are very 
concerned about this very issue. The patients are. Physicians 
are as well.
    The impact upon myself and other peers, if we go to saying, 
okay, I spend too much money, and I won't be in the program 
anymore, this is what I do. How is that fair?
    Mr. Luetkemeyer. Very good.
    Dr. DiMarco.
    Dr. DiMarco. We concur also. We do not support rationed 
care in this country. It is just not the American way.
    Mr. Luetkemeyer. Okay. I have a medical school in my 
district, by the way. So, welcome.
    Dr. Heim, everybody has got their hand up here. I must have 
hit a hot topic here. Thank you.
    Dr. Heim. I would just like to point out that I think under 
our current system we do ration care. If you do not have health 
insurance right now, you oftentimes delay or do not get care. 
That is rationing.
    I also think, though, that even those people who have 
insurance currently, I see a disparity, and we all know that 
there are disparities of care in this country. So I think that 
when we develop health care reform, we have to look at whether 
the disparities right now, what is the rationing that is 
currently going on as we move forward to a different program. 
But, sir, it exists out there right now, and I face it every 
day in my active practice.
    Mr. Luetkemeyer. Okay.
    Dr. Sheldon. We have a safety net hospital. Eighteen 
percent of our work is uncompensated, coming close to $300 
million a year. Rationing is common in the public programs in 
England and on the continent, and it is often pegged at a 
patient's age. And unfortunately, with all of the patients, 
everybody getting older in this country especially, that is 
when most of the diseases come along that need care. And the 
cancer statistics that I quoted earlier in my comments may well 
in part be due to the fact that they have limitations what care 
you can get at certain ages. It is hard to get it right. I 
think if we follow the advisory of Council of Economic Advisors 
that was in that June 2nd document from the White House, the 
inevitable result will be losing public money and probably will 
make this worse.
    Mr. Luetkemeyer. Dr. Harbaugh.
    Dr. Harbaugh. I think the specter of rationing is that 
someone who doesn't know an individual patient will make a 
determination that this particular patient cannot receive care 
that may in that case be life-sustaining, and that scares 
people to death. I don't think we need to go there. If we had 
better research on what care is truly effective and what care 
was futile or ineffective, we could take care of a lot of the 
expense problems that we have now.
    If you look at the Dartmouth health care maps--and I spent 
a long time at Dartmouth, and it was part of their surgical 
outcome s group. And if you look at the variability in the 
number of surgical procedures done from region to region, what 
you find is that where the indications for surgery are 
ambiguous, you have a great deal of variability, and it tends 
to follow the number of surgeons. On the other hand, when you 
have very clear-cut indications for surgery, you find that the 
rate of those operations is the same all over the country.
    So we can do a much better job of finding out clear-cut 
indications for surgical care, and I am sure the same is true 
for other types of care, and the comparative effectiveness 
approach, I think, if done right, has a lot of merit.
    Mr. Luetkemeyer. Thank you very much.
    Thank you, Madam Chairman.
    Chairwoman Velazquez. Thank you.
    Mr. Bartlett.
    Mr. Bartlett. Thank you very much. Sorry that I was late.
    I think in moving forward, we need to recognize that we 
really do not have much of a health care system in this 
country; we have a really, really good sick care system, the 
best in the world probably. I hope that in moving forward that 
we are focused a bit more on--a whole lot more on health care. 
Maybe if we had a better health care system, we wouldn't need 
to have such a big sick care system.
    One of the problems that we have in rural areas, and I 
guess in some of our inner cities, too, is that the government 
now controls the health care for almost 50 percent of our 
population: all of our military, all of our veterans, SCHIP 
children, Medicare and Medicaid. And by design, the government 
intends to pay less than the cost of health care. Obviously you 
can't do this, or you can't stay in business. So there is a lot 
of cost shifting going on.
    How are you dealing with this problem in rural areas where 
frequently large percentages of your patients--I have some 
rural areas in my district, and I know that some of their 
nursing homes are 90-odd percent all Medicaid. Tough to run an 
institution when the person who is paying the bill intends to 
pay less than the full cost of health care. How are you dealing 
with this?
    Dr. Harbaugh. Well, at a large academic medical center, 
this is an acute problem because we do not refuse care to 
anyone because of ability to pay. We are--our trauma patients 
very frequently are Medicaid patients.
    Now, we are luckily to live in a part of Pennsylvania that 
also has a pretty good payor mix in other parts of the 
population, and it is clearly cost shifting, that people who 
have insurance are paying enough to care for the people who 
don't cover their expenses with Medicaid.
    Mr. Bartlett. You have to do this, or you are out of 
business. Yes.
    Dr. Kauk. I think it is really becoming an issue. I deal 
with 65 percent Medicare patients, and realistically it is 
coming to a point where I cannot any longer be a private 
physician running my own business. After 30 years of doing 
this, 30 years of being a very good, efficient, busy physician, 
I have not been able to give my employees a raise for 5 years, 
I have not funded my pension profit-sharing plan. I am looking 
at other options for my practice at this point. I will probably 
become an employed physician and will probably lose another 
small business, and this at a time where I should be doing 
well, not suffering.
    And that is a personal story, but that is the way I think 
most people are struggling with it, not very well, hoping they 
get enough of the private insurance people who pay a little 
better that they can keep going or looking for other people to 
pay those bills. Studies have shown the average primary care 
physician loses 80-some thousand dollars a year.
    Mr. Bartlett. Dr. Heim.
    Dr. Heim. There are a few things that I think we can look 
to for models. One is in North Carolina we have the North 
Carolina Community Care, which actually is built around 
Medicaid patients right now, and as you said, you lose money on 
your Medicaid patients. And so simply filling up your practice 
usually with Medicaid, like any small business knows, that 
volume doesn't work when each time you lose more money. But in 
the North Carolina, the Community Care, what they have done is 
it is a patient-centered medical home model, and the State has 
paid the primary care physicians an additional payment per 
Medicaid payment in order to coordinate the care specifically 
across certain disease States. What that has done is it has 
increased the payment for the primary care physician to a point 
that they can afford to not only see these patients, but do the 
coordination of care, and, in fact, to save the State over 250 
billion in the length of the program.
    The other thing that I agree, I think what we are seeing is 
a change in primary care practices. They are starting to do 
more procedures, which is not what we want, because the system 
has driven people to simply do more things, rather than looking 
at health outcomes. And we have also seen that there are a lot 
of our members who are now selling out their practices and 
starting to work for hospital systems, or they are starting to 
leave and go into other practices.
    Dr. Harbaugh. I would like to point out that I think not 
only primary care physicians practice preventive care. Much of 
what I do is preventive care. The patient with the symptomatic 
carotid stenosis who is at risk of stroke, there is a very 
effective surgical intervention to prevent a stroke and all of 
the costs that go with that. The patient with the unruptured 
intercranial aneurysm who is at risk of a devastating 
hemorrhage, if that aneurysm is fixed before the hemorrhage 
occurs, that saves an immense amount of cost in the system. And 
as I have mentioned briefly in my system, I think there are 
neurosurgical procedures just around the corner that would 
offer a minimally invasive and effective treatment for things 
like addiction, And that means addiction to tobacco and alcohol 
and et cetera, and obesity. And that would be a neurosurgical 
example of very effective preventive care that could save 
immense amounts of money.
    So when we talk about prevention, let us be clear that many 
of us practice preventive medicine, even if we are surgical 
specialists.
    Dr. Sheldon. I was going to comment that colonoscopy and 
early removal of polyps has a great impact on lowering colon 
cancer mortality, which has already seen progress since that 
has become more common.
    Similarly, one of the differences that the United States 
has led the world in is frequency of mammograms. Instead of 
diagnosing a breast cancer at Stage 3, we are getting it at 
Stage 1.
    As far as programs that have been authorized by Congress, 
they have a program in our State that has also been very 
effective in helping with some of these things and making 
access good.
    Chairwoman Velazquez. Time has expired. Let me take this 
opportunity to thank all of you for taking time to be here 
today. This is a very important issue, and there is no doubt in 
my mind that, as you stated, each one of you, you know, there 
are--most medical practices are small businesses, and that is 
why we wanted to hold this hearing today.
    The House will be introducing its health care reform bill 
this week, and it is expected to be marked up next week. I have 
been meeting with some of the leaders dealing with the 
committee of jurisdictions discussing some of the important 
issues related to health care reform with small businesses. The 
shortage of physicians is a very important issue. There is no 
way that we can accomplish the goal of health care reform 
without addressing this important issue.
    So with that, let me say that I ask unanimous consent that 
Members will have 5 days to submit a statement and supporting 
materials for the record. Without objection, so ordered.
    Chairwoman Velazquez. This hearing is now adjourned. Thank 
you.
    [Whereupon, at 10:55 a.m., the Committee was adjourned.]

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