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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

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slide1
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

learning objectives
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
overview
Overview
  • Forecast workforce shortages and surpluses
  • Estimate scaling-up costs
  • Illustrate workforce and wage bill shortages under different skill mixes
two types of shortages
Two types of shortages

Need-based shortage:

Need – Supply = Shortage

Economic demand-based shortage:

Economic Demand – Supply = Shortage

slide6
WHR 2006 found 2.28 workers per 1,000 population are required to achieve 80% coverage of births
whr 2006 country level model
WHR 2006 country-level model
  • Regression model:

arcsine(percent coverage) =β0 + β1* ln(health workers per 1,000 pop) + ε

extensions
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
conceptual framework
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

needs based model projection
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

demand based model projection
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

needs based and demand based regression modeling results
Needs-based and demand-based regression modeling results

Source: Scheffler et al., 2008 The Bulletin of the World Health Organization

supply projection
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

number of countries with projected shortages of doctors in 2015
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

significant doctor shortages projected for africa and asia in 2015
Significant doctor shortages projected for Africa and Asia in 2015

Source: Scheffler et al., 2008 The Bulletin of the World Health Organization

summary of findings for africa
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
doctor shortages in africa in 2015
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

doctor shortages in africa in 2015 cont
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

overview1
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
world health survey whs 2002
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

extended needs based model
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

number of required workers varies based on health utilization measure
Number of Required Workers Varies Based on Health Utilization Measure

Source: Fulton and Scheffler, forthcoming. Do not cite or distribute.

number of required workers varies based on countries geographic characteristics
Number of Required Workers Varies Based on Countries’ Geographic Characteristics

Source: Fulton and Scheffler, forthcoming. Do not cite or distribute.

overview2
Overview
  • Forecast workforce shortages and surpluses
  • Estimate scaling-up costs
  • Illustrate workforce and wage bill shortages under different skill mixes
components of scaling up
Components of scaling-up
  • Human resources
    • Wage bill for health care professionals
    • Wage bill for support staff
    • Training
  • Other inputs
    • Facilities
    • Equipment
    • Supplies
    • Pharmaceuticals
annual wage bill required to remove health worker shortage in africa for 2015
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

annual wage bill required to remove health worker shortage in africa for 2015 millions us 2007
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

annual wage bill required to remove health worker shortage in africa for 2015 millions us 2007 cont
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

wage bill only represents fraction of scaling up costs 31 ssa countries
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

overview3
Overview
  • Forecast workforce shortages and surpluses
  • Estimate scaling-up costs
  • Illustrate workforce and wage bill shortages under different skill mixes
optimal skill mix
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)?
slide34
Example: If you had $15 more budget, would you want to hire more doctors or nurses, given this situation?
  • Hire 3 doctors for 30 visits.
  • Hire 5 nurses for 45 visits.
slide35
Annual wage bill required to remove health worker shortage in 12 non-African countries for 2015 ($USD 2007 mn)

Note: Numbers are based on rounded numbers. Preliminary results. Do not cite.

adjusting the skill mix elements of the simulation
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.

nurse doctor wage ratio significantly varies across projected shortage countries
Nurse:Doctor Wage Ratio Significantly Varies Across Projected Shortage Countries

*Indicates wage was predicted by gross national income per capita.

bangladesh example
Bangladesh Example

Numbers may not add due to rounding.

bangladesh example1
Bangladesh Example

Numbers may not add due to rounding.

bangladesh example2
Bangladesh Example

Numbers may not add due to rounding.

changing the skill mix has the potential to reduce the wage bill costs
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.

wage bill reduction depends on relative productivity of workers
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.

adding chw to the skill mix has an even greater potential to reduce wage bill
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.

wage bill shortage is reduced under new skill mix but varies by country 2007 usd million
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.

implications of adjusting the skill mix
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
learning objectives1
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
global center for health economics and policy research uc berkeley publications
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.
questions

Questions?

End of Presentation

millennium development goals targets for 2015
Millennium Development GoalsTargets for 2015
  • Halve extreme poverty and hunger
  • Achieve universal primary education
  • Eliminate gender education disparity
  • Reduce child mortality by 2/3
  • Improve maternal health by 3/4
  • Halt and reverse the spread of HIV/AIDS
  • Adopt national environmental sustainability policies
  • Develop and global partnership for development
slide53
Monthly Wage Statistics in Africa

($US 2007)

53

Source: Occupational Wages around the World (OWW) Database

full cost to scale up
Full Cost to Scale Up
  • Wage bill for doctors, nurses, and midwives ($2.6 bn)
  • Other recurring costs ($16.4 bn)
    • Wage bill for other health workers and support staff
    • Funds for supplies, pharmaceuticals, equipment, and facilities
  • Training costs ($2.6 bn / year)

Source: Scheffler et al., 2009 Health Affairs

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