Review and Update of the 1995 Physical
Medicine and Rehabilitation Workforce Study
1998 Demand Side Issues
1. Effects of HMO and managed care penetration
The growth of managed care and its potential effects
on the demand for the services of physiatrists were important factors in the
1995 workforce assessment. The Advisory Group considered it especially
important in 1998 to reassess these factors because of a perceived
"backlash" against the managed care concept and its slower than
anticipated growth—especially within the Medicare program. Also of
significance, the Advisory Group believed, was the success of efforts by the
Academy and other organizations to educate physiatrists on how to better
adapt to managed care, and to inform managed care decision makers of the
value of physiatry.
Two factors determine the effect of managed care on
the demand for physiatrists. The first is the "managed care penetration
rate." This study measured the HMO penetration rate—the percent of
the population covered by closed panels of health care providers, which is
generally considered a more stringent form of managed care than, for
example, a Preferred Provider Organization (PPO).
The second factor is the "elasticity" effect
that an increase in managed care has on the demand for physiatric services.
The elasticity measures the percentage change in the demand for PM&R
services with respect to a percent change in the HMO penetration rate. For
example, an elasticity of -0.2 means that a 10% increase in the penetration
rate results in a 2% decline in the demand for physiatric services.
It was assumed in the 1995 study that the HMO
penetration rate would grow from 20% in 1994 to 36% in 2000, and to 54% by
2015—an average annual growth rate of approximately 4.8%.
Figure 4 shows the projected penetration rate from 1994 through 2015; it
also shows the measured actual rate from 1994 through 1997. The actual rate
in that time frame was very close to the projected rate; the projected rate
begins to accelerate after 2000.
The effect of a 10% increase in the HMO penetration
rate, according to 1995 estimates, would be a decrease of 2% in the demand
for the services of physiatrists. For example, a demand for 100 hours of
service would decline to 98 hours.
Members of the 1998 study panel believed that managed
care growth would be less rapid than the rate projected in 1995, and that
the negative effects of managed care on demand for physiatric services would
be less than anticipated in the first workforce study. The basis for these
beliefs was the perceived consumer backlash against managed care’s
restrictive policies, and to the progress made by physiatrists in adapting
to the managed care environment. The panel’s median response estimates of
managed care’s growth rate and "elasticity" are reported in Table
4. The consensus was that Medicare managed care growth would be
extremely slow, particularly because of the withdrawal of Medicare Plus
Choice contractors from the market.
2. Clinical practice areas of growth and decline
Because traditional physiatric practice domains such
as inpatient rehabilitation may be declining relative to other areas, the
1998 Advisory Group suggested that practice areas be reassessed, areas of
probable growth and potential decline be identified, and the resulting net
effect on demand be considered.
Involvement with patient care claimed the interest and
attention of the majority of the PM&R workforce in the years 1985
through 1996 (Figure 5), and office-based patient
care showed the most growth in that period (Table
5). Hospital-based patient care experienced the least growth.
Twelve potential practice areas were assessed in 1998
with a three-point scale in which +1 indicated an area of substantial
growth, 0 indicated approximately no growth, and -1 indicated an area of
substantial negative growth in demand in the next 10 to 15 years. Some panel
members, however, interpolated between the three points. Table
6 shows the median responses of panel members. In general, the consensus
was for growth in demand in most practice areas. Providing primary care for
the disabled will continue to be an important activity, panel members
indicated, but they did not project a major role for physiatrists as primary
care physicians. Negative growth was anticipated for inpatient
rehabilitation, sub/post acute care, and in the number of faculty positions
in teaching institutions. The panel’s median assessment of overall growth
was about 0.5—between substantial growth and no growth. It was the
panel’s belief that this moderate growth will offset the negative effect
that managed care growth is like to have on demand.
3. Competing/complementary providers
The 1995 study focused on the effect on demand for
physiatric services that could result if providers such as neurologists
become more aggressive competitors with physiatrists in response to the
pressures of managed care. In 1998, the Advisory Group suggested that in
addition to making a reassessment of competing specialties, the study panel
consider complementary models of care wherein physiatrists work with groups
of other specialists such as the neurologists or orthopedic surgeons.
Eight health care disciplines considered as
potentially competing providers were assessed by the panel, using the
three-point scale described earlier. The median response is shown in Table
7. Neurologists and anesthesiologists were seen as the specialists whose
services posed the greatest "threat" to the demand for physiatric
care, with anesthesiologists competing increasingly in the practice of pain
management. Growth in the practice of gerontology was regarded as
potentially increasing the demand for PM&R services because geriatrists
refer patients for rehabilitation and pain management.
To put in perspective the magnitude of the effects of
competing providers, together they were seen as having less than 10% of the
effect managed care growth would have on demand for PM&R services.
Interestingly, panel members believed that physician assistants and nurse
practitioners would have a modest negative effect on demand and
chiropractors and rheumatologists largely do not affect the demand for
physiatrists.
4. The role of the Federal government
The issue of whether direct demand for physiatrists by
the Veterans Administration or the Department of Defense is likely to change
significantly was not addressed in the 1995 study. The Advisory Panel
suggested that government demand be reviewed in 1998 because of the
downsizing of the US military’s active duty forces and a declining
population of veterans. Figure 6 shows the number
of physiatrists employed by the Department of Defense, the Veterans
Administration, and the US Public Health Service in 1990, 1993, and 1996.
Although both the Department of Defense and the VA numbers were lower in
1996 than in 1990, the differences were slight. Total demand from all three
agencies remained fairly constant at about 225 physiatrists. The study panel
concluded that the government’s need for PM&R specialists would would
not have a significant effect on overall demand.
5. Effect of changes in technology or epidemiology
An aging population was cited by the study panel as
one source of increased demand for the services of physiatrists, but the
effects were judged to be only about 10% as important to demand as managed
care. That conclusion was based on the panel’s median response of
1.0—based on the three-point scale for measuring demand—to the
importance of technology and epidemiology to demand.
6. Effect of the AAPM&R’s efforts to inform the market
The 1995 study concluded
that there would be an excess demand for physiatrists through 2015 if the
health care market were "fully informed" about the efficacy and
efficiency of physiatric services. The American Academy of PM&R then
developed its "PM&R Awareness Initiative" program to
accomplish that goal. It was the panel’s conclusion that the program has
been successful through 1998 and that market demand is moving toward the
path predicted if the market were fully informed.
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