workforce shortage and wage bill forecasts: effect of skill mix changes (lecture b2)

Workforce Shortage and Wage Bill Forecasts: Effect of Skill Mix Changes

(Lecture B2)

Richard M. Scheffler, PhD Distinguished Professor of Health Economics & Public PolicyDirector, Global Center for Health Economics and Policy ResearchSchool of Public HealthUniversity of California, Berkeley

2University of

California, Berkeley

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

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Overview

Forecast workforce shortages and surpluses

Estimate scaling-up costsIllustrate workforce and wage bill

shortages under different skill mixes

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Two types of shortages

Need-based shortage:

Need – Supply = Shortage

Economic demand-based shortage:

Economic Demand – Supply = Shortage

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

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WHR 2006 country-level model

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

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Extensions

Time period: 2015Estimate need for doctors versus nurses

and midwives separatelyEstimate economic demand for doctorsNeeds-based extensions

Use different needs-based health utilization measures

Use additional co-variates

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Conceptual Framework

0

1

2

3

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5

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1 2 3 4 5 6 7 8 9 10

Time period

Phys

icia

ns p

er 1

,000

Need

Supply

Surplus Shortage

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

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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 termScheffler, 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

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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

WhereIncomeDummyi: low-income and middle-income

dummiesμi : country fixed effectsηt : Time fixed effectsεi,t : random disturbance term


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

Needs-based and demand-based regression modeling results

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

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Supply projection

ln(doctors per 1,000 populationt) =α0 + α1*Yeart + εt

Wheret = index {1980,…,2001}Yeart: year dummy variables

εt random disturbance term


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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.

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

Significant doctor shortages projected for Africa and Asia in 2015

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Summary of Findings for Africa

Over 30 countries with projected doctor shortages in 2015

Shortage totals 257,000 doctorsNeeds-based demand: 369,000

Projected supply: 112,000

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Doctor Shortages in Africa in 2015


Country Supply Shortage (-) Supply/Need%

Shortage (-)or Surplus (+)

Supply/Demand%

1 Mozambique 277 -12624 2.1% -407 40.6%2 Gambia 23 -1014 2.2% -54 30.3%3 Lesotho 51 -906 5.3% -67 43.2%4 Zambia 433 -7162 5.7% -1086 28.5%5 Rwanda 395 -5784 6.4% -261 60.2%6 Malawi 644 -8134 7.3% 231 155.9%7 Niger 802 -9778 7.6% 295 158.2%8 Burundi 449 -5376 7.7% -179 71.5%9 Cameroon 822 -9625 7.9% -717 53.4%

10 Central African Republic 201 -2349 7.9% -10 95.7%11 Benin 490 -5665 8.0% -415 54.1%12 Mali 890 -9037 9.0% -148 85.7%13 Ethiopia 4916 -48390 9.2% 1949 165.7%14 Uganda 2282 -20717 9.9% -33 98.6%15 Togo 433 -3873 10.1% -288 60.1%16 Burkina Faso 1197 -8503 12.3% 517 176.3%17 Madagascar 2376 -10690 18.2% -540 81.5%

Need-based model Demand-based model

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California, BerkeleyScheffler, 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.)

Countries with no doctor shortages: Botswana, Congo, Namibia, Mauritius, South Africa and Algeria

Country Supply Shortage (-) Supply/Need%

Shortage (-) or Surplus (+)

Supply/Demand%

18 Sierra Leone 759 -3025 20.1% 335 179.0%19 Gabon 188 -692 21.3% -459 29.1%20 Zimbabwe 1659 -5915 21.9% -705 70.2%21 Angola 2593 -8900 22.6% 1284 198.1%22 Senegal 1819 -6158 22.8% 423 130.3%23 Ghana 3414 -11159 23.4% 1317 162.8%24 Guinea 1552 -4972 23.8% -151 91.1%25 Equatorial Guinea 86 -258 25.0% -209 29.1%26 Cote d'Ivoire 2975 -8850 25.2% 987 149.6%27 Kenya 6105 -18143 25.2% -1497 80.3%28 Mauritania 599 -1589 27.4% 207 152.8%29 Cape Verde 105 -240 30.4% -137 43.4%30 Guinea-Bissau 504 -666 43.1% 111 128.2%31 Comoros 322 -237 57.6% 180 226.8%32 Nigeria 72123 -16176 81.7% 35543 197.2%33 Swaziland 537 -8 98.7% 369 319.6%

Need-based model Demand-based model

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Overview

Forecast workforce shortages and surplusesEstimate requirements using different

utilization measures and controlling for country-level factors



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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

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Descriptive Statistics for Africa (n=18)Variable Mean Std. Dev.Health Care Services

1. Birth attended by health worker 0.74 0.232. Received healthcare when needed it 0.94 0.04

Women's Health Care3. Pelvic examination <3 years 0.17 0.144. Pap smear test <3 years 0.44 0.145. Mammography <3 years 0.05 0.046. HIV testing offered when pregnant 0.19 0.16

Child vaccinations and supplements7. Received any vaccination 0.76 0.118. Received DPT vaccination 0.93 0.059. Received measles vaccination 0.82 0.1010. Received vitamin A capsule or similar supplement 0.61 0.21

Health Outcomes11. Health rating 0.64 0.1112. Health satisfaction 0.59 0.14

Health WorkforceDoctors per 1,000 population 0.21 0.27Nurses and midwives per 1,000 population 1.52 1.68Health workers per 1,000 population 1.73 1.85

Population DistributionLand (square km) per capita 0.08 0.12Urban (% of total population) 38.01 21.33

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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 measurex: country-level factors (land area per capita,

percent population that is urban)ε: Random error term

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Number of Required Workers Varies Based on Health Utilization Measure

0

20

40

60

80

100 % receiving health services

0 5 10 15 Health workers per 1,000 population

Birth attended by HW (A) Received health care when needed (B) Pap smear test (C) HIV testing offered (D) Pelvic examination (E) Mammography (F)

A B C D E F

2.28*

*WHO Threshold

2.28*

*WHO Threshold

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

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Number of Required Workers Varies Based on Countries’ Geographic Characteristics

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

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Overview




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Components of scaling-up Human resources

Wage bill for health care professionals Wage bill for support staff Training

Other inputs Facilities Equipment Supplies Pharmaceuticals

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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

Doctors($ billions)

Nurses & Midwives($ billions)

Total($ billions)

Need 1.3 2.3 3.6Supply 0.2 0.8 1.0

Incremental Costof additional workers 1.1 1.5 2.6

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Annual wage bill required to remove health worker shortage in Africa for 2015 (millions $US 2007)

Country DoctorsNurses & Midwives Total

% of Gov't Health Budget

Africa (shortage countries) 1,097 1,508 2,605 46.8%1 Mozambique 53 82 135 47.1%2 Gambia 6 10 15 66.0%3 Madagascar 15 32 46 30.4%4 Central African Republic 32 96 128 378.1%5 Burundi 19 26 45 670.8%6 Rwanda 29 65 95 150.2%7 Equatorial Guinea 2 6 8 4.6%8 Cameroon 205 323 528 200.2%9 Lesotho 6 10 16 24.2%10 Niger 73 129 201 506.6%11 Mali 49 60 109 65.8%12 Ethiopia 101 170 271 74.6%13 Uganda 8 12 20 7.7%14 Togo 20 30 50 104.5%15 Zambia 35 16 51 15.4%



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Annual wage bill required to remove health worker shortage in Africa for 2015 (millions $US 2007) (cont.)

Country DoctorsNurses & Midwives Total

% of Gov't Health Budget

16 Cape Verde 1 4 5 10.0%17 Burkina Faso 55 86 141 60.1%18 Guinea 29 48 77 211.6%19 Zimbabwe 37 55 92 33.1%20 Cote d'Ivoire 43 75 118 57.5%21 Senegal 32 45 77 27.3%22 Benin 33 33 66 55.6%23 Ghana 63 49 111 40.5%24 Mauritania 9 11 19 35.2%25 Malawi 19 12 31 28.7%26 Kenya 79 44 122 24.6%27 Guinea-Bissau 3 2 4 N/A28 Sierra Leone 4 0 4 14.4%29 Comoros 1 0 1 N/A30 Gabon 6 -3* 3 1.0%31 Angola 31 -18* 13 1.6%



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Wage bill only represents fraction of scaling-up costs, 31 SSA Countries

Data Sources: World Health Report 2006, and Effective Aid Better Heath (2008)

$0

$5

$10

$15

$20

$25

Scale Up Costs Current HealthSpending

Global Aid ODA (31)

Bill

ions

($U

S 2

007)


Wage bill

Non-wage bill

Training

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Overview




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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)?

CHW

CHW

MW

MW

N

N

D

D

wMP

wMP

wMP

wMP

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Example: If you had $15 more budget, would you want to hire more doctors or nurses, given this situation?

3$

95$

10 visitsvisits

N

N

D

D

wMP

wMP

Hire 3 doctors for 30 visits. Hire 5 nurses for 45 visits.

3$

65$

10 visitsvisits

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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.

Country Need Supply Shortage1 Nepal $98 $10 $882 Djibouti $42 $5 $363 Yemen $154 $35 $1194 Papua New Guinea $150 $30 $1215 Haiti $38 $12 $266 Solomon Islands $3 $1 $27 Bangladesh $592 $215 $3768 Vanuatu $2 $1 $19 Sudan $904 $396 $507

10 Samoa $6 $3 $311 Indonesia $2,028 $1,484 $54412 Fiji $21 $17 $4

Total $4,037 $2,210 $1,827

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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.

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

Country

Nurse+Midwife: DoctorRatio

Nepal 2.2Djibouti 2.3Yemen 2.0Papua New Guinea 10.5Haiti 0.6Solomon Islands 6.7Bangladesh 1.2Vanuatu 21.5Sudan 4.2Samoa 2.9Indonesia 6.1Fiji 5.9 Mean 5.5 Median 3.5 Minimum 0.6 Maximum 21.5

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Nurse:Doctor Wage Ratio Significantly Varies Across Projected Shortage Countries

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

CountryDoctor

Wage ($)Nurse

Wage ($)Nurse:Doctor Wage Ratio

1 Nepal 1,946* 1,105* 0.572 Djibouti 37,622 13,929 0.373 Yemen 3,543* 2,000* 0.564 Papua New Guinea 20,773 5,807 0.285 Haiti 2,525* 1,430* 0.576 Solomon Islands 3,213* 1,815* 0.567 Bangladesh 1,930 1,420 0.748 Vanuatu 5,802* 3,258* 0.569 Sudan 9,659 8,794 0.91

10 Samoa 18,466 11,819 0.6411 Indonesia 5,400* 3,035* 0.5612 Fiji 17,481 8,065 0.46

Mean 10,696 5,206 0.57 Median 5,601 3,147 0.56 Minimum 1,930 1,105 0.28 Maximum 37,622 13,929 0.91

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Bangladesh Example

Numbers may not add due to rounding.

Table 1: Current Situation Estimated for 2015

Variable DoctorsNurses & Midwives

Community Health

Workers TotalDoctor

EquivalentsNeed 92,000 291,000 383,000 325,000Supply 59,000 72,000 131,000 116,000Shortage 33,000 220,000 253,000 209,000

Annual Wage ($) $1,930 $1,420 Annual wagebill shortage ($ mn) $64 $312 $376

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Bangladesh Example




Community Health

Workers TotalDoctor



Table 2: Increase nurse:doctor ratio 50%


Community Health

Workers TotalDoctor


Annual Wage ($) $1,930 $1,420 Annual wagebill shortage ($ mn) $17 $355 $372 Savings -1.0%

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Bangladesh Example



Community Health

Workers TotalDoctor



Table 3: Increase nurse:doctor ratio 50% & substitute 20% of nurses w/ CHW


Community Health

Workers TotalDoctor

EquivalentsNeed 68,000 257,000 214,000 540,000 325,000Supply 59,000 72,000 0 131,000 116,000Shortage 9,000 186,000 214,000 409,000 209,000

Annual Wage ($) $1,930 $1,420 $284 Annual wagebill shortage ($ mn) $17 $264 $61 $342 Savings -9.1%


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0%

5%

10%

15%

20%

25%

0% 50% 100% 150% 200%

Nurse:Doctor Ratio Increase

Red

uctio

n in

Wag

e Bi

ll Sh

orta

ge0.7One nurse equals this number of doctors:

Changing the skill mix has the potential to reduce the wage bill costs

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.

A

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0%

5%

10%

15%

20%

25%

0% 50% 100% 150% 200%


Red

uctio

n in

Wag

e Bi

ll Sh

orta

ge

0.9 0.8 0.7One nurse equals this number of doctors:

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.

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0%

5%

10%

15%

20%

25%

0% 50% 100% 150% 200%


Red

uctio

n in

Wag

e B

ill S

horta

ge0% 10% 20%Percentage of Needed Nurses Replaced with CHW:

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.

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Wage bill shortage is reduced under new skill mix, but varies by country (2007 $USD million)

Country Original New ReductionNepal 88 80 8.3%Djibouti 36 32 12.1%Yemen 119 107 9.7%Papua New Guinea 121 102 15.7%Haiti 26 23 11.0%Solomon Islands 2 2 10.5%Bangladesh 376 342 9.1%Vanuatu 1 1 12.5%Sudan 507 467 8.1%Samoa 3 2 14.4%Indonesia 544 391 28.1%Fiji 4 2 43.9% Total 1,827 1,552 15.1%

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.

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Implications of adjusting the skill mix

Substitute lower skilled workers for higher skilled

Reduce wage billReduce training costsReduce time to scale upNeed to maintain quality

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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

48University of


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?

End of Presentation

Back Up Slides

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Millennium Development GoalsTargets for 2015

1. Halve extreme poverty and hunger2. Achieve universal primary education3. Eliminate gender education disparity4. Reduce child mortality by 2/35. Improve maternal health by 3/46. Halt and reverse the spread of HIV/AIDS7. Adopt national environmental sustainability

policies8. Develop and global partnership for development

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Sample calculations for increasing nurse+midwife:doctor ratio

Increase in Nurse & Midwife-to-

Doctor Ratio Doctors

Nurse & Midwives Total

Nurse & Midwife-to-

Doctor RatioDoctor

Equivalents0% 0.55 1.73 2.28 3.15 1.9310% 0.51 1.78 2.29 3.46 1.9320% 0.48 1.82 2.30 3.77 1.9350% 0.41 1.91 2.32 4.72 1.93

100% 0.32 2.02 2.34 6.29 1.93160% 0.26 2.10 2.35 8.18 1.93200% 0.23 2.13 2.36 9.44 1.93

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California, Berkeley53

Doctors($)

Nurses($)

Doctor-to-Nurse Ratio

Average 522 333 1.8

Median 423 272 1.7

Minimum 33 18 1.0

Maximum 1,779 1,129 5.0

Monthly Wage Statistics in Africa($US 2007)

Source: Occupational Wages around the World (OWW) Database

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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 staffFunds for supplies, pharmaceuticals,

equipment, and facilitiesTraining costs ($2.6 bn / year)


workforce shortage and wage bill forecasts: effect of skill mix changes (lecture b2)

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