Biased technical change in hospital care and the demand for physicians

The development of labour productivity is relevant for accurately planning future staffing requirements, especially in sectors where technological developments may drive labour substitution. The present study investigates how labour productivity has developed across Dutch medical specialists (2007-2017) and discusses its implications for workforce planning, also in relation to the existing literature.

A regression model is developed in which the number of full-time equivalents is related to production (admissions), hospital characteristics and a trend parameter. The trend parameter captures the average annual change in the number of full-time equivalents per production output and is a measure for labour productivity. The model is applied to a micro-data set of Dutch hospitals in the period 2007-2017 across 24 different specialties using regression methods.

The results indicate an increase in the number of full-time equivalents per admission has increased for most specialisms and that labour productivity has thus decreased. However, there is considerable heterogeneity and uncertainty across different specialisms.

The results amplify the issue of medical personnel shortages driven by the growing demand for health care. The research outcomes are linked to the existing literature regarding physicians' productivity. Changes in accountability such as using relative value units, incentive payments, use of staff and mid-level providers, and technology have been discussed, and some consensus has been reached.