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OCR for page 44
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Approaches to Measuring
Demand and Supply
CONGRESS DIRECTED that this study identify projected needs, availa-
bility, and requirements of various types of health care delivery systems
for each type of allied health personnel." Before it could respond to this
charge, however, the committee had to resolve several issues of scope and
approach.
1. Current versus future "needs, availability, and requirements" The com-
mittee believes that, given its limited funds and time, it can make a greater
contribution by providing its best assessment of future needs and require-
ments for allied health personnel and its best assessment of the kinds of
adjustments that will be needed to meet those needs and requirements.
Although it recognizes that there is intense interest in the current situation,
the committee believes that most of the study's resources would have been
exhausted in performing a systematic assessment of that situation. The
future outlook, on the other hand, is crucial to strategic planning and
policy; therefore, the committee chose to devote most of its efforts to
developing a picture of the future. To the extent that it became aware of
perceptions of current imbalances in demand and supply of allied health
personnel as the study progressed, those perceptions are noted in the
report.
2. "Each type of allied health personnel" As the charge implied and the
committee clearly recognized, it is neither feasible nor useful to consider
the needs and availability of allied health personnel collectively. The allied
health rubric comprises occupations with varying labor market character-
istics (e.g., paths of entry, levels and types of responsibilities, wages and
44
OCR for page 45
MEASURING DEMAND AND SUPPLY
45
salaries, labor force entries and exits, and work sites). As a consequence
the demand and supply situation must be considered separately for each
occupational field. The approach used in this study has been to examine
10 allied health fields in some depth to illustrate the diversity among them.
To the extent possible, these fields are used as the basis for several general
conclusions about the future employment outlook.
3. "Needs, availability, and requirements" Two different approaches are
implied by the charge. "Needs," as used in the context of health personnel
planning, refers to a normative idea of the number and type of personnel
required to provide therapeutic and preventive services to a defined pop-
ulation. Need is usually defined independently of economic constraints.
Demand (or effective demand), on the other hand, refers to the number
and type of personnel required to fill the available jobs and provide services
for which consumers are willing and able to pay.
The committee elected to assess future needs and requirements in terms
of the effective demand for allied health personnel. This decision was based
on the committee's judgment that this approach is of most use for realistic
planning. However, in the case of long-term care (see Chapter 8), the
committee chose to take a patient-centered approach in examining the
future need for allied health personnel.
4. Planning horizon The committee selected the year 2000 for its pro-
jections of future demand and supply. Because most of the available base
data are for 1986, this decision means, in effect, looking ahead 15 years.
The committee recognizes the great uncertainty that goes with so long a
horizon. Yet many decisions require some assessment of the future, how-
ever rough, and the types of decisions that affect the labor market for
allied health practitioners (e.g., starting or modifying educational pro-
grams) necessitate long lead times. On balance, then, the committee's de-
cision was to take the long view.
DATA FOR ASSESSING DEMAND AND SUPPLY
The committee was limited to the use of existing data as the basis for its
assessment of demand and supply in allied health fields because it was not
possible to design, field, and analyze a survey within the available study
time, particularly considering the requirement for the Office of Manage-
ment and Budget's approval of such a survey. The paucity of existing data
on allied health fields severely constrained the committee's ability to carry
out its charge. Thanks in large part to significant federal investments in
developing data bases in medicine, dentistry, and nursing, previous Insti-
tute of Medicine (IOM) studies of those fields have been able to draw on
large amounts of data and on requirements and supply projections made
by the Bureau of Health Professions of the Department of Health and
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46
ALLIED HEALTH SERVICES
Human Services based on those data. In the allied health fields, however
data are limited.
Nonetheless, some data do exist. BLS collects information on employ-
ment, earnings, and labor force behavior of a number of allied health
occupations in its ongoing analysis of the U.S. work force. The decennial
censuses and the Current Population Survey offer detailed information by
occupation. In addition, allied health associations conduct surveys of their
members that provide invaluable data on persons meeting their member-
ship criteria. Associations of hospitals, nursing homes, and home health
care agencies also collect data on employment in their constituent institu-
t~ons.
The committee has examined these and other data sources to inform its
assessment of personnel demand and supply. In the sections that follow,
we point out problems and weaknesses in the data and offer some sug-
gestions for improvement that, if heeded, will ease the way for future
studies.
ASSESSING CURRENT DEMAND AND SUPPLY
How do we know if there is a current shortage of allied health personnel?
This is not a straightforward question. First of all, the term shortage has a
variety of meanings. Sometimes it is defined normatively: a shortage exists
if there are fewer respiratory therapists than are needed, according to some
definition of need. Economists define a shortage as a situation in which
fewer people are employed than employers would like to employ at the
current wage. Although they may be cognizant of other factors that influ-
ence employers' decisions to employ workers and prospective employees'
decisions to seek work, economists traditionally focus on levels of salaries
and wages, and sometimes on fringe benefits, as the principal variables that
equilibrate employer demand and the labor supply.* According to eco-
nomic theory, if the labor market were functioning properly, a shortage
could exist only temporarily because employers would pay more to attract
more workers until all jobs were filled. Thus, economists view any labor
shortage as reflecting either a lag in the adjustment of the labor supply to
demand or an imperfection in the functioning of the labor market. For
example, if the demand for labor grows at a rapid rate over a period of
time, a temporary labor shortage may occur. Barriers to adjustment can
also result in labor demand and supply not coming into balance. These
factors will be described later.
*This explanation is somewhat oversimplified, however, because other aspects such as the
risk involved in work and working conditions are also considered in economic analyses of
labor d mend and supply.
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MEASURING DEMAND ED SUPPLY
47
A shortage can occur over the short term or the long term, although
long-term shortages are unusual unless there is some market imperfection
such as a price ceiling that prohibits market adjustments. In the short term,
workers must be recruited from the existing pool, and employers must use
existing technology. Over the long term, however, new workers can be
trained and new technologies employed to change the nature of the work.
Indicators of a Labor Shortage
A number of signals can indicate that labor shortages exist. Such signals
include large numbers of job vacancies, rising compensation levels, and low
unemployment levels.
Vacancies
The most commonly cited indicator of a labor shortage is job vacancies.
A large number of vacant positions or a high ratio of vacancies to total
employment is taken as evidence of a shortage. "Large" and "high," of
course, are relative to some expected level of vacancies. This expectation
may be based on historical vacancy levels for the occupation of interest or
on a comparison with current vacancy levels in other occupations.
There are some vacancies in an occupation at all times because of job
turnover. Because job mobility is important to a well-functioning labor
market, such vacancies can be viewed as a sign of the market's health rather
than its pathology. As Hall (1978) has pointed out,
The role of vacancies can only be understood against the background of the ceaseless
motion within the labor market.... Every month, several million workers change
jobs, and hundreds of thousands of others move in and out of the labor force.
Much of this turnover is attributable to fluctuations in the labor requirements of
individual employers and the rest to the changing circumstances of individual
workers.
vacancy rates are not reliable indicators of job opportunities for several
reasons. For one thing, the highest rates occur in occupations with the
highest turnover; construction work is an example often cited. Among the
health occupations, turnover is much higher for nurses' aides than for
highly trained personnel (e.g., medical technologists or physical therapists).
In addition, reported vacancies should be viewed with caution because
they do not always represent a shortage. If, through one mechanism or
another, wages are kept below the level that would bring demand and
supply into equilibrium, employer demand will always exceed the number
of allied health personnel who want to work at the going wage. Such excess
demand cannot really be characterized as a shortage but rather as an
imperfection in the operation of the market.
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48
ALLIED HEALTH SERVICES
Sloan (1975), Yett (1975), and others have pointed out in the context of
nursing that if the labor market is not competitive and therefore one or
several employers have some control over wage levels, the market can be
in equilibrium even though there are vacant jobs. In this case, an employer
would report vacancies but would not raise wages to fill them. Another
possible explanation for market equilibrium in the midst of vacancies is
the systematic undervaluation of work in occupations in which female
workers predominate. Institutional barriers long-standing custom, the
misperception of market conditions by employers, and inflexible recruit-
ment practices rather than an insufficient number of qualified persons
available to work may account for vacancies.
Compensation Levels
Another signal that is often interpreted as indicating a shortage is rising
compensation levels. Wages are the element that is most easily observed,
but compensation in this instance means the entire package offered by
employers: wages or salaries, benefits, hours, and conditions of work. If
employers are unable to attract workers with their current package, pre-
sumably, they will improve it. Increases in compensation levels, however,
are not in themselves evidence of a shortage. Rather, they may indicate
normal and often temporary market adjustments in an environment of
rising demand.
Relative changes in compensation levels are better indicators of labor
market conditions than are absolute changes. If the earnings of physical
therapists are rising much faster than earnings in, for example, medical
technology or teaching (fields that require similar educational investments)
and if employers are unable to fill vacant physical therapist positions, we
might conclude that there is a shortage, or at least that, at present, demand
is outstripping supply. If market signals are sufficiently strong that is,
compensation rises, unemployment drops, and so forth the shortage pre-
sumably would be alleviated over time by new entrants to the physical
therapy field. The interim may bring painful dislocations, however. Services
may have to be curtailed, or substitute workers may have to be employed,
with an unacceptable decrement in quality. In some industries, of course,
such dislocations are viewed as normal.
Unemployment Levels
Some frictional unemployment (a level of unemployment resulting from
the time involved in changing jobs) is characteristic of a dynamic labor
market in which people change jobs, often with an interval in between.
Unemployment levels will tend to be relatively higher in occupations with
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MEASURING DEMAND AND SUPPLY
49
high turnover. Very low unemployment levels (virtually everyone seeking
employment is finding it) are another signal that may indicate a labor
shortage. Low unemployment levels are especially indicative of shortages
if vacancy levels remain high.
The employment experience of new graduates is one indicator of con-
ditions in the labor market. If, for instance, most physical therapy graduates
find work in the field within a year after graduation, the labor market may
be tight. As with the other signals mentioned above, however, caution must
be exercised in interpreting such signals. New graduates can be hired at
lower wages than experienced therapists, and some employers may prefer
to substitute less experienced workers for more experienced ones to keep
costs down. In addition, new graduates tend to be more mobile; therefore,
their experience may be more favorable than that of other, less mobile
workers.
Any one of these signals alone does not indicate a shortage. On the other
hand, when a number of them occur together, especially if they persist
over time, it becomes ever more likely that there is a real problem. If
employers are constrained from making such adjustments as substituting
less highly trained employees for more highly trained ones (for example,
substituting corrective therapists for physical therapists) or importing work-
ers from abroad, or if the necessary adjustments are unacceptable to society,
it would be fair to call the problem a labor shortage.
Data for Assessing Current Vacancies
National data on job vacancies are not available. For both technical and
budgetary reasons, BLS does not collect vacancy data. The American Hos-
pital Association collects data on allied health employment but not on
vacancies. Qualitative assessments are often made in surveys of local em-
ployers by, for example, education administrators. Surveys by professional
associations may include questions about their members' perceptions of the
labor market in their communities. Anecdotal data are reported in health
care journals and newsletters from time to time. In addition, regional or
state development bodies such as the state-sponsored Massachusetts Tech-
nology Development Corporation sometimes attempt to make assessments.
Data on Salaries and Wages
The BLS Industry Wage Survey program collects and publishes average
straight-time hourly wages for selected occupations in hospitals and nursing
homes in 23 standard metropolitan statistical areas (SMSAs). Hospital sur-
veys were conducted in 1978, 1981, and 1985; the allied health occupations
that were covered included diagnostic medical sonographers, electroen-
cephalographic technicians, electrocardiographic technicians, medical lab-
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50
ALLIED HEALTH SERVICES
oratory technicians, medical technologists, nuclear medicine technologists,
radiation therapy technologists, radiographers, surgical technologists, die-
titians, medical record administrators and technicians, and all of the therapy
occupations. The survey excluded such elements of compensation as pre-
mium pay for overtime and work on night shifts or holidays and such in-
kind compensation such as room and board. Fringe benefits were also
excluded. These data are quite useful for examining trends in basic wages
in urban hospitals and nursing homes and for comparing wage levels
among SMSAs.
Occupational earnings are available from the Census Bureau's Current
Population Survey. Data on the earnings of allied health association mem-
bers are collected through member surveys. In addition, the University of
Texas Medical Branch at Galveston annually surveys 33 hospitals, 16 med-
ical schools, and 28 medical centers.
Unemployment statistics are collected monthly by BLS. Although ex-
tremely useful in the aggregate, these data have some weaknesses when
used to assess market conditions in specific occupations. Unemployed per-
sons are classified by the occupation in which they were last employed.
Thus, a person seeking work as an audiologist whose last job was as a
teacher would be categorized as an unemployed teacher. Recent graduates
seeking their first job are excluded from the unemployment figures by
occupation. As with other market indicators, BLS occupational unemploy-
ment data must be used carefully and only after being critically examined.
Surveys by allied health professional associations generally elicit infor-
mation on whether their members are employed and where. Less fre-
quently do they provide information (e.g., whether the respondent is looking
for work) that would complement data from the Current Population Sur-
vey. CAHEA has conducted surveys of education program directors about
offers to their graduates as a means of assessing the job market; some state
education departments conduct similar surveys. In addition, individual
educators sometimes survey employers in their community regarding em-
ployment opportunities.
How to Improve Data on Current Allied Health
Personnel Demand and Supply
The balance between the current demand for and supply of allied health
personnel is of concern to a wide range of organizations, to educators
seeking jobs for their students, to facility administrators who are unsure
about the availability of needed personnel, and to allied health practitioners
and the associations that represent them, all of whom are concerned about
jobs, compensation, and career prospects. In functional terms an assessment
of current personnel demand and supply is the essential baseline data point
from which projections start. Current information about the labor market
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MEASURING DEMAND AND SUPPLY
51
also enables those in positions to do so to act early to prevent the occurrence
of serious imbalances and the need for major corrective action later.
In the previous sections, we have noted the types of data that are needed
to estimate current demand and supply. Some of these types of data are
available but usually only for certain allied health fields in some localities.
Health care institutions are already responding to heavy demands for op-
erating data and are reluctant to add to their burden in the absence of a
belief that such data will serve their interests. Additional data collection
activities should be undertaken only after a careful consideration of the
benefits of such efforts and of ways to minimize the burden of undertaking
them. The data to assess current labor market conditions are more readily
available for other health care professions such as physicians and nurses-
than for allied health fields. The committee believes that the lack of data
about allied health fields, compared with the data available on other types
of providers, reflects an underestimation of the role of allied health prac-
titioners in the health care system. Both the large contribution to care made
by such practitioners and the high total costs associated with the aggregate
use of allied health professionals strongly suggest that data collection strat-
egies that allow the assessment of current personnel demand and supply
should be seriously explored.
For example, associations of employers could try to develop simple,
inexpensive surveys to learn about problems in recruiting. Survey questions
might include the following: What kinds of employees are you finding the
most difficult to recruit? Are you using any exceptional recruitment mea-
sures? What actions are you taking to cope with vacancies? These surveys
might be conducted in a small sample of "sentinel" institutions as frequently
as twice a year.
Professional associations should use standard labor statistics terminology
to increase the usefulness of their surveys to BLS and vice versa. It is
especially important to count people who are not working but who are
actively seeking work; these are the people the U.S. Department of Labor
categorizes as unemployed. Professional associations should also explore
longitudinal studies of a sample of their members; studies of this type could
provide better data on members' work histories, labor force participation,
earnings, and other characteristics than can be gathered from the cross-
sectional surveys that are usually conducted. In addition to technical im-
provements, associations should look for ways to make their research more
relevant to current policy issues. Associations would be well served to
strengthen the links between their research and policy functions.
The committee also recommends that the U.S. Department of Health
and Human Services' Health Resources and Services Administration (HRSA)
reconstitute the Forum on Allied Health Data as a technical assistance
endeavor. HRSA should also hold workshops with experts in survey design,
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52
ALLIED HEALTH SERVICES
statistics, and labor economics to help the allied health associations improve
their data collection programs. Other possibilities for improving the infor-
mation on current labor market conditions for allied health personnel
include the following:
· When renewing licenses, state licensing bodies could ask whether ap-
plicants are currently employed in their field, employed in another occu-
pation, looking for work, or not looking for work.
· State and regional health planning agencies could make larger in-
vestments in education and employment data and planning. They could
also operate as an important link between educational institutions and
employers.
· Educational institutions could pool information on the job-finding
experiences of recent graduates and alumni. Local experience could be
aggregated to develop state and national pictures.
ASSESSING FUTURE DEMAND AND SUPPLY
Forecasts of the future are often inaccurate, either because they do not
take into account all of the relevant factors or because the factors change
in ways that were not or could not have been predicted. Yet decision making
is based on assumptions about the future, however crudely they are formed.
The committee's task has been to use the limited data available to formulate
a "best guess" and to let that projection inform its recommendations. Thus,
the committee's recommendations are based on the interpretation of gen-
eral trends in the work force and in the economy and of specific projections
for selected allied health fields.
Several approaches are possible to assess future needs and requirements
for allied health personnel. Some of the approaches that have been used
for other types of health manpower fields are described below to illustrate
the available assessment options, the ways they can be used, and the types
of data that are needed for their use.
Needs-based projections usually define the number of personnel re-
quired to provide a given set of services to a defined population. The needs
approach, which was pioneered by the Committee on the Costs of Medical
Care in the 1930s, involves two types of judgment: (1) the quantity and
type of health care services judged to be appropriate, and (2) the appro-
priate division of responsibility for those services among the various types
of health care personnel. The projections that finally result depend on who
makes these judgments and on their views of what constitutes good health
care. Needs-based models represent an unconstrained social ideal: they are
norms against which to compare actual performance. They can be used to
establish health care program objectives and to assess the probable avail-
ability of personnel to meet those objectives.
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MEASURING DEMAND AND SUPPLY
53
The Graduate Medical Education National Advisory Committee, which
was established by the secretary of health and human services in the late
1970s, used a needs-based approach to project physician requirements for
1990. The committee began with estimates of the incidence of particular
illnesses or medical conditions in the population and then made judgments
about which conditions required medical care, how many visits would be
required, and how many of these visits might be "delegated" to persons
other than physicians. The total estimated visits were transformed into
physician requirements based on assumptions about productivity (Jacoby,
1981).
A model of requirements for nurses developed by the Western Interstate
Commission on Higher Education also had its foundations in judgments
of need. Panels of nurses provided professional judgments about desirable
changes in health care delivery and about the mix of registered nurses
(RNs) and licensed practical nurses (LPNs) needed to provide the desired
services (Bauder, 1983~.
Another approach to projecting health care human resources require-
ments is to extrapolate from current levels. Instead of assigning ideal health
care services utilization levels (and their corresponding health care per-
sonnel requirements) to projected population segments, current utilization
levels are projected into the future. Most simply, current health care per-
sonnel-to-population ratios are applied to population projections. The Bu-
reau of Health Professions of the Department of Health and Human Services
uses this method to project physician requirements by starting with current
utilization levels and then adjusting for projected changes in population,
trends in health insurance benefits, and other factors that affect utilization
such as the cost of health care services. Productivity assumptions are used
to translate projected utilization into the number of physicians required.
The Division of Nursing also employs a model that projects population,
per-capita use of health care services, and the associated required numbers
of RNs and LPNs.
The simplest extrapolation models are strictly mechanical; the health
care personnel-to-population model is an example. More sophisticated models
incorporate "behavioral" components, such as the price elasticity of demand
for health care services, and then make independent projections of prices.
They may also incorporate changes in production technology for ex-
ample, capital-labor substitution or the division of tasks among health care
personnel.
As extrapolation models become more sophisticated, they begin to re-
semble models of economic demand. A demand model is based on the
relationship of such independent variables as health status, income, and
prices to the demand for health care services. In the case of labor demand,
the model is based on such variables as wages, the price of capital, and
product prices. Although not strictly a demand model, the BLS projections
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54
ALLIED HEALTH SERVICES
of employment are made in the context of projected labor force and eco-
. . .
nomlc actlvlty.
The committee chose to rely heavily on the BLS employment projections
for its assessment of future demand. The principal reasons for this reliance
were the following:
~ The BLS projections are grounded in projections of the entire econ-
omy, which include projections of the work force and levels of economic
activity. Health care expenditures and health care industries employment
are estimated in the context of growth in other types of expenditures and
employment in all other institutions.
· BLS's projections use a consistent methodology across occupations.
Not only can the allied health occupations be compared with each other,
but they can be viewed in the context of all other occupations for which
projections have been made in the same way.
· The BLS projections are widely known and used; they are reviewed
regularly and revised biennially.
The committee did not, however, use these projections uncritically. It
took several factors into account in using the BLS data:
· Occupational employment projections are subject to considerable er-
ror, more so than the projections of total employment by industry.
· BLS staff use their knowledge and judgment to project the number
of jobs for each occupation in an industry. For the health care industry,
many judgments have to be made about how changes in health care fi-
nancing and delivery will affect different occupations. Because these judg-
ments by BLS staff are not published, it is difficult to subject the results
to a critical assessment.
· The occupational definitions used by BLS are not identical to those
of professional associations or educators. Although great improvements
have been made in the system of occupational classification, BLS definitions
still rely more heavily on functions and less heavily on credentials. In
addition, the data are not adequate in some cases to distinguish among
different levels within occupations. For instance, BLS combines data for
laboratory technologists and technicians. In some instances (e.g., for per-
fusionists, dialysis technicians, and cardiovascular technologists), no em-
ployment projections are made. (See Appendix E for further discussion
and evaluation of BLS data.)
HOW BLS MAKES EMPLOYMENT PROJECTIONS
Because the committee relied heavily on BLS for its assessment of future
demand, it is important to understand how these projections are made.
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MEASURING DEMAND AND SUPPLY
55
BLS projections are made from a base year to a target year. The base for
the bureau's most recent projections was 1986; the target year was 2000.
Harold Goldstein, in a background paper (1987) prepared for the com-
mittee, characterized the BLS approach as follows:
The basic approach followed is to estimate the employment in each occupation that
~ ~ A
will be generated by economic demand. This goes back to the demand for the
goods or services the occupation provides, and this in turn is affected by the total
spendable income available to consumers and government and to the changing
patterns of what they spend it on. These are influenced by a wide variety of social
and economic factors, including changing tastes and styles, scientific discoveries
and technological change affecting both what is produced and how it is produced,
the growth and changing composition of the population, taxation and government
expenditures policies ("guns or butter") and what other countries are buying from
and selling to us.
There are several steps in the projection sequence, the first of which is
. .
1 ~ ~ ~
the projection of the labor force. The foundation for this projection is the
Census Bureau's population projections by age, sex, and race, which are
based on assumptions about birth rates, death rates, and migration in and
out of the United States. Labor force participation for each age, sex, and
race group is projected by extrapolating from past participation rates. The
projected labor force participation rates are applied to the corresponding
population projections to arrive at the projected labor force in the target
year.
Next, BLS uses a macroeconomic model to develop projections of the
gross national product (GNP) and major categories of demand and income.
Some of the assumptions that affect the macroeconomic model, such as
population projections, are fairly certain; other assumptions, such as net
imports, energy prices, and the exchange value of the dollar, are quite
uncertain, depending as they do on international political and economic
developments. Because assumptions about certain key variables have major
impacts on the projections, BLS produces three sets of macroeconomic
projections based on differing sets of assumptions. These assumptions in-
volve the levels of expenditures in major components of federal spending,
the major components of state and local government spending, the size
~ . ~
and composition ot the population, and the key variables underlying for-
eign trade. Low, medium, and high projections of GNP are then produced
from differing assumptions for each of these variables (Table 2-11.
The effect of these variations in assumptions can be seen in the figures
for GNP and employment. The low, moderate, and high GNP projections
that result from these and other assumptions are (in billions of dollars)
$4,617, $5,161, and $5,552, respectively. The corresponding projections
of total employment (in thousands) are 126,432, 133,030, and 137,533
(Monthly Labor Review, 19871.
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56
ALLIED HEALTH SERVICES
TABLE 2-1 Assumptions Used in Making Spending and Labor Force
Projections for the Year 2000
Variable
Federal defense spending ($ billions)
Federal nondefense spending ($ billions)
State and local spending on education ($ billions)
Size of the civilian labor force (millions)
Low
222.5
97.3
195.3
134.5
Moderate High
25 1.0
1 03.4
223.1
138.8
263.0
108.2
232.5
141.1
BLS next estimates the principal GNP components: personal consump-
tion of durable and nondurable goods and services, capital investment,
foreign trade (imports and exports), and government expenditures. These
estimates of final demand are translated into estimated levels of production
for each industry in the economy using an input-output table based on
historical relationships that is compiled by the Department of Commerce.
The input-output table shows what each industry in the economy pur-
chases from every other industry. For example, the automobile industry
purchases raw materials (iron ore), intermediate products (tires and glass),
and services (electrical power and transportation) from other industries to
produce its final product, automobiles (Goldstein, 1987~. This step in the
projection process results in estimates of the level of production for every
industry in the target year.
The next-to-last step is the estimation of total employment for each
industry from a regression equation that estimates worker-hours as a func-
tion of industry output, the unemployment rate (a measure of capacity
utilization), the relative price of labor, and the ratio of output to capital.
The estimated worker-hours are translated into the number of workers by
dividing worker-hours by the estimated annual hours per worker.
Finally, BLS develops estimates of occupational employment by industry,
using base year data on the distribution of industry employment by oc-
cupation. Sources of data for these estimates include the Occupational
Employment Survey conducted periodically by state employment security
agencies under a BLS-state cooperative program (see Appendix E for a
discussion of OES and other data sources), the decennial census, and the
Current Population Survey. In projecting occupational employment in each
industry, adjustments are made in the occupational composition of the
industry.
In the BLS estimates, the health services industry is broken down into
components that reflect the different employment settings (e.g., hospitals,
physicians' offices, nursing homes). The next step of the process takes into
account factors that are not explicitly included in the mathematical model.
BLS analysts with responsibilities for specific occupations consult experts
(e.g., the staff of the professional associations), use the relevant literature,
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MEASURING DEMAND AND SUPPLY
57
and make site visits to assess whether staffing patterns are likely to change
and if so, how they will change. Because the aggregate employment for
each industry provides the parameters of employment, BLS analysts confer
with each other to determine how each occupation in each industry will
fare relative to one another. For example, the analysts who follow health
occupations will meet to discuss hospital staffing patterns, the changes that
are expected, and why those changes will occur. Factors that are taken into
account include new technologies that are likely to change staffing intensity,
changes in insurance coverage, and regulatory policies that may influence
the demand for a service or individual occupation.
Table 2-2 shows the BLS low, moderate, and high projections of em-
ployment in the allied health fields for the year 2000. The differences
among the three projections are attributable to different assumptions about
economic growth and aggregate employment. The same assumptions about
and adjustments to the occupational distribution of employment are used
in all three groups of projections.
.
TABLE 2-2 Bureau of Labor Statistics Wage and Salary Employment
(in thousands) in the Allied Health Fields, Actual for 1986 and
Projections for the Year 2000
Occupation
Clinical laboratory technologists and
. .
tec nnlclans
1986
Employment Lowa
Projected Employment for
the Year 2000
Moderateb
Highc
238
87
40
r ~
Dental hygienists
Dietitians
Emergency medical technicians
Medical record technicians 40
Nuclear medical technologists 10
Occupational therapists
Physical therapists
Radiologic technologists and
. .
tecnulclans
Respiratory therapists
Speech-language pathologists/
audiologists
aThe low projection reflects annual growth rates of 1.6 percent in GNP, 1 percent in
the civilian labor force, and 0.9 percent in employment.
bThe moderate projection represents annual growth rates of 2.4 percent in GNP, 1.2
percent in the civilian labor force, and 1.2 percent in employment.
CThe high projection represents annual growth rates of 3 percent in GNP, 1.3 percent
in the civilian labor force, and 1.5 percent in employment.
SOURCE: Silvestri and Lukasiewicz, 1987.
26
56
114
56
42
285
134
52
73
67
12
43
109
296
141
54
75
70
12
45
115
183 190
74 76
58
307
145
55
77
72
12
46
118
196
78
61
63
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58
ALLIED HEALTH SERVICES
FUTURE SUPPLY
In a dynamic labor market the supply of workers in an occupation is
constantly changing. New graduates emerge from education programs.
People enter the labor market who have worked in other occupations or
who have studied related subjects. Individuals leave the work force and
later reenter; some leave permanently.
Projecting the future supply of workers in an occupation requires, first,
an estimation of how many people are in the field in a base year and then
an estimation of the various inflows and outflows that will occur between
the base year and the target year. Which inflows and outflows are important
depends on the purpose of the projection.
For example, in the nursing field, there has been concern voiced about
the many trained nurses who are outside the nursing work force, either
working in other fields or not working at all. Although data on licensed
nurses provide a picture of those nurses who keep their licenses active,
some have argued that there may be many nurses who have dropped their
licenses but who, in some sense, constitute a potential supply. If market
conditions warrant, the argument goes, these nurses could be attracted
back to work, even if some retraining were necessary. This pool of trained
workers can be estimated and projected using data on the number of
graduates and applying standard mortality rates to each age group. The
supply estimated by this life table approach represents an estimate of all
living nursing graduates (Institute of Medicine, 19831. For this purpose,
the only inflow is new graduates, and the only outflow is death.
However, if the question is whether there will be enough nurses to fill
the jobs that we expect to be available in the future, more information is
needed about the likelihood that those who are not in the work force will
reenter it. We also need to know about the likelihood that nurses who are
in the work force will leave. Variations in the rates of reentry and loss from
the labor force and the average time practitioners spend in the labor force
produce large differences in the supply projected for the future. For most
purposes, it is the "effective" supply of health personnel, trained and want-
ing to work, that is of greater interest.
The committee, where feasible, has projected the future supply of work-
ers in allied health fields in the year 2000, assuming inflows to and outflows
from the labor market remain as they were in 1986 and the number of
allied health program graduates remains at the current level. These as-
sumptions are unrealistic, but they are used to indicate the magnitude of
change that must take place to meet future demand. The committee used
a simple arithmetic equation to arrive at its projections. The work force at
the beginning of one year was said to equal the work force at the beginning
of the year before, minus those persons leaving the work force for reasons
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MEASURING DEMAND AND SUPPLY
59
other than unemployment, plus graduates of allied health programs and
other additions. These additions include people resuming work and people
transferring from other occupations.
The base year for our observations was 1986. To achieve comparability
among fields, the BLS estimate of total employment for each occupation
was used. An estimated number of unemployed practitioners was added
in each case.
For some allied health fields the number of graduates in 1986 was as-
sumed to remain constant through the year 2000. When it was reasonable
to do so, the 1986 share of bachelor's degrees granted in a field, relative
to all bachelor's degrees granted, was applied to the Center for Education
Statistics' projection of bachelor's degrees to be granted each year through
2000.
Labor force accession and separation rates that BLS derives from Current
Population Survey data were used to determine additions to and losses
from the work force. Because the sample size of most allied health fields
in the survey is small and estimates are subject to great sampling variability,
we used rates of labor force accession and separation for larger groups.
For example, the rates for therapists overall were applied to physical, oc-
cupational, and respiratory therapists separately. In approximating addi-
tions to the work force, the accession rate for 1983-1984 was applied to
the 1984 work force to generate an estimate of the number of persons
who joined the work force in 1984. That number was held constant each
year.
. . .
Chapter 4 brings together the committee's information about the de-
mand for and supply of allied health practitioners. The BLS employment
projections for each field to the year 2000 are evaluated in light of expec-
tations about the forces that drive demand. The results of the process to
estimate the supply of workers that has been described in this chapter are
compared to the expected demand. To this, the committee has added its
knowledge of how the fields are faring in current labor markets and the
trends in the fields in numbers of graduates and programs to make an
assessment of the future balance between demand and supply.
DATA FOR PROJECTING THE FUTURE SUPPLY OF
ALLIED HEALTH WORKERS
Current (Base Year) Supply
The BLS Industry-Occupational Employment matrix estimates the number
of employed persons in each of 480 occupations. It is not an unduplicated
count; wage and salary workers holding two jobs would be counted twice.
The most recent data, used as the base for employment projections to the
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60
ALLIED HEALTH SERVICES
year 2000, were for 1986. The next year for which these data will be
available is 1988.
The occupational classifications used in the Occupational Employment
Survey, the principal source of data for the matrix, are consistent with the
standard occupational classifications used by all federal agencies that collect
data. They represent a balance between comprehensive coverage that pro-
vides quality data and the ability (and willingness) of employers to respond.
(Appendix C gives the current definitions used in hospitals.) These cate-
gories and definitions should be continually evaluated and modified, if
necessary, to portray the allied health work force accurately.
The other data source for examining the base year supply of workers is
membership data from allied health associations. For fields that are well
defined and have a single route of entry, and in which the associations
represent a very large proportion of the field (e.g., occupational therapy),
this source usually provides a good estimate. For many allied health fields,
however, association membership data are incomplete or nonexistent. (See
Appendix D for a discussion of the different sources of data on the supply
of workers for each field.)
New Entrants
For fields in which the bachelor's degree is the entry-level educational
requirement, there are two main sources of data. The U.S. Department of
Education collects historical data on degrees awarded by field of study.
These data include the allied health fields of occupational therapy, physical
therapy, dental hygiene, medical record librarianship, medical laboratory
technologies, radiologic technologies, and speech pathology and audiology.
The Center for Education Statistics periodically makes projections of the
total number of bachelor's degrees and the number of awards to men and
women. These projections are based on mathematical projections of his-
torical trends in college enrollment by different age groups. As discussed
earlier, the committee has projected new entrants from bachelor's degree
programs in some fields by assuming that the field's share of bachelor's
degrees in the years 1987 through 2000 will remain constant at the 1986
level.
The second principal source of data on new graduates is the bodies that
accredit education programs. CAHEA is the largest, representing 24 allied
health field occupations in 1987. Others include the American Physical
Therapy Association and the American Speech-Language-Hearing As-
sociation. Estimates of the number of future new entrants to the various
fields can be extrapolated from historical figures on graduates. Individual
states can use data from their own higher education institutions.
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MEASURING DEMAND AND SUPPLY
61
Other Inflows
The weakest links in projecting the future supply of allied health workers
are the data for estimating entrants from outside the labor force, from
other occupations, and from abroad (immigration). These inflows (and
mirroring outflows) are important short-run labor market adjustment
mechanisms. The BLS staff has made some headway by matching Current
Populaton Survey data and calculating inflows and outflows for the matched
observations (Eck, 1984~. Yet for occupations with small numbers of work-
ers (such as many of the allied health fields), these estimates are based on
an extremely small number of observations. Estimating inflows and out-
flows of workers is an area in which the professional associations could do
a great deal to improve the data. The Forum on Allied Health Data, with
the help of appropriate expert consultants, should give attention to this
serious data weakness.
CONCLUSIONS AND RECOMMENDATIONS
The committee found that available data for assessing the current supply
of allied health personnel are inadequate, and it suggests that efforts be
made to improve these data. The BLS employment (demand) projections
are quite valuable and, when used in conjunction with other data, are likely
to be the only available demand estimates that are comparable across fields.
The federal government has a responsibility to monitor the health care
work force and to inform participants in the health care labor market and
public policymakers of trends and developments. The work of the Bureaus
of Health Professions and Labor Statistics and the Center for Education
Statistics is to be commended and should be built upon. To improve the
data on allied health fields, the committee recommends that the secretary
of health and human services convene an interagency task force com-
posed of representatives from BLS, the Center for Education Statistics,
and other agencies that collect relevant data on the allied health work
force. This task force should work toward increasing the amount and
improving the quality of data needed to inform public policy decision
makers, health care managers, unions, prospective~students, and aca-
demic institutions about the allied health occupations.
Staff for the task force should be provided by the U.S. Public Health
Service focal point for allied health personnel that is recommended in
Chapter 5.
REFERENCES
Eck, A. 1984. New occupational separation data improve estimates of job replacement
needs. Monthly Labor Review 107:3-10.
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62
ALLIED HEALTH SERVICES
Goldstein, H. 1987. Projections of demand and supply in occupations. Paper prepared
for the Committee to Study the Role of Allied Health Personnel, Institute of Medicine.
November.
Hall, R. E. 1978. lob vacancy statistics in the United States. Background paper no. 3.
Washington, D.C: National Commission on Employment and Unemployment Statis-
tics. May.
Institute of Medicine. 1983. Nursing and Nursing Education: Public Policies and Private
Actions. Appendix 5, Projections of Registered Nurse Supply and Requirements.
Washington, D.C.: National Academy Press.
acoby, I. 1981. Physician manpower: GMENAC and afterwards. Public Health Reports
96(4) :295.
Saunders, N. C. 1987. Projections 2000: Economic projections to the year 2000. Monthly
Labor Review 110(9): 11 - 18.
Silvestri, G. T., and Lukasiewicz, l. M. 1987. Monthly Labor Review 110(9) :46-63.
Sloan, F. 1975. The Geographic Distribution of Nurses and Public Policy. Washington,
D.C.: U.S. Government Printing Office.
Representative terms from entire chapter:
labor market
