evaluate than are other kinds of services, and the consequences of making a mistake can be fatal. The uncertainty that consumers feel regarding their medical needs and their reduced sensitivity to physicians ' fees due to the widespread availability of health insurance have given rise to the observation that physicians can both induce demand for their services and set their own prices (Feldstein, 1979). Where there are more surgeons, there is more surgery (Bunker, 1970). And contrary to what might be expected under usual market conditions, physicians' fees are often higher in locales with a large supply of physicians, as in many urban areas, than in communities with fewer physicians. Thus, an increase in the supply of physicians becomes a critical factor in national health expenditures, whereas, for example, having more computer programmers would not increase the cost of computing.
Specialty choice, while an individual physician's decision, is of public policy relevance because a specialty influences where providers locate, the constellation of services they provide, the populations they serve, and the cost of their services. Under fee-for-service arrangements that have until recently been the norm in the United States, market forces promoted an ever-increasing supply of specialists, perpetuating a long-standing geographic maldistribution of physicians despite very large increases in the number of practicing physicians.
The belief that government can influence the supply, type, and location of health care providers through its financing of education and practice is the driving force behind most federal and state health work force policy initiatives. Public funds constitute about 40 percent of the $1 trillion the nation spends annually on health services. In addition, public subsidies of medical education are substantial. Medicare financing of graduate medical education alone totals over $6 billion a year including both the direct costs of residency training ($1.6 billion) and payments to teaching hospitals to offset the “indirect” costs of education (COGME, 1994). As public financing of health professions education and health services has increased, the debate about whether and how to use public funds to shape the future health care work force has intensified.
When the IOM was established 25 years ago, public policy debate about the medical work force was well under way. Many of the issues of concern then dominate the policy debate today: how many physicians are needed; the imbalance in the production of generalists relative to specialists; the geographic maldistribution of physicians; the influx of international medical graduates; continuing problems of access to care among some populations; the potential for nonphysician providers to help meet health care shortfalls; and escalating costs of medical care (Stevens, 1971; Millman, 1980). what is dif-