Will the Needs-Based Planning of Health Human Resources Currently Undertaken in Several Countries Lead to Excess Supply and Inefficiency?

Abstract

Recently, the emphasis on health human resources (HHR) planning has shifted away from a utilization-based approach toward a needs-based one in which planning is based on the projected health needs of the population. However, needs-based models that are currently in use rely on a definition of 'needs' that include only the medical circumstances of individuals and not personal preferences or other socio-economic factors. We examine whether planning based on such a narrow definition will maximize social welfare. We show that, in a publicly funded healthcare system, if the planner seeks to meet the aggregate need without taking utilization into consideration, then oversupply of HHR is likely because 'needs' do not necessarily translate into 'usage.' Our result suggests that HHR planning should track the healthcare system as access gradually improves because, even if health care is fully accessible, individuals may not fully utilize it to the degree prescribed by their medical circumstances.