Sunday, March 18, 2012

Migration of health personnel and market failure

The international market for highly skilled workers is a Chicago economist's dream. On the one hand, between the developed economies and the least developed economies, there exist vast differentials in pay and opportunities for skill development for professionals. On the other hand, immigration rules in developed countries, many of whom face a shortage of such professionals, are very liberal and welcome, even incentivize, such migration.

It is therefore no surprise that large numbers of professionals - doctors, engineers, scientists, mathematicians etc - migrate from the least developed countries to the most developed ones. Free-market advocates would rationalize this trend as efficient - professional workers improve their skills, are better remunerated, and are happier. If questioned about its adverse impact on the parent country (due to say, doctor migration), they would point to the long-term trickle down beneficial impact - flow of remittances, skilled doctors returning back and setting up specialty hospitals and transferring expertise to local doctors, and so on.

However, in the real world, such long-term trends take time and its costs are catastrophic. There is a clear market failure. Nowhere is this impact most debilitating on the parent country than in case of medical professionals, especially from the least developed countries. An excellent report in the Times examines the impact of migration of doctors from Africa to the United States. It writes,

About 530 Ghanaian doctors practiced in the United States in 2006, which amounted to about 20 percent of the doctors left in Ghana, according to an article in The New England Journal of Medicine. Zambia... had no surgeons performing this (laparoscopic surgeon) less-invasive surgery, though the Netherlands had recently donated a laparoscope... the median salary of a surgeon in New Jersey is $216,000. In the main hospital in Lusaka... a surgeon makes about $24,000 a year.

In this context, the Times report points to a study published in The Lancet in early 2008, which reveals the shocking impact of migration of medical professionals - doctors, nurses, and pharmacists - on the parent countries of sub-saharan Africa. The authors, a group of doctors, argue that active recruitment of health workers from African countries is a systematic and widespread problem throughout Africa and should be viewed as an international crime. They write,

Overall, there is one physician for every 8000 people in the region. In the worst affected countries,such as Malawi, the physician-to-population ratio is just 0·02 for every 1000 (one per 50000)... the UK, for example, has over 100 times more physicians per population than Malawi. Furthermore, almost one in ten doctors working in the UK are from Africa... An estimated 13272 physicians trained in sub-Saharan Africa are practising in Australia, Canada, the UK, and the USA. Around a third of medical graduates from Nigerian state medical schools migrate within 10 years of graduation to Canada, the UK, and the USA...

In Malawi, for example, there has been a 12% reduction in available nurses due to migration. In 2000, roughly 500 nurses left Ghana, double the total number of nursing graduates for that same year... Liberia has a pharmacist-to population ratio of only one to 85 000, 77 times lower than that in the USA. In 2001, more pharmacists emigrated from South Africa (600) and Zimbabwe (60) than graduated (500 and 40).Many pharmacy outlets have closed because of a scarcity of trained pharmacists and pharmacy technicians.

Assuming the trend rate of physician attrition rate due to migration and incidence of HIV in sub-Saharan Africa, the paper projected the impact on HIV treatment. In the 2006-12 period, it estimated an almost three-fold increase in the number of patients per physician (from about 9000 to 26000) and an overall decrease in the number of physicians treating patients with HIV from 21000 to about 10000.

In this context, an Econ 101 analysis of this trend in the field of health care teaches us that such migration is efficient if the total gains from it offset the losses suffered. In other words, the financial rewards and professional skill addition gains to the individual health worker and the benefits accruing to the host country should exceed the obvious losses suffered by the parent country. However, as the Lancet report and the shocking state of health care indicators in sub-Saharan Africa shows, the losses suffered by these countries are of a much higher magnitude.

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