Understanding Gastroenterology Supply and Demand Amid Widespread Shortages
Gastroenterology is one of a variety of specialties for which there is a rising demand in the U.S. and a limited supply. In its June, 2021 report, the Association of American Medical Colleges (AAMC) projected a shortage of up to 124,000 physicians nationally by 2034.
This will include a shortage of up to 47,000 primary care physicians, but an even larger shortage of up to 77,000 specialists. So, how is this shortage of physicians and specialists directly impacting the Gastroenterology field?
A Growing Shortage of Gastroenterologists
A growing shortage of gastroenterologists has been projected since 2009, when the New York Times reported on a Lewin study suggesting that by the year 2020 there would be a deficit of more than 1,000 gastroenterologists.
In 2016, the Healthcare Resource and Services Administration’s (HRSA) projected in its study Regional Projections of Supply and Demand for Surgical Subspecialty Practitioners that there will be a shortage of 1,630 gastroenterologists by 2025. In general, these shortages will be driven by demographic trends; in particular, the aging of the patient population and the aging of the physician workforce.
Factors Driving Gastroenterologist Demand
The population of US citizens over the age of 65 is expected to more than double from 46 million in 2016 to 98 million by the year 2060, according to the Census Bureau. Older people use medical services at a higher rate than younger people, and are more prone to diseases such as cancer.
The American Cancer Society estimated there were 101,420 new cases of colon cancer and 44,180 cases of rectal cancer in 2019 (American Cancer Society, Key Statistics for Colorectal Cancer).
A Focus on Prevention and Quality-Based Payments
Demand for more gastroenterologists will also be driven by evolving models of healthcare delivery, which put greater emphasis on (and financially reward) prevention and population health management. Colon cancer screenings are a featured part of this preventive approach that rewards quality outcomes rather than volume of services provided. In recent years, questions regarding the effectiveness of colon cancer screening with colonoscopy have been laid to rest.
Studies have shown that patients who undergo colonoscopy reduce their colon cancer risk by up to 77 percent. Despite this information, about 40 percent of patients over the age of 50 continue to not be screened. This number is higher in minority populations.
Gastroenterology Demand and Private Equity
According to Becker’s ASC, Over the past 10 to 15 years, private equity (“PE”) firms have displayed an increasing interest in the healthcare provider industry. Recently, PE firms have set their focus on certain specialty physician practices with the intent to consolidate and grow practices in traditionally fragmented markets.
Historically, ophthalmology and dermatology practices, among others, have been the targets of PE consolidators; however, gastroenterology (“GI”) has emerged as a specialty of interest. In 2016, the first major PE transaction in the GI physician practice space occurred between Audax Group and Gastro Health. Since then, GI physician practices have been hot targets for PE buyers, a trend expected to continue in the coming years.
There are a multitude of attributes that attract potential PE buyers to GI physician practices. In particular, the current GI market dynamics and opportunities for PE firms to create value are driving the investments in this space.
PE firms can provide the information technology, compliance, billing and administrative functions that gastroenterology groups may need to cope with the increasingly complex medical practice environment.
They also may be able to drive revenue of a GI practice through the addition and consolidation of ancillary services such as anesthesia, pathology, infusion and others. The growing presence of PE firms is leading to greater demand for gastroenterologists to grow existing groups.
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