Thursday, September 9, 2010

Who Should Provide Anesthesia Care? (Redux)

Recently, Corrections wrote on the New York Times article "Who Should Provide Anesthesia Care?" (September 6th, 2010), a post that elicited widespread interest, enough to warrant further analysis.

Corrections would like to further note that even if anesthesiologists are harmed in the short run by the law, they're unlikely to be harmed in the long run. Our reasoning is that there are substitute specialties for individuals who practice anesthesiology. While currently-practicing anesthesiologists might not quit, if there are substitute professions (for the sake of an example we name surgery), then the relevant marginal individuals are new medical school students.

Observing declining wages in one profession, they opt into the other. This consequently reduces wages into that profession until the wages equalize (assuming they are perfect substitutes) or the difference is mitigated, not by immediate exiting of the profession but instead by a lack of new entrants.

Below, we graphically depict what we would expect to happen to anesthesiologist wages, surgeon wages, and nurse wages and stock before and after nurses are allowed to practice particulars of anesthesiology (click to enlarge). The idea is as follows: the supply of nurses in the short run is fixed, and therefore their wages immediately rise. As their wages rise, more nurses are trained until, as discussed previously, their wages go back to the reservation wage of the (presumably) vast reservoir of individuals who can become nurses.

For doctors, more newly-minted doctors will be surgeons, and fewer anesthesiologists. As the number of anesthesiologists drop, their wages begin to rise. As the number of new surgeons begins to rise, surgeon wages fall, eventually rising as wages converge back to equilibrium. (Note we operate off the assumption of a vast reservoir of positions substitutable to anesthesiologist positions. Otherwise, the long run equilibrium wage would be slightly lower than the original wage).

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