A new working paper from the National Bureau of Economic Research argues that fixing the physician shortage requires looking beyond standard market concentration metrics and targeting the gatekeeping institutions that control who can practice medicine.
The paper, written by Joshua Gottlieb, PhD, economist and professor at the University of Chicago, and Sean Nicholson, PhD, professor in Cornell’s Department of Policy Analysis and Management and director of the Sloan Program in Health Administration, identifies two structural levers that drive competition in physician markets: the upstream barriers that limit who can become a physician, and the downstream rules that determine who else is allowed to provide care.
The numbers behind the shortage
While the U.S. population grew by 50% between 1980 and 2025, first-year positions in U.S. medical schools increased by only 34% over the same period. Today, the United States has just 2.7 practicing physicians per 1,000 people, compared to an OECD average of 3.8.
The financial stakes are equally stark. In 2024, average annual earnings in high-income non-primary care specialties ranged from $342,000 in psychiatry to $680,000 in orthopedic surgery, compared to $265,000 to $326,000 in primary care. That gap helps explain why in 2025 U.S. MD graduates filled 79% of high-income residency positions despite representing only 47% of total Match applicants.
Meanwhile, nurse practitioners and physician assistants, who earn roughly half what primary care physicians do, have seen their training expand far faster than the physician pipeline. Nonphysician providers now account for a growing share of primary care visits and anesthesia procedures, and their employment growth is running at nearly three times the rate of physicians.
Opening the pipeline
The authors argue that the most direct path to greater competition runs through residency slots. Private specialty-specific Residency Review Committees, operating under the Accreditation Council for Graduate Medical Education, effectively control how many physicians can enter each specialty. Because most states require ACGME-accredited residency training for licensure, these committees function as a binding constraint on physician supply.
“The most consequential change would be to make it easier to expand existing residency programs and start new ones,” Dr. Gottlieb told Becker’s. “After that, applying the same approach to medical schools, along with shortening the combined path of undergraduate education and medical school, would reduce training costs and encourage more prospective physicians.”
Dr. Nicholson pointed to transparency as a practical first step.
“Ideally the residency review committees would be more transparent with the content and substance of the requests by existing programs to expand and for new programs to launch, as well as the RRCs’ decisions on those requests and the rationale for their decisions,” he told Becker’s. “Shining a bright light here would help.”
On the downstream side, the authors highlight the rapid expansion of nonphysician providers — nurse practitioners, physician assistants, certified registered nurse anesthetists and others — as a market force already helping to absorb unmet demand. Since 1984, 27 states have passed laws allowing nurse practitioners to diagnose and treat patients, order tests and write prescriptions without physician supervision.
The authors estimate an elasticity of substitution of roughly 2 between nurse practitioners and physicians, suggesting the two are meaningful but imperfect substitutes. In areas where physicians are scarcer, nurse practitioners have stepped in — particularly in rural communities and in primary care, where the overlap with physician training is greatest.
Still, the authors caution that the substitution has its limits. Specialist wait times have continued to climb even as primary care waits have held relatively steady, consistent with the view that nonphysician providers can fill some gaps but not others.
A two-pronged competition policy
The paper concludes that effective competition policy in physician markets must address both ends of the pipeline. Antitrust enforcement focused on practice consolidation and insurer bargaining, while important, misses the foundational question of how many physicians are trained and in which specialties.
The authors argue that accreditation bodies, residency review committees, state licensure boards and scope-of-practice laws collectively shape the competitive landscape more than the downstream organization of practices.
At the Becker's 23rd Annual Spine, Orthopedic and Pain Management-Driven ASC + The Future of Spine Conference, taking place June 11-13 in Chicago, spine surgeons, orthopedic leaders and ASC executives will come together to explore minimally invasive techniques, ASC growth strategies and innovations shaping the future of outpatient spine care. Apply for complimentary registration now.
