Hawaiʻi Physician Shortage Worsens, Potentially Increasing Healthcare Costs for Businesses
A net loss of 31 full-time equivalent physicians in the past year has pushed Hawaiʻi's physician deficit to an estimated 833 doctors. This escalating shortage directly impacts the availability and cost of healthcare services across the islands, posing significant risks to businesses and their employees.
The Change
According to recent data, Hawaiʻi continues to struggle with physician recruitment and retention. The physician workforce saw a net decrease of 31 full-time equivalents (FTEs) from the previous year, contributing to an overall deficit now estimated at 833 physicians across various specialties. This trend indicates a worsening access to medical care, particularly in underserved areas and for specialized services. Hawaii Free Press reported an estimated shortage of 833 doctors, with a decline in FTEs contributing to this widening gap.
Who's Affected
Healthcare Providers: Private practices, clinics, and hospitals face increased patient loads, longer wait times for appointments, and potentially higher rates of physician burnout. This could necessitate a re-evaluation of service areas and specialties offered. The capacity to take on new patients or expand services is severely limited. The Hawaiʻi Department of Health acknowledges the ongoing challenges in physician workforce stability.
Small Business Operators: Businesses that provide health insurance for their employees are likely to experience rising premium costs as demand for services outstrips supply. Longer wait times for medical appointments can lead to increased employee absenteeism and reduced productivity. This could force businesses to explore high-deductible plans, wellness programs, or even limited provider networks to manage costs.
Investors: The growing physician shortage presents both risks and opportunities. Traditional healthcare providers may face operational challenges and reduced profitability due to staffing issues and increased administrative burdens. Conversely, this could spur investment in telehealth platforms, remote patient monitoring, and innovative healthcare delivery models that can bridge the gap in physical access. For example, venture capital firms might look closely at companies offering AI-driven diagnostic tools or efficient patient navigation systems.
Real Estate Owners: Properties zoned for medical use or currently occupied by clinics and doctor's offices may see reduced demand if the physician shortage becomes acute enough to impact service viability. Conversely, there might be an increased demand for telehealth infrastructure within commercial spaces, requiring flexible build-outs. The Department of Business, Economic Development & Tourism (DBEDT) monitors workforce trends that impact economic development.
Second-Order Effects
The deepening physician shortage will likely trigger a cascade of economic consequences across Hawaiʻi's island economy. Increased demand for limited medical services will drive up healthcare costs for individuals and businesses, potentially outpacing wage growth and straining household budgets. This could also lead to a decline in the quality of life and make it harder to attract and retain a qualified workforce, impacting the competitiveness of local businesses. Furthermore, longer wait times for specialized care could lead some residents to seek treatment abroad, resulting in an outflow of healthcare spending.
What to Do
Given the chronic and worsening physician shortage, businesses are advised to adopt a WATCH strategy. This involves monitoring key indicators and proactively assessing potential impacts on operations and employee well-being.
For Healthcare Providers: Continuously evaluate staffing models and explore recruitment incentives. Monitor patient wait times and capacity, and consider partnerships with telehealth providers to extend reach. Engage with state and county health boards on workforce development initiatives.
For Small Business Operators: Begin actively monitoring healthcare premium increases and employee health insurance utilization rates. Evaluate the feasibility of offering more robust wellness programs or exploring telehealth-as-a-benefit options. Benchmark your current health benefits against industry standards for the region and consider negotiating longer-term insurance contracts to lock in rates, if possible.
For Investors: Track the growth and adoption rates of telehealth platforms and remote healthcare solutions. Assess the financial health and operational resilience of existing healthcare facilities. Consider the regulatory landscape and potential policy shifts aimed at addressing the physician shortage.
For Real Estate Owners: Stay informed about zoning updates related to medical offices and telehealth facilities. Understand the evolving needs of medical tenants regarding space configuration and technological infrastructure. Monitor lease renewal negotiations for potential concessions needed to retain medical tenants.
Action Details
Monitor the Hawaiʻi physician workforce projections from the Department of Health and DBEDT quarterly. If average wait times for primary care appointments exceed 30 days or specialist appointments exceed 60 days, and employer-sponsored health insurance premium increases for the next policy year are projected to be 10% or higher, begin actively exploring and piloting at least one alternative to traditional health insurance plans, such as a defined contribution benefit or a comprehensive telehealth subscription service, for implementation within the next 12-18 months.
