Barefoot and Footloose Doctors: Optimal Resource Allocation in Developing Countries with Medical Migration

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Discussion Paper

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In light of the shortage of healthcare professionals, many developing countries operate a defacto two-tiered system of healthcare provision, in which Community Health Workers (CHWs) supplement service provision by fully qualified physicians. CHWs are relatively inexpensive to train but can treat only a limited range of medical conditions. This paper explicitly models a two-tiered structure of healthcare provision and characterizes the optimal allocation of resources between training doctors and CHWs, and implications for population health outcomes. We analyze how medical migration alters resource allocation and population health outcomes, shifting resources towards training CHWs. In the model, migration stimulates health care provision at the lower end of the illness severity spectrum, improving health outcomes for those patients; sufferers of relatively severe medical conditions who can only be treated by doctors are made worse off. It is further shown that donor countries must be reimbursed by more than the training cost of emigrating physicians in order to restore aggregate population health to the pre-migration level, assuming that there are increasing marginal costs in involved in replacing migrating physicians.

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