The Economic Costs and Benefits of Adding Medical Manpower to Rural and Urban Communities: A Human Capital Perspective*

For health planners to be able to use scarce resources efficiently and effectively to improve health, it is necessary for them to have reliable information on the productivity of the major categories of health producing expenditures. The present study utilizes a human capital perspective to evaluate the economic costs and benefits of medical manpower to communities in the West South Central United States. The results of the study suggest that beyond problems of maldistribution of physicians and nurses, the larger problem from an economic effectiveness perspective may be significant excesses of medical manpower, although some rural communities could justify, economically, adding physicians and/or nurses to reduce lost human capital. The findings indicate a need to further rationalize the allocation of health care resources as well as the need to consider means other than increased spending on curative medicine (e.g., health promotion and health education) as a strategy for efficiently meeting the objective of improving public health.