Health Professional Shortage Areas and Physician Location Decisions

Stephanie Khoury, Jonathan M. Leganza and Alex Masucci

American Journal of Health Economics, 2025, vol. 11, issue 3, 487 - 527

Abstract: To address regional inequities in access to health care, the US government designates primary care Health Professional Shortage Areas (HPSAs). Several programs use these designations to incentivize physicians to practice in areas of need, including a large program through which the Centers for Medicare and Medicaid Services (CMS) provides 10 percent bonus payments to physicians billing in HPSAs. We use data from CMS and a matched difference-in-differences design to estimate the causal effects of HPSA designations on physician location decisions. We find that designated counties experience an increase in the number of early-career primary care physicians. The increase is driven by physicians who attended ranked medical schools. In contrast, we find no evidence that physicians in later career stages relocate to shortage areas.

Date: 2025
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