Hawaii’s supply of doctors is the lowest since 2015 as aging physicians retire and younger ones move to the mainland for better-paying jobs.

The state has 2,819 active physicians but needs at least 3,481 to care for an aging population, according to the latest survey by the Hawaii/Pacific Basin Area Health Education Center at the University of Hawaii John A. Burns School of Medicine. A quarter of the state’s doctors are 65 and older, the center said.

“It’s the hassles of medicine and the low pay in Hawaii. The demand goes up year by year because we have more people and we have one of the highest healthiest older populations. We lost 108 full-time physicians (over the past year), and so worst-case scenario is we’re short 830 doctors,” said AHEC Executive Director Kelley Withy of the shortage, which has grown from 797 last year. The calculation is based on individual island and specialty needs. “But we only have between 200 and 300 positions open because physicians used to open their own offices, but now it’s too expensive, and payment transformation makes it very challenging.”

So-called payment transformation was implemented in 2017 by the state’s largest health insurer, Hawaii Medical Service Association, which is now reimbursing doctors a fixed monthly rate for each patient in a practice regardless of how many times they see a patient. That replaced the years-long fee-for-service model, with reimbursements based on number of visits and type of service.

Almost three-quarters of the 156 doctors who responded to the survey said they are unhappy with the new per-member per-month payment model, and more than half reported they make less than they did in 2016. It is unclear how many doctors surveyed are actually in the payment transformation program.

“I think payment transformation has scared people out of state,” Withy said.

Maui native Luukia Ruidas, who was a private-practice family physician for seven years in Kahului, said she left the islands three weeks ago to take a job in San Francisco after losing $100,000 in insurance reimbursements from 2017 to 2018. She said about half her 2,400 patients were insured by HMSA.

“The last year was kind of the straw that broke the camel’s back. Since 2012 my business was doing really well … and then payment transformation happened and every year I lost money,” she said. “Patients in Hawaii are losing … local physicians who are from Hawaii and just having difficulty making the business model work. My whole family’s in Hawaii. I definitely would love to be able to serve the people that I intended to serve when I went to medical school. I’m Native Hawaiian, which is part of reason I went to medical school: to be able to help other Native Hawaiians.”

Oahu is short by as many as 421 doctors, or 18% of the calculated demand, while Hawaii island’s deficit is 192, or 41%. Maui County is facing a shortage of 166, or 39%, and Kauai is short 51, or 30%. Most of the shortages are among specialties, including infectious disease doctors and neurological and colorectal surgeons.

“There’s no question that the practice expectations have changed dramatically over the last 20 years,” said UH medical school Dean Jerris Hedges, adding that the federal Affordable Care Act, which mandates most Americans obtain medical coverage, and changes to the payment model have been burdensome to doctors. “The need for electronic health records, electronic bill submission, mandates to report a variety of procedural things you’re doing labeled as quality measures, these mandates for reporting, they all take time (in order to get paid). It’s getting hard to run an office unless you’re extremely restrictive on which insurances you use or you do a cash-only practice.”

To alleviate the shortages, the medical school is looking to expand to Maui and the Big Island so that future doctors can learn and hopefully stay in the rural areas that need help the most. Hedges said the school will request $1.4 million per year per site from the Legislature in the upcoming session.

HMSA acknowledged doctors’ frustration with administrative burdens, which it said it is “working to address.” The health insurer also said that more than half of the providers in the program have seen an increase in payments from 2017 to 2018. It said the program was developed to ensure more money for doctors who deliver high-quality care and that the model ensures physicians do not lose more than 10% under the new rates.

“The physician shortage is not due to payment transformation. We are short on providers because it is difficult to train enough docs to keep up with retirements and people going to the mainland,” said Lt. Gov. Josh Green, an emergency room doctor on the Big Island. “We are in the middle of the evolution of our health care system.”