Provider Retention in High Need Areas. Location Decisions in the Presence of the NHSC LRP

12/22/2014

Consider now NHSC’s loan repayment program (LRP). A unique feature of this program is that an individual who applies for the LRP must have an NHSC-approved job in a HPSA and also have outstanding student debt in order to qualify for the program. Applicants are screened by the NHSC and not all applicants are accepted into the program. Importantly, in deciding whether to approve an applicant for the program, NHSC makes a determination regarding the applicant’s fit for the program and for the position the individual accepted. NHSC strives to choose the ‘most qualified’ applicants, but during the acceptance process it gives weight to an applicant’s fit for a particular position. An implication is that NHSC may select an applicant judged to be a ‘good fit’ over other applicants with better academic records. In addition to individual qualifications, the main driver of acceptance into the program is the severity of the shortage of health care providers in a particular area as measured by the HPSA score. Individuals applying for approval of a position in an area with a high HPSA score may have a better chance of approval than individuals applying in an area with a low HPSA score. Prior to 2009, approved individuals received funding only if the HPSA had a score of 14 or above. After the expansion in 2009, all approved individuals were funded regardless of HPSA score. Because of program funding constraints, not all applicants receive approval, even when applying for positions in high HPSA score areas.10

If an individual is accepted into the program and qualifies for the loan repayment amount Lj, the utility of location j is given by

       (2)

The individual prefers to participate in the program if there exists at least one HPSA location j for which the utility associated with that location is higher than the utilities associated with any other location. If the location that maximizes utility is not a HPSA, the individual of course does not apply. The attractiveness of a given HPSA depends on the loan amount Lj, so that the probability of choosing location j increases with the amount Lj. Some providers who do not participate in NHSC may still locate in a HPSA. This group will include: (1) individuals without student debt (and therefore ineligible to apply for NHSC program); (2) individuals who have student debt but did not apply (perhaps due to a low expected probability of approval, or lack of knowledge of the program); and (3) individuals who did apply and were not accepted.


10 In fiscal years 2012 and 2013 the admission rate into NHSC programs was around one third of applicants in those years.

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