I had a recent conversation with a friend who is an equity analyst. Her clients pay her firm a lot of money to help them know where the stock market, and the shares of particular companies, might be heading. They are fortune tellers, but with a lot more data.

The conversation turned to the topsy turvy summer of the Dow, that ubiquitous proxy for that amorphous thing we call ‘the market.’

Based on the fundamentals, on the underlying numbers that should drive stock prices, where should the Dow Jones average be right now?

‘Not in the 10,000s, that is for sure. Maybe somewhere between eight and nine thousand.’

That was depressing, but before you stop reading, this is not another bucket of water in the face about the economy. I am trying to practice the ‘power of positive ignoring’ on that front. Rather, it is a set-up to some similar questions for the physician world.

What causes prices to be at a different level from what we would expect given the underlying reality? How long can prices stay out of whack before the forces of economic reality cause them to move as they should?

I am talking about physician prices now, not the stock market.

While the stock market is currently priced higher than at least one firm thinks it should be, the physician situation is the opposite.

Why aren’t prices higher?

Why have prices been flat to down, in some cases sharply, over the past decade?

How long can pricing fly in the face of the underlying economic drivers?

Let me set some context for my questions.

Recently, I was asked to be part of a panel attempting to explain the effects of ObamaCare on average Americans. Given my day job, I was assigned to do the physician aspect of the presentation.

Since my time slot was short, I decided to concentrate on one dimension of the issue, one that readers of this space know is one of my interests, that seemed to fly completely under the radar of the reform debate and the media coverage of it. That issue was about the physician supply and demand problem.

Even before the passage of ObamaCare, we knew the demand for physician services were heading up. Besides general population growth, which is expected to be about 15 million more people in the next ten years, the Baby Boomers have been sliding predictably to old age like a pig through a python. Now it is time, with the front edge of the bulge now moving into the golden years when the particulars of what is covered by your health plan now matter more to you than you care to admit.

Now, according to the plan, add about 32 million more people to the demand side of the equation. Remember, we’re going to lower the cost of healthcare by moving these people from expensive care settings (read: ER) to more appropriate settings, most of which means the doctor’s office.

So demand is up, which is supposed to be good, something almost every other industry covets right now.

Before we get to the ‘price’ side of this little three legged stool, let’s take a quick look at the supply part of the equation.

The American Association of Medical Colleges, and they represent the suppliers, released a study in 2008, before ObamaCare, that predicts a shortage in 2025 of somewhere between 124,000and 159,900 physicians.

There are a myriad of complex, interacting factors that go into those calculations and many policy changes can impact the slope of various converging forces between now and then. But here are a couple of interesting factoids that help drive that projection.

Today, we produce about 18,000 new physicians a year. Right now, we have about 12,300 physicians a year who turn 65, a decent predictor of retirement. So far, so good. But in less than a decade, the number of physicians hitting 65 each year will climb to over 23,000.Hey, physicians are Boomers, too.

And we don’t even need to get into how few are selecting primary care, or how few are going to work in rural or inner city settings, places that will be hit worse by the shortage.

The point is we’re facing a pretty material shortage, one that the suppliers cannot address fast enough. Besides the fact that it takes us a long time to make a doctor, the recruiting pitch is a little sketchy right now (‘No really, pick a career in medicine. Where else can you give up 14 years of your life, amass $140,000 in debt, and earn a living that has not kept up with inflation since you were born?’).

So, at the panel, I made these points and suggested patients prepare for a less personal, more mass produced healthcare experience. I also suggested that all 50-65 year old who could see Medicare in their not-so-distant future be really, really nice to their current physicians. That drew a nervous chuckle.

As a side note, after the session, the CEO thanked the panelists for coming, told us it was well done and very interesting, but said that we sort of scared him. To which one of my fellow panelists replied, ‘Well, how would you feel if you also worked in healthcare?’That drew a nervous chuckle from me.

But in the process of preparing and delivering this little talk, I had the conversation with my equity analyst friend, which as I mentioned, got me to thinking about why prices persist at a level, high or low, that is not supported by the fundamentals.

Which got me thinking about the distortion in physician pricing.

We all remember Econ 101.

If demand goes up and supply is short, prices go…?

Up, right?

Wrong, in this case. Prices are down.

What? How can that be?

We all know the answer to the why is pretty straightforward. We don’t have a real market. You don’t get to negotiate with the government, and increasingly, you don’t get to negotiate with the five major health plans that control about one-third of the population. There is a buying cartel that places a strong hand on the scales and disrupts the normal movement of pricing.

My equity analyst friend talked about her version of price distortion due to federal stimulus spending and the Fed’s monetary policy and the value of the dollar. But, she said, ‘Prices eventually have to find their rightful level.’

That is the bigger question for physicians.

If demand is growing, and the supply is not, when will physicians act to force pricing to move to its rightful level?

Obviously, most are not yet acting. Falling and flat prices are evidence of that.

But, encouragingly, some isolated examples can be found where physicians are moving strategically to unleash market forces so the price for their services can find its rightful level.