Between 1975 and 2010 the number of healthcare administrators grew by 3200%, with this growth really beginning in earnest in the early 1990's. What changed in the early 90's to account for this vast increase in hospital administrators?

Because there aren't enough doctors. Now I know what you're thinking - that's one of the stupidest things you've ever heard. Why would the number of administrators go up 3200% if the number of doctors is increasing too slowly? Because the demand for healthcare has risen sharply, and, absent enough doctors, the only way to meet that is to make doctors more efficient. Once again, you're probably thinking I'm talking nonsense: doctors are late, no-show, slow-moving, and often hire incompetent staff, but I didn't say "make them efficient", I said "make them more efficient".

Today, the profession of medicine is fundamentally different than it was a few decades ago. Doctors focus essentially entirely on patient conversations, operations, treatments - practicing medicine. Nearly all administrative, billing, and legal tasks are handled by an army of office assistants, debt collectors, insurance coders, and office managers. Medical tasks like the initial patient conversation and testing have also been outsourced to non-MDs like nurses and med techs. Without enough of the central input required to produce their product, hospitals have had to delegate parts of what was previously "doctor work" to unlicensed employees, leaving only those activities which absolutely require an MD to physicians. The vastly increased complexity of healthcare operations as a result has required a 30-fold expansion in managerial personnel. This is not an ideal solution, as anyone who's visited an American hospital can attest, but it is the only solution.

With that in mind, why doesn't the US just make more doctors? The American Medical Association.

Though demand for healthcare has ballooned since the 1980s, the number of medical graduates has barely increased. It has actually declined as a share of the population. Between 1982 and 2005, not a single new medical school opened in the US.

From the 1960s to the 1980s, the output of the US medical school system doubled. The American Medical Association, a union containing virtually all specialized doctors in the United States, feared a "doctor glut" and started cracking down on the number of graduates per year. The AMA's Council on Medical Education and Hospitals is, in the United States, the formal licensing authority for both medical schools and hospitals, so the association had direct control over the supply of employees into their profession. However, unilateral action would invoke more hostility and be less durable than bilateral action, so the association also embarked on a public relations campaign to increase public awareness of the coming doctor glut. Congress, consequently, also passed a law limiting the number of residencies (the final stage of MD education).

What developed over the next decade was a "weed out" culture in medical schools and undergraduate pre-medical programs. The impression created by this culture is that medicine is a uniquely rigorous, difficult, and restless job where only the toughest can survive. Any of reddit's few doctors reading this post are smirking now: it's well known that life becomes much easier after residency, and it's far easier to obtain a medical degree outside the United States. The real reason is entirely political: the AMA, which economists sometimes refer to as a "guild" (a union so powerful it controls the number of entrants into the field), feared a drop in physician wages due to then-increasing supply, and increased barriers to entry. Realizing this was lucrative, they didn't stop until 2005, when, once again they gave the green light to found new medical schools (22 between 2005 and 2015). However, the change is far too small and has not come close to resolving the doctor shortage.

As I mentioned, however, the AMA's course of action in the 1980s had express Congressional approval, and this is because of the "consultative" nature of the United States government. Unlike most others, the US government rarely makes decisions in a vacuum. It is not really ruling the market as much as conversing with it. Any policy revision will come after convening panel after panel of field experts, and legislation (due to the underfunding of Congressional offices) will typically be drafted directly by industry experts or, more notoriously, lobbyists. Laws are then enforced by regulatory bodies which again consist mainly of industry experts and former professionals, and which themselves usually have governing boards consisting of current industry professionals. The result of this is that American legislation and regulation are remarkably circumspect compared to those of most other countries, accounting for virtually every exception and rarely doing unintended damage (that is not to say anything about intended damage). However, it also means the US government is typically terrible at doing simple things quickly. The government could easily resolve the healthcare cost crisis by taking over medical licensing or hospital & medical school licensing, but by the 1980s physician interests were so deeply entrenched in the US government that this was never even part of the mainstream conversation around healthcare costs. That conversation, consequently, has ignored basic healthcare economics - we are not talking about models here, but something as simple as "less medical grads make healthcare costs go more upper".

That said, there are of course academic sources for further reading. Profession and monopoly : a study of medicine in the United States and Great Britain, written in 1975 (e,g. before the AMA-Congressional doctor supply restrictions) was ahead of its time for noticing the possibility that such restrictions could be implemented in the future - the US was fairly unique for having a guild-controlled medical profession that was deeply entrenched in regulatory bodies, so the author hypothesized that they would quickly slam the brakes on their then-growing field.

Milton Friedman's 1980 Free to Choose: A Personal Statement is no doubt the most well-known book that discusses this topic (this time while the AMA and Congress were in the process of imposing restrictions), but it's not strictly speaking an academic work and often gets dismissed because of its author.

For more recent sources, the following are good reads:

Stark, Roger. The Looming Doctor Shortage.

Miller, Edward. The Physician Workforce Shortage and the Implications for Expanded Medical Coverage.

Zhang, Xiaoming et al. Physician workforce in the United States of America: forecasting nationwide shortages.