Provincial governments asking for the wrong thing from physicians


Currently labeled by the federal Minister as “mediocre”, healthcare in Canada should be producing world-leading rather than sub-standard health outcomes. To achieve this provincial governments have to do much more than focus on physicians’ pay and reining in cost increases. They do have to hold the line on costs but they also have to enlist all providers, physicians especially, in a joint endeavour to transform our healthcare system so that it achieves better outcomes and does more than it does now to optimize the health of Canadians.

In 2014, the latest year for which the Canadian Institute for Health Information has complete data, physicians’ pay accounted for 15.3 percent of health care costs. That share is little changed since the late 1980s although it has risen in recent years due to increases in the number of physicians. Compensation per physician did not change in 2014-15 and over the previous 5 years increased at almost the same rate as the CPI, meaning the real income of physicians has not increased in recent years. Physicians’ pay does account for a large share of the total but it has not been a principal driver of healthcare cost increases.

The problem with physician compensation is not how much it costs or its rate of increase but rather how it’s determined. A pay system should focus on outcomes and provide incentives to achieve them – healthy people. In the fee-for-service model, compensation is based on inputs that reward doing lots of consultations and tests whether or not they are the most appropriate form of care. On the other hand, they discourage physicians from sharing their responsibilities with nurse practitioners and other providers or referring patients to where they can be closely monitored against evidence-based standards, a heart failure or diabetic clinic for example, and their medications adjusted to prevent the recurrence of symptoms and the need for treatment.

Fee-for-service accounts for almost three-quarters of physician compensation, a share that has not changed much since 2008. The remaining quarter constitutes alternative pay plans, salaries, and capitation whereby physicians receive monthly payments for the number of patients rostered with them. In most cases alternative pay plans are combined with partial fee-for-service payments, and are rarely tied to health outcomes and therefore offer little or no transformative advantage. Indeed, it is a fundamental problem in Canada in that there is little capacity anywhere to measure health outcomes.

It is inevitable that conflicts arise when dealing with a flawed payment structure. This is perhaps nowhere illustrated more graphically than in Ontario where physicians have not had a contract in 3 years. In the meantime, the government has applied a unilateral, across-the-board fee cut, physicians have rejected a proposed contract recommended by the Ontario Medical Association, and now there are suggestions of job action. The across-the-board cut was inappropriate and could perhaps have been averted had the OMA been open for changes in relative pay levels as was the case in Alberta where the Medical Association input into how a cut in fees should be configured. The negotiated fee schedule gives undue benefit to specialties in which technological changes have enabled some procedures to be done much more easily and quickly while other physicians have struggled to preserve appropriate incomes. These issues have distracted everyone from the need for transformative reform of healthcare. The public interest is badly served.

What’s to be done? First, governments should clarify they are not trying to take money away from physicians as a group and physicians’ associations do need to negotiate adjustments to fees to reflect technological and other changes. Second, governments should build the infrastructure to measure and monitor health outcomes so they can be used as the basis for incentives in a new pay structure. Third, that pay structure should be geared toward encouraging treatment protocols that promote the achievement of healthy outcomes. Fourth, physicians and other providers should be fully engaged in the transformation of healthcare in Canada. At present many physicians know that the payment system draws them into unproductive uses of their time and undermines the quality of care they want to provide. As partners in transformative change they would see their role in a bigger picture – the health of Canadians – and their creativity would be unleased.

The current battles between governments and physicians are unproductive distractions from achievement of the larger goal of healthy Canadians.

Authored by members of the Queen’s Health Policy Council:

Don Drummond
Chris Simpson
Duncan G. Sinclair
David Walker
Ruth Wilson

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