Aligning Primary Care Compensation to Health Outcomes


For primary healthcare homes to meet the expectations of patients, their families, and communities, incentives linked to the health outcomes they need to achieve are essential. Those expectations include the ‘triple aim’:

  • Improved indices of health status within the served population and measures of individual outcomes of care
  • Patient, care-giver, and community satisfaction
  • Demonstrable efficiency and effectiveness

Financial incentives are obvious. Prominent among the others are the team’s status and standing in its community and freedom for the primary care team to innovate – to make its own decisions on how to operate within the policy guidelines established by the responsible regional authority and/or government.

Today’s ‘triple aim’ expectations of primary care teams require much more than visits to the doctor’s office. They require the provision of a wide range of health services, many bordering on social services, and many delivered in people’s homes and communities rather than in the office. They require an increasing focus on people with many and varied chronic conditions that cannot be repaired, people who need on-going care, support, assistance, and comfort provided by a wide range of health professionals in addition to doctors more than they need symptom relief, although they need that too. The fee-for-service compensation system relied on in the past is completely inappropriate as an incentive mechanism for the contemporary primary care team.

A method of financing the Accountable Care Organization (ACO) model, pioneered under the publicly-supported Medicare program in the United States, already applies, in part, to many primary care teams in Canada. Over half of primary care physicians in Canada are now recompensed through a variety of alternatives to fee-for-service. Basically, financing of the ACO is by capitation whereby the team is paid a fixed sum annually for each person registered with it and is expected in return to provide all registrants the services needed to maintain them in good health. The ACO/primary healthcare home is expected to be:

  • Accountable for the quality, cost, and overall care of a defined population
  • Made up of sufficient provider members, employees, and affiliates to provide a full range of primary, home, and community services
  • Able legally to receive and distribute recompense to its members, staff and affiliates in relation to the services they provide
  • Governed by a leadership structure that ensures patient centeredness and includes clinical and administrative oversight
  • Equipped with the capacity to promote evidence-based practice and patient engagement and to assess regularly the health of the population served, its satisfaction with the services provided, and the quality of outcomes achieved.

The principles at work are that the team is funded for each person registered with it as his or her primary care home, the amount being based on the age and social characteristics of the served population and the public resources currently spent on their primary, home, and community care. With respect to the latter, the team is able to charge fees and accept the remittance of insurance payments for its provision of services not currently paid for publicly. After its formation, the primary care team’s funding would be adjusted upwards or downwards by up to 20% in direct relationship to measurements of its efficiency and effectiveness, the quality of its outcomes, and the satisfaction of its registrants and their families with its services, thereby providing a financial incentive both for good work in competition with other primary care teams. Another is an agreement with the regional authority or government to split any annual reduction in the overall cost of service provided to the served population while maintaining competitive standards of quality and satisfaction.

Moving to such a form of recompense for primary healthcare homes will require a major adjustment in how providers are currently remunerated. Fee schedules and salary levels negotiated centrally by professional associations and unions are antithetical to funding a team. New forms of primary care governance, better measures of patient satisfaction, meaningful measures of quality outcomes, and legal frameworks allowing funds to be distributed by the team to its providers are a few of the challenges.(1) Fortunately, there are some promising examples of teams in Canada taking this approach. They need to be emulated widely.


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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