Social Policy in Ontario

The Ontario government is warning doctors that it plans to radically overhaul how they are compensated by paying more of them salaries – the latest salvo in its efforts to rein in the biggest contributors to ballooning health-care costs.

The McGuinty government has already targeted generic prescription drugs and hospitals as part of a plan to get a bigger bang for its investment in health care. Now it is zeroing in on doctors and a fee-for-service compensation system that has been in place for more than four decades.

“I think we’ve got some work to do when it comes to appropriately compensating physicians and others in health care for that matter,” Health Minister Deb Matthews told reporters on Thursday.

Hospitals represent the largest share of health-care spending in Ontario, followed by doctors’ compensation and prescription drugs. The province’s doctors collected $8.76-billion in compensation in the fiscal year ending March 31, 2009, according to government figures.

The majority of Ontario’s approximately 24,000 doctors are paid on a fee-for-service basis, meaning they bill the provincial health plan for each service they provide to a patient. But in recent years, some hospitals, particularly those in smaller, rural communities, have switched to a salary system for doctors in their emergency departments. As well, the 1,900 doctors who work in clinics as part of family health teams created by the McGuinty government are also paid a salary.

Ms. Matthews said she would like to see that compensation model expanded to include more doctors. She was responding to a report released this week by Toronto-Dominion Bank, which made eight proposals to wring more efficiencies out of the health-care system, including moving doctors away from the fee-for-service compensation model.

In a system where doctors are paid for each service, the report says, there is no incentive for them to measure the cost-effectiveness of their treatment decisions against the potential benefits.

The report concludes that the sustainability of the health-care system is in jeopardy unless profound changes are made. It was done at the request of Ms. Matthews and gives her ammunition in pushing ahead with changes.

Ms. Matthews described the report as a “very thoughtful” piece of work. “We need to have the conversation about the future of health care in Ontario,” she said.

Ontario has already introduced legislation this month that would tie the compensation of hospital chief executive officers to how effectively they improve the quality of patient care. The new rules would make executives accountable not just for the fiscal health of their hospital but also for how effectively they put patients’ needs first.

The government has also waged a bitter fight with pharmacies over its plan to save money by cutting in half the cost of generic prescription drugs.

Robert Bell, chief executive officer of University Health Network, Ontario’s largest hospital, said the government has to examine the rapid rise in doctors’ compensation, which has far outstripped the increase in hospital budgets.

Under a collective agreement with the province that expires in March of 2012, doctors received a 12.25-per-cent fee increase over four years. McGuinty government officials have stressed that they will not attempt to break any collective agreements.

“Everybody in the system is struggling with sustainability,” Dr. Bell said. “I think the issue of … compensation levels is clearly going to be one of the things that, sooner or later, is going to be addressed.”

Mark MacLeod, president of the Ontario Medical Association, said he welcomes a discussion about improving the health-care system.

“Ontario’s doctors are well aware of the fiscal pressures that the government is facing,” Dr. MacLeod said in a statement. Regardless of how doctors are compensated, he added, they are “focused on providing quality care.”

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