September 5, 2019 – The Ontario government should expand and strengthen compensation reform for primary care doctors as it creates new Ontario Health Teams to better coordinate healthcare services, argues a new C.D. Howe Institute report. Such compensation reform is compatible with improving appropriateness of care and could be a more flexible way to reduce medically unnecessary treatments than the current approach of delisting services from public coverage.

In “Health Teams and Primary Care Reform in Ontario: Staying the Course,” authors Åke Blomqvist and Rosalie Wyonch examine Ontario’s experiment with capitation-based payment methods, in which doctors are paid in part on the basis of a patient head count, not purely via fee-for-service. They conclude that the relatively limited effects of the new payment methods in terms of improving access or saving costs are due to the weak incentives and loopholes in the partial capitation options that doctors have been offered.

Under fee-for-service compensation, doctors are paid a fee for each item of service they actually have performed, whereas doctors’ income from capitation is determined in advance of services being provided. The core of a capitation system is a contract that specifies what services a primary-care practice must supply if its patients need them, and a roster of patients for whom capitation payments will be made. Ontario’s primary care reforms have used “blended” models that have only been partially based on capitation, and that also have allowed doctors to continue with the fee-for-service model for many patients.

According to the authors, the effects of the reforms so far may not seem particularly impressive, but they are good first steps and, if properly implemented, an enrolment-based capitation approach has the potential to both improve the quality of care and reduce costs. “Ontario has quietly taken the lead among Canadian provinces in trying new approaches to primary care,” says Blomqvist. “Instead of abandoning attempts to reform physician payment methods, the province should take the reforms further and incorporate them in the new system of Ontario Health Teams.”

Blomqvist and Wyonch suggest some specific measures that Ontario should take in order to create a more cost-effective system:

  • Extend the capitation principle so that primary-care providers also have a stake in the cost of drugs and secondary care their patients use – a healthcare system likely functions better when each patient has a “medical home,” with a provider who manages the overall care the patient receives. This would also likely improve the appropriateness of care while maintaining individual doctor and patient autonomy in choosing particular treatments;
  • Increase patients’ responsibility for adhering to enrolment contracts – give clearer and more explicit rules for patients who have signed an enrolment contract with a practice; and
  • Make patient enrolment universal – follow the model of the UK healthcare system in making enrolment a condition for receiving care.

Read the Full Report

For more information contact: Åke Blomqvist, Fellow-in-Residence, C.D. Howe Institute and Adjunct Research Professor, Carleton University; Rosalie Wyonch, Policy Analyst; or Nancy Schlömer, Communications Officer, C.D. Howe Institute, phone 416-865-1904 ext. 0247, email: