Social Policy in Ontario

Physician, restrain thyself

Posted on July 11, 2012 in Health Delivery System

Source: Globe & Mail — Authors: Jeffrey Simpson

TheGlobeandMail.com – commentary
Published Wednesday, Jul. 11 2012.    Jeffrey Simpson

Something predictable happened after governments began pouring huge new sums into health care. And now, in Ontario and elsewhere, the reaction to it has begun.

When Paul Martin’s government decided in 2004 to spend another $41-billion over 10 years on health care, indexed annually at 6 per cent, provider groups mobilized for the grab.

Doctors and nurses, both represented by powerful associations and unions, began to demand and receive very handsome wage settlements. From 1998 to 2008, physician compensation grew faster than the price of other services purchased by governments, and faster than the average wages of other groups in the health and social services sector. Which was really saying something, since health and social services wages rose by 3.1 per cent a year during that period, compared to wages in the overall economy, which were rising by 2.5 per cent a year.

But even these numbers underestimate how well physicians did. The big surge in spending took place after the federal money started flowing. So in the last half of the decade, physicians’ incomes soared. In Ontario, in particular, remuneration went up sharply as the government tried to entice family practitioners to group themselves in teams and offered incentives for this change.

It was inevitable that these very generous increases could not continue. Although it could not have necessarily guessed the precise nature of the restraint demanded of it, the Ontario Medical Association knew what was coming. Many months ago, the OMA began a soft-sell advertising campaign playing up the services doctors render to Ontarians. It was directed at the general public, who the doctors reckoned would support them, not Queen’s Park, when push came to shove.

The OMA dispute is obviously specific to Ontario, but you can bet that variations of it will play out in other provinces. Ontario is in particularly weak fiscal shape, but every province is worried about its health-care bills. Physicians account for about 13 per cent of all health-care costs – less than drugs and hospitals, but with built-in demands for increases.

More widely still, the OMA dispute illustrates something fundamental about the delivery of public services. As economists have often noted, public-sector productivity seldom keeps pace with increased costs. Therefore, while health care and social service employees were receiving higher wage increases from 1998 to 2008, does anyone think their productivity correspondingly increased faster than for other workers?

The OMA has taken to warning, as doctors’ associations often do, that if the government’s restraint becomes law, doctors will flee the province and patients will suffer. This argument is almost wholly false.

Unlike the late 1990s, when there was a significant net loss of doctors to the United States, more doctors are now entering Canada than leaving. And the number of graduates from medical schools is increasing. This might mean that some grads will decide to practise elsewhere, a phenomenon seen in other provinces, but it also will tend to bid down the price of physicians’ labour.

There are foreign-trained physicians looking for employment in Canada, including in Ontario. The feminization of the physician work force means more personnel are required for providing services, since women try to juggle family and practice. And it’s also the case that many young male MDs don’t want to work as many hours as previous generations did.

Technology has also rendered some procedures much more routine and less costly, so the government is absolutely right to reduce payments accordingly. The affected physicians are outraged, but it is a golden rule of health-care financing that costs can only be reduced at the expense of someone who works in or supplies services to the health-care system.

The doctors are not asking for wage increases; they’re trying to hold on to what they’ve gained. They have read Ontario’s doleful fiscal books. They know how well they have done in recent years, even if they don’t like to admit it. Eventually an agreement will be reached, more on the government’s terms than those of the doctors.

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