Should doctors be paid a salary?

Posted on September 18, 2017 in Health Debates – Opinion/Commentary – Private, fee-for-service practice does not reflect the needs of a modern health-care system, which requires team-based care that focuses on patient outcomes, not piecemeal work.
Sept. 18, 2017.   By

The recent tax changes to Canadian Controlled Private Corporations (CCPC) proposed by the federal government have certainly raised the ire of doctors across the country. They have taken to social media and other venues to voice their displeasure with the Trudeau government.

These proposed tax changes and the amount of criticism raised by the physician community have even had some national columnists begin to ask the question, “Why don’t we just salary doctors like any other health care worker?” It’s an important policy question that’s worth exploring.

Canadian health care is primarily organized as a publicly funded, privately delivered system. Provincial health insurance plans pay physicians by and large on a fee-for-service (FFS) basis for the medical services they provide the public. That fee is supposed to cover all of the costs of that service, including overhead, like staff salaries and supplies like any business. This model is a holdover from the days before medicare when people paid out of pocket or private insurance companies paid doctors for these services.

I probably hold a minority view among my colleagues but in a single payer, government-funded system, the private office model is likely anachronistic. Private, fee-for-service practice does not reflect the needs of a modern health-care system, which requires team-based care that focuses on patient outcomes, not piecemeal work.

It also does not make financial sense to physicians anymore, who have no access to benefits, such as vacation, parental leave or pensions, and due to both price regulation and prohibition of private care, can neither adjust prices nor find alternative sources of revenue to cover increasing practice costs. Continuing on the current trajectory, it’s a failing business model.

But the reality is that fee for service, private practice medicine is not going away anytime soon, even if the majority physicians asked for it. Provincial insurance plans significantly benefit from this model in a couple of very politically important areas, which make wide scale implementation of any physician-as-employee based model practically impossible.

1. Wait times: There is a lot wrong with FFS, but there is one big thing it does right, which is to incent physicians to work hard. Prior research has shown FFS physicians see twice as many physicians as salaried ones. By reducing the price per service, as has been done in Ontario, the government has been able to deftly hold the line on costs, while getting doctors to work even harder to hold their overall income steady. Remove that key economic incentive, and wait times would increase. This is a death knell for any provincial government.

2. Costs of care: Physician office overhead is the most poorly understood cost driver in our health system, but is also probably the most critical barrier to changing the way doctors are paid. If we assume, conservatively, that 25 to 30 per cent of physician payments go to overhead that is $3 to $4 billion a year, or the annual budget for the Toronto District School Board.

Thousands of people are employed by physician corporations, including medical assistants, technicians, nurses, and support staff. What happens to those people if physicians become government employees? These mostly non-unionized workers would either be out of work, or subsumed by either regional health authorities, hospitals or other health-care institutions.

A substantial number would join the collective bargaining agent of the institution they join, or if non-unionized, receive similar wages and benefits of their institutional colleagues. While better pay for thousands of health care workers would be virtuous side effect of physician employment, the end-result of this mass migration would be a substantial increase in costs with no tangible health system benefit in the short term.

And herein lies the central problem. Most health policy experts have advocated for an end for FFS, yet government policy since the inception of the Canada Health Act has not only allowed, but encouraged it. Provincial governments have effectively used to tax code to get something for nothing.

Will these proposed tax changes move provincial governments and medical associations to have an honest conversation about modernizing the way physicians are paid? The optimist in me hopes so, but the realist in me says probably not.

Dr. R. Sacha Bhatia is the F.M. Hill chair in health systems solutions and cardiologist at Women’s College Hospital and University Health Network.

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