How (and how much) MDs are paid deserves scrutiny

Any discussion of the upcoming provincial budget includes exchanges about how to contain ever-increasing health-care costs.

Health care is by far the greatest provincial government expenditure, and physician compensation — at about nine per cent — is a significant share of the B.C. budget. This important area of health policy, however, receives little public scrutiny.

Most physicians are paid “feefor-service” and are independent contractors who bill the public health-care system through the B.C. Medical Services Plan per service provided. This results in 15-minute appointments that frustrate patients and might be fine for dealing with straightforward needs, but not more complex health problems.

Back as far as the 2002 Royal Commission on the Future of Health Care in Canada (the Romanow Commission), there were concerns that rapidly rising physician incomes could threaten efforts to contain health-care costs. Yet B.C. has been slow to consider alternatives to fee-forservice.

Under this model, physicians are business operators responsible for overhead costs that come out of MSP payments, including clinic space and office staff. Even considering overhead costs, the limited evidence we have tells us that physicians are well compensated.

There is, however, a significant gap in earnings between family physicians and specialists. Surgeons earn on average more than twice the average for family physicians. And, in some specialty areas — ophthalmology in particular — the gap is stunning. The topearning ophthalmologists will gross nearly $1.3 million per year, more than six times the average for family doctors.

Among the top 100 highestbilling practitioners in 2015-16 (the most-recent available data that can be analyzed), 97 were specialists, including 62 ophthalmologists and 20 cardiologists. MSP payments to the top 100 ranged from $1,051,859 to a whopping $3,306,401 in 2015-16.

And doctors’ incomes far exceed typical salaries for workers in other health occupations, including nursing ($71,168) and non-nursing health professions ($74,008). Why does this matter? A large body of evidence suggests that rising income inequality drives poor health outcomes, increases public health-care costs (such as for chronic disease and higher rates of hospitalization) and reduces economic growth. So paying doctors considerably more than other health professionals contributes to the larger problem of inequality and squeezes the provincial budget. So what has to change? Health systems that perform better than our own demonstrate that we need to move away from the antiquated fee-for-service payment approach and look to models that: • separate physician compensation from clinic expenses; • account for each patient’s needs and health condition; • facilitate team-based care so that workload and expertise are appropriately spread across providers.

Jurisdictions such as Scotland have shifted away from fee-forservice, and their new contract for general practitioners gradually removes the burden of overhead from doctors, guarantees a minimum income and introduces a population-based payment model that better accounts for the complexity of patients’ needs. In one such population-based funding model, the primary-care practice would receive a set amount each month to provide for all the care needs of the patients registered with that practice. Unlike fee-for-service, the amount of the monthly payment varies depending on the age, gender and complexity of the patients served.

In time, this approach will provide greater clarity between government and the medical association when negotiating compensation. It also seeks to make team-based care a reality.

Research suggests that many new physicians prefer alternatives to fee-for-service and want to work in team-based settings such as community health centres. Last May, the provincial government announced opportunities for 200 recent family-medicine graduates to work under a new compensation model with the promise of team-based clinics.

There are signs of progress in B.C., but more needs to be done. Reforming physician compensation has the potential to improve healthcare delivery for patients and doctors and reduce public health-care costs. This is exactly the kind of innovation we need in B.C.

Andrew Longhurst is a research associate with the B.C. Office of the Canadian Centre for Policy Alternatives.