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 BC budget. This important area of health policy, however, receives little public scrutiny.
Most physicians are paid ‘fee-for-service’ and are independent contractors who bill the public health care system through the BC Medical Services Plan (MSP) 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.
Yet, BC has been slow to consider alternatives to fee-for-service.
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 very well compensated. In BC, the average physician received $284,918 in payments from the provincial government in 2015/16 (the most-recent available data that can be analyzed). But the gap between family doctors and specialists can be significant. Government payments to the top 100 highest-billing doctors ranged from over $1 million to $3.3 million 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 shows that rising income inequality drives poor health outcomes, increases public health care costs (like 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 needs to change?
Health systems that perform better than ours 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 is appropriately spread across providers.
Jurisdictions like Scotland have shifted away from fee-for-service 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 time, this approach will provide greater clarity for government and the medical association when negotiating compensation. It also seeks to make team-based care a reality.
Research shows 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 BC, but more needs to be done. Reforming physician compensation has the potential to improve health care delivery for patients and doctors and reduce public health care costs. This is exactly the kind of innovation we need in BC.
Andrew Longhurst is a Research Associate with the BC Office of the Canadian Centre for Policy Alternatives.