OPINION: Would Reforming Doctors’ Fees Fix Health Care?

Courtesy TheMarkNews.com

Recently, a major Canadian bank released a special report on the sustainability of Medicare in Ontario. While the study is lauded for bringing much needed facts to the health policy debate, its conclusions get it wrong on many levels — not the least of which is its overall prescription, which sees the government remaining at the centre of our health care system, with consumers nowhere to be found.

Let’s single out one of the recommendations for further analysis. The authors argue that “both capitation and salary systems allow for a more cohesive health care system and would move the system towards aligning the incentives of physicians with those of the rest of the health care system.” I wonder what incentives they are talking about. Since when is paying someone a salary regardless of quality or quantity of output supposed to align incentives? And this recommendation coming from a financial institution where pay for performance is as pervasive as their ATMs.

In an era of severe physician shortage, is providing physicians a hefty base salary really the way to greater and timelier access to care? While no one is questioning physicians’ commitment to the Hippocratic Oath, we can’t ignore basic supply-demand market principles. Nor can we ignore that physicians, like the rest of us, strive to maximize opportunities for a better work-life balance.

Frankly, physicians, whether they are fee-for-service or salaried, have little incentive amid a physician shortage to operate their practices with an eye to client service or client retention. In fact, there is little need for a physician to compete with the physician down the street because if a patient leaves a doctor, there are dozens more patients waiting outside that doctor’s door. Consider the H1N1 vaccine situation last fall. The untold story is that one of the reasons many physicians weren’t administering the vaccine is that it would have cost them money to do so, which is perhaps why only 30 per cent of Canadians were vaccinated. With a reimbursement from OHIP of less than $10 per shot, and a patient appointment to administer the vaccine taking approximately 15 minutes (because patients always have questions), $40 per hour would have barely covered overhead, especially considering that physicians would have had to purchase refrigerators for the vaccine. Being on salary would have made it even more appealing to skip town when the going got tough.

Right now in the fee-for-service scheme, physicians — who are already a scarce resource — at least have an incentive to see as many patients as possible. Just imagine what it would be like if they were pre-paid for your visit? Do you think they would work through their lunch break or stay another hour past 5 p.m. to squeeze you in? The reality is this won’t be the case. Already scarce hours will diminish over time, since there will be little incentive to see more patients. I suppose this is what the authors of the report had in mind when they said paying salaries is a way of aligning incentives with the rest of the system. Perhaps like a financial system where the branch opens at 10 a.m. and closes at 4 p.m. Which is of course unthinkable in a world where consumers rule, banks compete, and employees are paid for performance.

The Mark News is Canada’s online forum for opinion and analysis.