Published in the National Post on February 23, 2015
By: Åke Blomqvist, Colin Busby and Aaron Jacobs
Åke Blomqvist is an adjunct research professor at Carleton University and a health policy scholar at the C.D. Howe Institute. Colin Busby is a senior policy analyst and Aaron Jacobs is a research intern with the C.D. Howe Institute.
With negotiations between the Ontario Medical Association and the province breaking down, there is a need to consider new approaches to funding physicians in Canada, especially when it comes to funding specialists working in our public hospitals.
The Royal College of Physicians and Surgeons found that, in 2012, about 34% of new hospital-based specialists reported not being able to find work within three months of graduating. We believe that giving hospitals the budgets and authority they need to contract specialist services would be a more efficient use of public funds.
A decade ago, when wait times began to dominate health policy debates, the prospect of specialists not being able to find work would have seemed unlikely. At the time, policymakers emphasized increasing medical school enrolment. The result is that the number of specialist doctors has ballooned by 36% since 1999 — more than double the growth of Canada’s population over that time.
Although the supply of specialists has been growing fast, the inability of our health system to better deploy the growing number of specialists has resulted in many recently graduated specialists struggling to find work and taking up positions for which they are overqualified.
One reason for this paradox is the inefficient allocation of resources that arises from paying doctors and hospitals out of different funding envelopes.
On the one hand, hospitals rely largely on fixed, lump-sum payments to cover their operating costs. On the other, specialists are paid on a fee-for-service basis by provincial insurance plans, not by the hospitals where they work. This creates two “silos” with conflicting incentives.
Provincial insurance plans fix the prices for specialist services according to fee schedules, encouraging them to take on as much work as they can manage. The fixed budgets given to hospitals, however, may restrict the resources available to doctors who need operating room time and nursing staff.
If hospitals instead were given responsibility for paying for specialists’ services — and the authority to negotiate with specialists directly about both their pay and access to the hospitals’ facilities — available specialists could be better matched with hospital capacity, and the value for money we get from our health system would improve.
The results would be uneven within provinces and across specialties. The prices of some specialists’ services may rise, but prices should fall in areas where many recent graduates are looking for work. Indirect benefits of such a reform might include clearer signals to medical students regarding what, and where, specialties are in demand. Further, hospitals may be inclined to specialize by performing more of the procedures that they do most cost-efficiently and with the best patient outcomes.
Clearly, allowing the terms for paying specialists to be established through bargaining between doctors and local hospitals would imply a major change relative to the current bargaining approach. At present, fees are determined through bilateral negotiations between provincial governments and the medical associations, and access to hospital facilities is governed by a combination of medical staff and hospital managers.
Under this model, local hospital managers would have more authority to negotiate the terms under which specialists gain access to hospital facilities and how they are paid. The role of the provincial medical associations would be quite different. A sensible transition to this new bargaining model would need to be negotiated carefully.
Bringing these issues into the negotiations between physicians and the provinces could help break down silos and improve the co-ordination of the health-care system. If policymakers do not change course, many graduating specialists will continue to struggle to find work. These problems may worsen, resulting in a significant under-utilization of resources and potentially even an outmigration of Canadian-trained specialists.
