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Healthy Incentives

It matters how your doctor gets paid

By Larry Johnsrude

If you’re like most Canadians, you probably don’t care how your doctor gets paid as long as you receive the help you need and the government picks up the tab. But Dr. John Chmelicek thinks you should care. As president of the Alberta College of Family Physicians, he believes whether your doctor is on salary or contract or charges a fee can make the difference between their spending more time attending to your health or rushing you through.

It could mean your local clinic stays open late for people who work and can’t get there in the daytime. It could mean one-stop medical shopping for patients with multiple needs, such as seniors or people with disabilities, who could see not only their doctor but also a nutritionist, exercise planner and social worker. It could mean you work with your doctor on prevention that pays off years down the road.

How doctors are paid “should be based on the needs of the community,” Dr. Chmelicek says. “Whether it takes me two hours or 12 doesn’t matter, as long as my patients get what they need. If it means I have to work from 3:00 in the afternoon until 8:00 at night because that works for my community, I’ll do it.”

But for change to happen, he says, the provincial government and the medical profession will have to move away from their current model for doctor remuneration, known as fee-for-service, which is being blamed for diminishing service, pushing up costs and discouraging innovation. Most doctors in Alberta are now paid fees based on a schedule negotiated between the government and the Alberta Medical Association. For example, a doctor gets $37.35 for a walk-in appointment and $103.41 for a physical. A general surgeon gets $348.42 for a tonsillectomy and $512.76 for an appendectomy. A cardiologist can bill $2,111.14 for a triple bypass.

The schedule also dictates that to get paid for any medical follow-up, doctors typically need to see the patient in person. A visit to a highly trained nurse won’t do. Only recently have they been able to bill for communicating with patients by phone, email or video conference on a limited basis, which has discouraged the use of time-saving technology such as Skype.

“For a physician to get paid, you have to see the whites in a patient’s eyes,” Dr. Chmelicek explains. “[But] you should be able to take care of your patients the best way it needs to be done, whether it’s in your office for 30 minutes, or by a phone call or [by them] seeing your nurse instead of you. The system is quite rigid and rewards volume over quality. It needs to be more adaptable.”

The current system is profitable for doctors. The average Alberta physician, including surgeons and specialists, took in $370,000 from fee-for-service payments last year, about 15 per cent above the national average. Family doctors billed less, at $286,000, while the average specialist billed $476,000. From these amounts, many family doctors have to pay overhead on their clinics, such as rent, utilities, nurses and receptionists and equipment, which can be as high as 35–40 per cent of their revenues. Still, that gives the average family doctor an after-expenses salary of $185,000—over three times the average provincial wage.

Our province pays its doctors the highest rates in Canada. An analysis done for Alberta Health found physician fees cost every man, woman and child in Alberta an average of $1,058 compared to a national average of $919. These costs have more than doubled in the past 15 years.

In fact, physician fees are among the fastest-growing healthcare costs. They rose by 5.7 per cent in 2014 nationwide and by almost 9.2 per cent in Alberta, more than four times the inflation rate, contributing to Alberta’s annual health spending of $4,862 per capita, the highest in Canada. Growth in doctors’ pay outstripped population growth and occurred in spite of our relatively young population. With a median age of 36, Alberta has the youngest citizenry in the country and the smallest share of people over 60 (who tend to use the healthcare system most). We also have a healthy population, with Canada’s lowest rates of high blood pressure, diabetes, respiratory diseases and mood disorders.

It’s not as though our high costs can be explained by a shortage of doctors. We have more than most provinces—118 family physicians for every 100,000 Albertans, tied with Quebec and second only to BC. And our wealthiest doctors are getting richer than ever. Some 363 doctors, likely specialists in their fields, each billed the province’s health insurance plan more than $1-million last year, an addition of 24 to the millionaire’s club from the year before. An additional 88 billed for more than $2-million, which was 23 more double-millionaires than the previous year. Alberta’s best-paid doctor last year was an ophthalmologist, who billed $4.9-million in fees.

To make the kind of money our family doctors make, they need to see a lot of patients. A survey done by the College of Family Physicians of Canada found the average Alberta family practitioner sees 134 patients a week—25–30 a day, or one patient every 15–20 minutes—producing crowded waiting rooms and long waits for appointments. “It’s not that physicians want to see 30 patients a day to make money,” Dr. Chmelicek says. “You have to put a certain number of people through because you have to pay your overhead and your bills.”

Alberta’s new NDP government is taking aim at the fee-for-service model, linking high healthcare costs to a past reluctance by the province’s doctors to explore alternative payment models. Indeed, almost 86 per cent of Alberta’s doctors remain on fee-for-service, well above the national average of 77 per cent. Saskatchewan, just next door, is at 65 per cent.

Health Minister Sarah Hoffman moved this disparity to the forefront at an Edmonton healthcare forum in February. “I think most of us would agree that the model our province uses to pay doctors is expensive, outdated and doesn’t support the efforts of doctors to provide the best care possible,” she said in her keynote address.

At current spending levels, she said, 60 per cent of the province’s total budget will go to health in 20 years compared with the current 45 per cent. “Changing the way we pay doctors would have a ripple effect on the entire health system,” she said. “It would help improve access to high-quality primary healthcare, which would reduce unnecessary hospitalizations and emergency room visits. And it would lead to more team-based care, which would increase patient satisfaction and allow for more timely access to care when it is needed.”

“The system is rigid and rewards volume over quality. It needs to be more adaptable.”-Dr. John Chmelicek, President of the Alberta College of Family Physicians

It’s not just the government saying this, however. Doctors themselves have been leading the charge for reform, acknowledging that the fee-for-service system encourages some of their colleagues to overtreat patients and order costly procedures and tests that net doctors more money. “The long goodbye to fee-for-service has been particularly long in Alberta,” Dr. David Naylor, professor of medicine at the University of Toronto, told the policy forum. “This overreliance on fee-for-service means that there’s no reward for quality. It’s no wonder economists from the left and the right grumble about doctors. We’re basically a regulated monopoly. We’ve got a closed market but we claim to be private, independent contractors. We have substantial access to public resources and we want our overheads covered and we claim to be bastions of the free-enterprise model of practice. And meanwhile we engage in aggressive collective bargaining. We’re sitting ducks for critics because the incentives are not aligned and the model makes very little sense.”

IN AUGUST Hoffman reached a tentative deal with the AMA aimed at finding a better way to pay doctors. It calls for a new pay model, called “blended capitation,” designed to reward time and quality of care given patients, not just the number of services provided, and includes a trial starting this fall. Officials wouldn’t provide details, but sources said Hoffman had negotiated for a pilot project in 10 clinics where doctors would be paid according to the number of patients on their rosters rather than the number of visits, with a premium for less-healthy patients. The patient load would be ranked from 1 to 9 for severity of their conditions, with 1 being a healthy person and 9 being one with multiple health issues. Rates would rise along the scale to take into account the extra resources doctors and clinic staff would need to devote.

Many believe this could go a long way towards fixing a broken system being held together by band-aids and half measures. Of Alberta’s 9,713 family physicians, surgeons and specialists, only 1,971 are paid salaries through “alternative relationship plans,” of which 782 are under an academic plan associated with universities and 1,189 receive salary top-ups for working with targeted populations such as First Nations and other cultural and holistic chronic care groups or working at the province’s three government-run family care clinics, one in each of Edmonton, Calgary and Slave Lake.

On top of that, AHS provides funding to 42 primary care networks to help cover salaries of nurses, social workers, dieticians and other interdisciplinary teams of health providers at doctors’ offices, who keep track of your health needs and steer you through a labyrinth of procedures and specialties. About 80 per cent of our family physicians belong to primary care networks and are able to offer some enhanced services. But many say the networks are a patchwork that falls short of providing full one-stop health coverage.

Westgrove Clinic is an example of how the primary-health model in Alberta might truly evolve. One of only a handful of similar practices in Alberta, the bright, airy second-floor medical centre in Spruce Grove, half an hour west of Edmonton, promises timely access to not just doctors but also licensed practical nurses, a nurse practitioner (an RN with extra training allowing them to do, by most estimates, about 80 per cent of what a doctor does), mental health therapists and other health professionals. Many of the routine visits, such as quarterly blood pressure tests, are handled by nurses, freeing up doctors for other duties. A pharmacist comes in a couple of days a week to review the medication of chronic patients, particularly those who have been in and out of hospital for surgery or a variety of other procedures, to ensure their meds aren’t working against each other or risking dangerous side effects.

Proactive office encounter technicians (known by the acronym POETs) track each patient to make sure there is follow-up and routine screening such as mammograms for women and prostate exams for men after they turn 50. A referral coordinator is responsible solely for helping patients access other specialty services and create a plan of action for achieving their health goals.

On top of that, the clinic’s 12 full-time doctors are divided into three teams to ensure that if your doctor is unavailable (perhaps delivering a baby or doing rounds in the local hospital), you’ll still get to see someone who is familiar with your medical history.

“The idea is to provide a patient medical home,” says Dr. Allan Bailey, senior physician at Westgrove and one of the clinic’s original owners. “We’re trying to create as much continuity as possible. The patient sees the same doctor and staff, we work together on a plan to keep them healthy and the patient takes a greater ownership of their health. All the research shows that if you develop a relationship with your patients, they get a higher quality of care, patients and doctors are more satisfied with the outcome, and it saves money in the long run because fewer end up in emergency rooms.”

Dr. Lee Green, chair of the department of family medicine at the University of Alberta and a specialist in public health management and promotion, has studied health systems around the world and has found that those involving teams of health professionals tracking, monitoring and caring for the ongoing needs of patients are the most cost-effective and efficient. His studies show savings of between $3 and $8 in acute-care costs for every dollar spent on prevention. For example, a heart patient who ends up in an emergency room because his condition hasn’t been monitored properly could easily cost the health system $70,000–$80,000. “You can save a lot of money if you avoid just three of these a year,” he says.

What might surprise many Canadians is that some of the most efficient examples cited by Dr. Green, a US-born family doctor and former University of Michigan professor, are south of the 49th parallel. “The US system is a swamp of dysfunction—but there are these islands of brilliance,” he says.

None of the funding models being considered are without their draw-
backs, however. A guidebook published by the College of Family Physicians of Canada cautioned that “pure” capitation, without cash incentives for taking on less-healthy patients (i.e., unlike Alberta’s pilot project), could encourage some doctors to take only low-risk patients, “denying care to those who need it most.” It also warned that salaries might discourage doctors from seeing new patients, because they’d get paid the same regardless of their patient load.

And if Minister Hoffman is counting on alternative remuneration systems for quick savings she may be disappointed. A report by the Canadian Institute for Health Information found that some costs actually went up in Ontario and BC after a blended compensation model was adopted. “Physicians tended to select remuneration that matched their preferences,” the report says. Some doctors made up to 30 per cent more after switching to alternative payment methods to supplement their fee-for-service income.

“There is no silver bullet,” says Andy Chuck, healthcare economist from the Institute of Health Economics, which along with the O’Brien Institute of Public Health at the University of Calgary sponsored the February health forum. “It’s difficult to say that there is any one model that will work better than another, because just the slightest change in what you include in it can totally influence the outcome. It’s all very dependent on context—demographics of the patient population you are serving and their specific needs, the existing mix of resources and services available to that population, and the specific objectives you are trying to achieve.”

But if change is going to happen,  now would be the time. The group representing the province’s doctors seems more sympathetic to the government’s precarious financial con-dition than in the past. “We’ve been seeing [overall system] cost increases of 6 or 7 per cent a year,” says Dr. Carl Nohr, president of the AMA. “We need to bend that curve down to help us achieve financial sustainability while offering a high level and quality of care. The best patient care isn’t necessarily the most expensive.”

Dr. Chmelicek believes savings will come. “Would [a new payment method] save a lot of money? In the short term I’m not so sure. But in the long term, yes, because of efficiency and prevention. Right now a huge amount of cost of the system is in acute care. People go to emergency for expensive procedures. We could reduce and prevent this. Why do people go to ER all the time? It’s hard to get to your doctor’s office after hours.”

The appetite for a new direction partly marks a generational shift. For many older doctors, the ability to bill on a fee-for-service basis is treated as a professional right dating to the early days of medicare. Saskatchewan, the first government in North America to adopt publicly funded healthcare, ended its 23-day doctors strike in 1962 by agreeing to let them retain their autonomy as independent, self-employed entrepreneurs paid fees rather than salaries. When medicare was adopted nationally in 1966, the Medical Care Act incorporated the fee-for-service provision, which doctors have jealously defended.

A 2010 “Mythbusters” report by the Canadian Foundation for Healthcare Improvement debunked the common perception that most physicians prefer the fee-for-service arrangement. “A growing number of Canadian physicians are interested in alternative payment models,” it says, noting those wanting to retain fee-for-service as their sole source of income declined from 50 per cent in 1995 to 23 per cent in 2007. It also found that younger doctors, particularly women, who now make up 40 per cent of the profession, are least in favour of fee-for-service. Only 17 per cent of doctors under 35 wanted to keep charging fees compared with 41 per cent of those 65 and over. “As older, predominantly male cohorts of physicians retire, support for fee-for-service as the sole source of income is expected to fall even more rapidly,” the report says. And doctors are happier for it. A 2006 CIHI report found higher satisfaction among physicians on alternative-payment plans, working fewer hours, seeing fewer patients and being less likely to burn out.

“The way we pay doctors is expensive, outdated and doesn’t support the efforts of doctors to provide the best care possible.”–Sarah Hoffman, Alberta’s Health Minister

“The AMA is being influenced by a younger generation looking to get past a way of doing business that goes back to the 1970s,” says Dr. Green. “Traditionally doctors in Alberta have been fiercely independent and want to run their own businesses. Younger physicians don’t want to run a small business. They just want to practise medicine.”

The challenge for Minister Hoffman and the Notley government is to bring change without returning to the bargaining-table acrimony of the past. Dr. Naylor, when speaking to the forum in February, summed up Alberta’s experience as a slump-and-boom cycle. “When times are good, the government buys peace with the profession, and fees zoom up,” he said. “When times get bad the government immediately looks at the fee schedule and they cut.”

This describes the last fee dispute, when then-premier Alison Redford inked a seven-year deal in 2013 following government threats of an imposed settlement and counter-threats from doctors of a lawsuit. Such acrimony—which Dr. Green described as “an adversarial relationship between two partners both behaving badly”—detracted from the co-operation needed for a better fee arrangement.

Both sides are hoping that has changed. “Having spent 25 years in the fee-for-service model, I’ve never liked it,” says Dr. Chmelicek, who as director of medical residency at the University of Alberta for the past three years is paid a salary under an alternative registered model for academics. “Fee-for-service was the law of the land. It’s what you did.”

Back at Westgrove Clinic, Dr. Bailey speaks passionately about the prospect of someday expanding their menu of services, possibly to include a dietician, exercise physiologist, lifestyle coordinator and more time with mental health therapists. They now get some funding through the primary care network, which he says pays 60–70 per cent of the salaries of nurses, pharmacists and the other health providers, with the doctors covering the rest of the staff’s salaries from fees.

He sees a time when they make more use of technical advances such as Skype to interact with patients—and get paid for it—saving on clinic time and eliminating a patient’s need to come in. He looks forward to the flexibility to adapt to the changing needs of Spruce Grove’s growing community and surrounding area, which includes three First Nations. “This isn’t about doctors getting paid more,” he says. “It’s about doing a better job with what we’ve got.”

Larry Johnsrude is a former Edmonton Journal reporter and CBC senior news producer. He lives in Edmonton.

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