Here’s a better way to pay Alberta doctors: Edmonton Journal Op-Ed

In Alberta, as well as across Canada, many citizens do not have family doctors, and those who do often cannot access them when needed. Health systems in other countries, however, have found ways to improve primary care access.

One solution is to pay doctors a lump sum for the number of patients under their care instead of a fee for each service provided. The result would be improved access and more value for money in the health-care system.

Canada’s provinces lag behind their peers in health-care access. The 2011 Commonwealth Fund Health Policy Survey found about 23 per cent of Canadians who needed primary care had to wait six days or more to get help. This compared with only two per cent in the U.K., five per cent in New Zealand and eight per cent in France. The difficulty in accessing timely primary care — a problem compounded by low rates of using electronic health records, among other things — has compelled roughly 58 per cent of sick Canadians to use emergency rooms in the last two years — by far the worst record among developed countries.

Part of the access problem is due to having too few doctors, especially family doctors. But another reason is the way doctors are paid. Under the current system, doctors lack a strong incentive to take responsibility for new patients.

In Alberta, like in the rest of Canada, most doctors are paid predominantly for each service provided. Roughly 50 per cent of Alberta’s doctors, and 40 per cent of Canadian MDs, receive more than 90 per cent of their income under a fee-for-service system.

Under this system doctors are paid for the procedures they perform in treating their patients or for the time they spend with them during consultations. Doctors have an incentive to be productive in terms of the volume of services they produce, since their income will be higher the more services they bill for.

In contrast, a per-patient method of compensating physicians called capitation — which pays doctors for the number of patients under care — is much less common.

About a quarter of Alberta’s doctors receive income as “blended” payments — that is, they derive significant shares of their total income from more than one payment method. In Alberta, capitation makes up about two per cent of blended income whereas fee-for-service accounts for more than 50 per cent of blended payments. By contrast, in Ontario, capitation accounts for roughly 17 per cent of income for physicians who receive blended payments.

Technological change and the evolution of primary care is making fee-for-service less relevant to efficient operation of the health system. Primary-care doctors today act more as patient managers within the health system — they diagnose, then prescribe or refer, but deliver a smaller share of curative services than in the past. Most of the work they do does not involve specific procedures nor does it always require patients even to be present.

Capitation gives a direct incentive for doctors to take responsibility for many patients. This should make it easier for patients to find a practice that is willing to give them ready access to services, including evening and weekend care.

There are additional benefits. Capitation means a family physician has an incentive not only to sign up many patients, but also to keep each one as healthy as possible so they do not have to be seen often.

Further, a capitation system promotes more efficient production of primary-care services by encouraging doctors and clinics to make use of ancillary personnel such as nurse practitioners and, more generally, to organize their practice as cost effectively as possible.

There are possible downsides, of course. If a doctor signs up too many patients, some might not receive needed services, and patients who are likely to need a large volume of services — such as the elderly or those with a history of illness — might have difficulty finding a doctor who is willing to accept them. Under capitation, family doctors might also tend to over-refer their patients to specialists.

To mute the negative incentives implied by a pure capitation system, a blended payment system with a capitation element could still retain a large share of total remuneration as fee-for-service. Ontario’s experience with capitation has not been problem-free, but other provinces are well positioned to learn from the missteps and challenges that it has faced, and to develop more effective versions of their own.

Patients in Alberta, like those in other provinces, struggle to access primary care when needed, which contributes to expensive inefficiencies such as overcrowded emergency rooms.

By paying family doctors a lump sum for the roster of patients under their care, we can improve access and the overall efficiency of the health system.

Ake 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 at the C.D. Howe Institute.