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I think averaging may be a little problematic as there is enormous variation in physician salaries. My understanding is that the provincial funding formula hasn't kept up with technical advances in some specialties so that once-intensive procedures are now routine, though the fee charged by docs to OHIP remains the same. Does CIHI have any data that could shed light on this?

If I recall correctly--and I'm too lazy to fact-check this--physician reimbursement (fees and salaries) accounts for 15-20% of HC spending on average in the past 10 years. And how much is ON going to save by shaving 1% off their incomes, or by slowing the rate of growth in their fees? Not much.

@DJR the worst example of this is cataract surgery, where a procedure that once took an hour now takes minutes, yet the rate for the job has not gone down. Who has the incentive to capture efficiency gains from those, esp on the taxpayer's behalf? Some of the technical advances are great, but not all advances are worth the cost.

The way to cut health care costs is to cut programs. The whole industry is all last-mile costs, and there is no technology yet that has delivered substantial economies of scale in that environment. Cutting services is the only way.

A couple of things stick out there. What the hell has BC done? They've decreased physician expenditure in real terms? Is that right? If so, that's gotta be a singular experience anywhere in the world. Are they holding their kids hostage or something?

The Quebec is another laggard on physician expenditure, but you wonder if language doesn't play a role there. An anglophone doctor can (setting aside regulatory restrictions) move smootly between Nfld, Ont and BC, a francophone physician has somewhat more limited options. That would explain the relative uniformity between physician expenditure in english Canada (with the exceptions of Ontario and BC).

"And how much is ON going to save by shaving 1% off their incomes, or by slowing the rate of growth in their fees? Not much"

Fair enough, but for Ontario, half the battle is to stop falling. Plus, you can't go after the wages of other stakeholders in the health care system (nurses, support staff, etc.) unless you're willing to do battle with doctors (for much the same reason, the Ontario govenrment is going after hospital CEOs).

Interesting point on the Quebec physician market Bob. Not sure what BC has done with physicians. They have also managed to keep per capita provincial drug costs under control also compared to Ontario.
Shangwen: Do you know if BC has cut physician services that Ontario still retains?

BC had a rigorous clinical evaluation system for drugs to be covered on the public plan. It eliminated many new drugs and duplicates and was not kind to meagre improvements. The pharmaceutical industry screamed. They finally got it killed but I want it done in Ontario.

@Bob @Livio I have always assumed that this is why Quebec docs are paid less, because many of them are somewhat captive. On the other hand, you could assume that a province with a disadvantage in recruiting foreign docs with no French would be held ransom by the natives, but clearly they aren't. Do they get huge tax breaks?

I'm not sure that there is an order of precedence in whose pay to go after. Generally, pay increases for docs and nurses go hand in hand, at least in the West and Ontario. Everybody else is peanuts. And there are the unforeseen developments. When internet pharmacies took off in MB and SK, hospital wages for pharmacists went through the roof. Twenty years ago, pharmacists were low-paid chem grads and their wives all had to work. Now younguns are graduating at 24 and starting at over $80k in some places, with lucrative (and unjustifiable) call pay.

I was talking to someone in BC last week and was surprised to hear that a number of surgeries that are covered in other provinces are not covered there. Whether they never were, or have been delisted, I don't know. But there are procedures that ON pays for that BC will not.

Regarding BC, I don't know. Has population growth outstripped the growth in the number of docs? That also looked surprising to me. When you hear of docs moving within Canada, it's generally to AB or BC. And unlike most Canadians, I think new BC docs do get an income adjustment to match the cost of living.

One reduction in the problem is to build more medical schools, and teach more students to be doctors, (especially those thinking about being lawyers?). But also nurses & para-medics.

Only an increase in the supply of doctors, which will be fought against by doctor orgs (like AMA in US), will be really effective at reducing doctor wages without big increases in wait-times / hassle for patients.

Livio, Shangwen,

I wonder if the BC number isn't a function of some sort of accounting game. BC doctors get paid less - oh, but BC provides free malpractice insurance, something like that. While there are variations between what different provinces will cover, and what they'll pay for what is covered, I've never heard of there being differences that were both systematic and significant (with the exception of Quebec which is notorious for its low fees).

Tom,

It's funny you say that, 20 years ago the thinking on reducing health care costs was that the problem was too many doctors inducing too much patient demand. That's the advice that led Ontario"s NDP government to slash medical school enrollment. That didn't help Ontario reduce health care spending, but did ensure that Ontarians have a heck of a time finding a family doctor.

I think the supply of doctors/nurses is probably less of a problem than the lack of competition for their services.

Tom, re the issue of increasing supply, see my comment on a post by Frances here. Demand and consumption are supply-sensitive (or supply-driven) in health care, in that the more there is, the more people will consume. This is true even if you add so-called mid-tier professionals like nurse practitioners or expand the prescribing franchise to more professionals (nurses and pharmacists). See Austin Frakt on this here. Basically, if you increase the number of clinicians available, demand will go up, and thus so will spending.

I agree in theory with Bob, that increased competition between service providers could be an answer. But there is competition between dentists (i.e., they advertise and their offices don't look like they're running an underground movement), yet prices for those services are hardly rational or competitive. The problem is partly one of occupational licencing (which I think Bob is getting at), but also a more problematic cultural or habitual one with regards to our expectations of health care. As I often say here, it does not achieve nearly as much for us as we think it does.

Delisting is problematic. Theoretically, a delisted procedure is no longer on the government's health care spending books. But many smaller delisted items end up on employee health plans, which is a whole other story in terms of fair pricing, public spending, and value-for-money. Besides, you couldn't delist enough to make a difference without huge upheaval, and I think it is a bad idea anyway.

There is too much gaming and fancy guesswork in so many attempts to control costs; consider the utter disaster of the $41-billion wait times reduction strategy (which, sadly, was not a political scandal). Past experience is that the only way to bring spending down is to cut services. The good news is that there are a lot of things that could be cut with minimal impact on the public's health.

It's tough to estimate the cost impacts of increasing med school enrolment without looking at how the med school grads distribute themselves among speciality residencies once they get their MDs. AFAIK (based on my experiences in my part of the country) there is very little direct federal or provincial government policy role in setting the number and distribution (among specialties) of residency positions. Governments generally leave university med schools alone to decide which residency programs they will offer (though accreditation factors into it), and how many residency positions they will offer in each specialty. In my province there are a number of serious, grumbling problems caused by the conflicting incentives/imperatives of university med schools, local health regions, and the various medical specialties. Only the provincial government has the authority to act to address these problems, but it doesn't want to touch them with a bargepole. The Ont. govt's. initiative re MD's salaries is the low-hanging fruit picking of this problem, and that fruit ain't that low or plentiful. But you have to start picking somewhere.

What I wonder when reading this is that in discussing health care costs and physician compensation we tend to talk about doctors costs in the abstract, without placing it in a micro context, and not really digging into the systems issues. Data like real per capita physician costs are interesting and important, but I have seen very little analysis of what the factors are that determine where physician dollars are actually spent, where there is overspending, where there is underspending, and what can be done about it. The responses I see look more like a hammer approach - to restrain costs, restrain procedure costs across the board, or some such response. I'm not sure that across the board cuts are the best way to do it (though it may be the only realistic possibility, I am willing to admit), but that seems to me to be a form of the "grandfather fallacy", in that current relative prices are crystalized, including for different specialties, and for the entire compensation model.

I noted that Minister Duncan, in his recent budget speech, mentioned that he couldn't justify spending on doctors where it meant taking the money out of the pocket of a single working mother. That seems to miss the point, a bit. I think the question has to be, what is the price of the quality and volume of services we want? I would note that the previous reactions, including clamping down on wage increases and cutting back on med school spots didn't make things better for anybody. Nobody seems to like wait times etc...

The sense I get is that the big gains will have to come from adjusting how the system works. One of those things is to adjust the way that billing and compensation works to reflect needs and to attract the right people to do the job. Along with cataract surgeries that were mentioned before, radiologists have seen a big rise in incomes ($6-700,000 in Ontario) because they can get a lot more done in shorter time periods due to technology, and the per procedure rate hasn't fallen. Not to mention that they can often read a scan at home now - beats running around the hospital all night, and in fact may be one of those compensating differentials that makes it more attractive to do the work, and in theory should lead to lower salaries. In fact, apparently there are many specialties (like radiology) where there are more doctors than jobs, but the prices aren't falling to deal with that market mismatch. At the same time, if non-market factors are being used, why pay a radiologist more than an emergency doctor that works overnight (and when working overnight, works 10 hours straight), gets spat on by patients, and has a high pace high stress jobs might require more money to compensate for the (de)compensating differential. (DISCLAIMER - my wife is an emergency doctor, so I am biased).

The spending doctors control is much more than their salaries. Going after utilization is needed to really cut medical spending.

Steve

Franco doctor immobility?
A specialist who sees me has worked in California and NS. Any Québécois who has gone through any high-level technical degree ( medecine, engineering, economics, finance,etc) is by definition bilingual and more mobile than most anglos. Regulatory matters apart, if a franco professional doesn't move, it's because he is homesick and our home is smaller. Like a Portuguese who won't move to Brazil.

Good article in the Globe and Mail that Ontario is directly targeting billing for cataract surgeries and radiology where technology has reduced costs and inflated pay. They are specifically going for the low-hanging fruit.

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