Changing how we pay doctors doesn't guarantee better care

Economic theory and common sense tell us that financial incentives influence people’s behavior. This is as true for the local barber as it is for doctors. Although some may believe in the romantic fallacy that doctors are altruistic actors, or bound to act in favor of their patients by the Hippocratic Oath, empirical evidence shows us that they too, are influenced by money.

Therefore, it’s important that the economic incentives created by physician payment methods are aligned with the wishes of Canadians, but also objectively scrutinized for their potential unintended consequences. That said, it is wrong to assume that simply adjusting physician payment methods will allow governments to fix the self-inflicted predicament of a Canada’s doctor shortage.

In Quebec, where 25 per cent of the province’s population aged 12 and older does not have a regular family doctor (compared to 15.2 per cent nationally), general practitioners are being offered financial incentives through bonuses to take on more patients. The provincial government is offering doctors $340 million in bonuses and incentives to accept new patients and work more hours, with the aim of increasing access for Quebecers. The proposed deal would give doctors $100 for every new patient added to their roster and each GP would receive bonus payments for working additional days.

It is important to recognize that altering physician payment methods will not necessarily resolve the lack of access to GP services. In fact, the wrong payment system could actually worsen the problem because, people, when faced with modifications in incentives, change their behavior in order to maximize their return under the new ‘rules of the game.’ And the result might differ from what policy-makers intended.  

For example, consider the results of Ontario’s introduction of a capitation model for physician funding in 2001, where doctors are paid based on the number of patients on their roster, not on how many times a patient is seen or how much time a doctor spends with their patients. The objective was to save money and increase physician service-levels, thus reducing the number of people without a regular family doctor. The real outcome was something different.

Economic theory suggests that this type of funding creates incentives for providers to under-serve patients as they are not remunerated for the volume of services provided, and encourages physicians to add younger healthier patients to their rosters over those that actually need medical care. Since physicians are paid an annual fee per patient, regardless of the time and volume spent treating patients, there is an incentive to work less – not more.

And that’s almost exactly what happened in Ontario. While the number of patients without a family doctor decreased slightly following the change in payment systems, access for patients who required medical care did not improve. A 2009 study by Glazier and colleagues found that Ontario GPs paid a flat annual fee based on a patient roster (capitation) had fewer sick patients, higher rates of patient use of emergency departments, enrolled fewer new patients, and provided less after-hours care compared to those that were paid according to volume of service and quality of care (fee-for-service). Instead of increasing access and saving money, Ontario’s capitation model arguably made sicker patients worse-off.

While it is encouraging that the government of Quebec is attempting to increase access to primary health care providers, the best way to achieve this goal is to increase the supply of Canadian physicians. First, training of Canadian students must be increased. Further, provinces should take advantage of the vast number of foreign-trained doctors living in Canada who may be able to increase the physician supply in the near term. However, while foreign-trained doctors should be free to train and become practitioners in Canada, governments should not be providing financial support for their training.

Though the province of Quebec is not replicating the mistakes that were made in Ontario by implementing a pure capitation model (the proposal includes a fee-for-service incentive for working extra hours), providing bonus payments for registering patients will likely result in the same experience as Ontario.

The provincial government should tread cautiously, with the knowledge that introducing bonuses based on patient rosters instead of simply focusing on fee-for-service will not necessarily encourage an increase in the volume of services – which is key in reducing wait times and ultimately increasing access for patients who require medical care. Simply modifying physician payment methods, and more specifically moving away from a fee-for-service model, will likely only exacerbate Canada’s doctor shortage.