The Economic Letter, April 4th by David Bond

Column April 4, 2010
Last week I wrote about the cost and financing of hospitals. This week I will discuss two issues involving healthcare practitioners: their numbers and how they are paid.
The average family doctor spends 20 years gaining an education to become a physician. Two more years of internship and residency are usually necessary before the person can actually open a practice. Specialists, of course, require additional years of training. It is the rare individual who has not incurred a ton of debt along the way.

Given the commitment of time and money, it’s a wonder that anyone wants to enter the profession. Consider that the income the newly- minted doctor can earn is determined by how many patients they see in a given day, and the rate at which they are paid bears little connection to how effective they are in keeping their patients healthy or how experienced or inexperienced they are. You might well ask why would anyone voluntarily take on this task unless they love the work?

Moreover, policy action taken more than two decades ago deliberately reduced the number of physicians that were allowed to enter the profession in Canada. The motivation was to constrain costs. Two decades later after having implemented this absurd policy we have the lowest ratio of doctors per 1000 of population of any G8 nation.

This manufactured shortage combined with two decades of cost controls have resulted in low morale, tense labour relations with provincial authorities and rigid defense of existing roles. Moreover, many physicians are seeking alternative income sources outside the government-funded envelope, for example, cosmetic procedures. That, in effect, further reduces the supply of physician services.

Furthermore, to that the changing attitudes towards retirement, career planning, and the shifting gender composition of the supply of physicians (women now constitute almost 50% of licensed practioners) are constraining the supply of trained people. In smaller communities there is an acute shortage of doctors and even in major urban centers finding a family physician is too often a hopeless task.

While the policy of reducing the number of spaces in medical schools has been discontinued, making up for lost training does not happen overnight. Four years of med school are required and the cost for educating each student each year runs into the tens of thousands of dollars.

One short-term solution would be to allow foreign trained doctors to practice in Canada but accepting foreign credentials is a tricky business and the self-regulating medical licensing bodies have been less than enthusiastic about opening the gates. Also, one should ask if one of the world’s richest nations should rely upon poorer nations to provide us with these highly trained and skilled personnel because of our misguided policies?
The other critical question is how should doctors be paid. The existing system of fee-for-service means a physician’s income is determined by how many patients they see in a given time period. Many believe this system, especially for general practitioners, provides the wrong incentives. Taking extra time to deal with a patient whose health issues are complex is expensive in terms of foregone income for the doctor since the “service” has a fixed fee unrelated to time taken. And using, for example, a nurse practitioner to aid in the delivery of services may involve excessive paperwork or may be forbidden under the existing provincial administrations.
Alternative approaches need to be considered and tested. We have to find a way of rewarding the management of complex health problems, not just volume. In doing this several factors should to be balanced, including the quality of the outcome, seniority and experience, and some way of allocating responsibility within and across health professions.

David Dodge, the former Governor of the Bank of Canada and prior to that the federal government’s Deputy Minister of Health has stated that the current system is unsustainable in the long-run. He has called for an “adult”, (non-emotion-charged) discussion on the problems and alternative ways of resolving them. Under current circumstances there seems little if any possibility of that occurring and that is a real tragedy

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