Not all physicians paid the same way

Letters to the Editor (The Guardian)
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Physicians who opt to work “fee-for-service” bill the government for each service they provide. They do not get a base salary and must pay staff out of their income. Contract physicians are paid by the hour to deliver clinical services and have restrictions placed on the number of hours they can bill.

Fee-for-service doctors pay for offices, staff, drug and pension plans out of their own income

In the April 23 Guardian there is a front page article reporting that the P.E.I. government paid Island doctors over $67 million on top of their already substantial salaries (inference taken). As one of those professionals at the upper end of the public service income scale, I feel a need to clarify a few points, but not before expressing my appreciation to the taxpayers of P.E.I. for affording me the opportunity to have practised my trade on the Island relatively free from financial worry, except of my own creation.

First, you need to understand that not all physicians are paid in the same manner. Fee-for-service physicians, who used to comprise the vast majority of Canadian physicians, are a slowly dying breed.

More and more physicians are opting to be paid through what are called “alternative pay” models. These include salary, capitation, contract and hybrid payment schemes. Currently, this alternative group receives 27.4 per cent of all physician compensation across Canada. And the percentage is higher in Atlantic Canada.

If you are interested, you can go online and read the 335 pages of the master agreement between the Medical Society and the P.E.I. government. This is the contract which spells out how physicians get paid.

Physicians who opt to work “fee-for-service” bill the government Medicare office for each service they provide (average cost per service is $39.85 for family physicians and $74.17 for specialists). If they provide on-call services to hospitals, nursing homes, correctional services or serve as coroners, they receive an additional daily on-call stipend which ranges from $30-$300 a day.

They do not receive a base salary, and they must pay for their offices and staff out of their own income. They do not receive any government health benefits, such as sick leave, paid vacation, pension plan, statutory holidays, drug or dental plans. They pay their own professional dues.

Contract physicians are paid by the hour to deliver clinical services and have restrictions placed on the number of hours they can bill. They also are eligible for on-call stipends and an additional annual workload incentive, currently calculated at 26 per cent of the amount they would have billed Medicare if they were fee-for-service.

This is intended to encourage contract and salaried physicians to optimize their workload efficiency. They do not receive any employer benefits. Salaried physicians get a base salary, which ranges from $144,000 for family physicians to $319,000 for oncology specialists. They also receive employer benefits, don’t pay office expenses and are eligible for the workload incentive and on-call stipends. Third party work can be extra-billed, as can after-hours on-call work.

The average gross clinical payment to Canadian physicians (before taxes and expenses) was $307,482 in 2010-11, ranging from $255,767 in P.E.I. to $349,655 in Alberta. Across the country, specialists, in general, earn more than family physicians, as fee schedules tend to reward high-volume specialties, such as ophthalmology, radiology and pathology.

Hospitals (29.2 per cent), drugs (15.9 per cent) and physician services (14.4 per cent) continue to be the major cost drivers for health care. Approximately 70 per cent of hospital costs are comprised of staff salaries.

The good news is that health-care spending, including payments to physicians, is slowing down across Canada. The percentage of gross domestic product spent on health care has dropped from 11.9 per cent in 2010 to 11.6 per cent in 2012.

I think it is extremely important that all Islanders understand how their tax dollars are being spent and hope that, in the future, articles on health care continue to be carefully researched and to reflect a balanced view of the bigger picture.



By Desmond Colohan (guest opinion)

Desmond Colohan is an Island physician with a keen interest in the development of responsible health care policy.

Organizations: Medical Society

Geographic location: P.E.I., Iceland, Atlantic Canada Alberta

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