How to Fix Canada’s Unemployed Doctor Problem

By C.D. Howe Institute —— Bio and Archives February 5, 2015

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Toronto, – Canadian healthcare is facing a paradox: recently graduated specialist physicians struggle to find work, even as Canadians report long wait times for their services, says a report released today by the C.D. Howe Institute. In “Doctors without Hospitals: What to do about Specialists Who Can’t Find Work,” authors Åke Blomqvist, Colin Busby, Aaron Jacobs, and William Falk find that if policymakers do not shift course, the problem could worsen, resulting in a significant underutilization of resources, and even outmigration of Canadian-trained specialists.

“One reason for this paradox is the two-silo approach that pays specialists and hospitals out of different funding envelopes,” says Blomqvist. “Specialists are paid on a fee-for-service basis by provincial insurance plans, not by the hospitals where they work, whereas hospitals are given fixed budgets by the province” he adds. The current funding arrangements between health ministries and hospitals create different incentives. A fee-schedule encourages specialists to work more but hospital revenue does not increase with the number of procedures their doctors perform. The result is that the budgets given to hospitals restrict the resources available to doctors who need operating room time and staff. According to Busby, “this causes an inefficient allocation of resources and labour slack among specialists, as well as other health professionals, despite implicitly high demand for their services.” The report recommends five solutions to Canada’s healthcare paradox:

1. Change funding rules by bundling payment streams for hospitals and hospital-based specialists.
2. Give hospitals the authority to allocate access to operating rooms and the budget to contract with specialists.
3. Partially finance hospitals according to the volume and outcomes of services provided.
4. Pay specialists a share of what the hospitals were paid per procedure, by salary, or some combination of the two.
5. Establish a transition plan to for a new model for bargaining with specialists, which would set a range around current fee schedules – both a floor and a ceiling – in which hospitals could contract with doctors.

“We need more flexibility in how we determine prices and budgets in negotiations between governments and providers,” state the authors. “Giving hospitals the budgets and authority to contract for specialist physician services could be a first step toward a more flexible approach, which should be good for specialists without work and for hospital performance.” For the report, click here: