[Edit Feb 26/20: For a visual overview that summarizes the urgent crisis facing Alberta family medicine as described in this article, please watch and share this short 3 minute video.]
To anyone paying attention, it’s clear that Alberta doctors are very upset about the provincial government’s recent announcement over changes in physician compensation. It can be a little confusing to see through all the political spin and bureaucratic jargon to know what exactly is going on. The details are not that complicated, and it is important for Albertans to understand this is not simply a case of highly paid professionals upset about earning a little less money; when inadequately executed, changes in health care funding can have dramatic effects on the day to day healthcare provided to you. There are a few important things to understand.
How are doctors paid and where does the money go?
Click here to read my more detailed explanation about how doctors are paid (including fee for service vs ARPs) and where the money goes. In summary:
- When the government “pays” doctors for care, the money is pre-expense and pre-tax business income, not a salary.
- Physicians working in a clinic tend to spend 30-40% of this payment on overhead to pay for rent, staff, equipment and other office expenses.
- Additionally, practicing as a physician requires multiple annual dues to various regulatory bodies to be allowed to practice medicine, maintain your certifications, keep up on mandatory continuing medical education, and holding expensive malpractice insurance. Annual totals can vary widely between specialties, but somewhere around $12,000 – $57,000 dollars per year is a reasonable estimate for most Alberta doctors.
- Medical education is an investment of at least 10 years of time and for some upwards of $300,000 in borrowings that needs to be repaid.
- Physicians receive no work benefits or pension, and need to budget for their own insurance, health expenses, time off, vacation time, and retirement savings.
- Physicians have a high demand, low supply skill set that commands a high market value. These skills are in demand everywhere, so if under-compensated, there are many options for work elsewhere.
- Physicians can and do earn a good living after a significant time and money investment, but are usually motivated by reasons other than money, as this career is not by any means a quick and easy path to wealth. It is worked hard for over a lifetime.
The information above is to help understand why when you hear that the average family doctor “earns $298,000” per year, it is not accurate to directly compare that to a generic salary in another field. When the government says they pay X amount to doctors, remember that this total includes (among other things) the salary and benefits of every single nurse, secretary and office assistant that works in any (non-AHS) physician clinic in the province. That includes almost all family medicine, walk-in and specialist clinics. These are all publicly funded private clinics, and that public funding comes under the umbrella of “doctor fees.”
Why does Alberta pay doctors more than in other provinces?
Part of the reason should be obvious when you understand the previous section. Clinic rents and employee salaries are on average higher in Alberta than elsewhere. To a run a business in Alberta costs a doctor more than in other provinces.
Another reason is that due to historically greater financial resources, Alberta could afford to pay more than other provinces, and intentionally did so to solve its physician shortage. These shortages stem from the Ralph Klein years of deep cuts to health care, which have taken the province almost a generation to recover from. Financial incentives to recruit and retain physicians have been central to the health care plan of Alberta governments for the last two decades. And it worked. The current government has cherry picked certain health indicators (like elective surgery wait times) to claim the province does not receive good value for its health expenditures (while ignoring the variable costs of doing business). However, in one of my last posts, you can see a long list of examples of terrible systemic health care problems faced by the rest of the country that have not been nearly as bad in Alberta. Does Alberta pay too much for health care or do other provinces not pay enough? The government frequently compares our spending to that of British Columbia. I’ve seen a lot of patients who left BC specifically because they could not get adequate and timely health care. If you know someone who lives there, ask them about it. Recent fee change discussions in BC have actually been using much of Alberta’s system as a model of a successful system to emulate in their future. Health care is expensive no matter how you pay for it, and each society needs to decide what it wants – shorter wait times for hip replacements, or adequate doctors to provide preventative primary care and enough space in the hospital for everyone who needs it.
What is the big deal with the government’s new compensation plan?
Negotiating physician compensation has always been a complicated back and forth of asks and concessions from both sides: the government needs to control its budget, and doctors need to make enough to have a viable practice, fund their education and future, and feel they are receiving enough value for their skills to stay in this province. Friction is inevitable. Despite this, agreements have always been made and honored before returning to the negotiation table when it was time for another. Budget restraints have been a reality for a few years, and the AMA has made concessions, and found millions of dollars of savings already by cutting and adjusting the fees paid to doctors. You can argue it has been too little and too slow for the current reality, and yes, it is a challenge to get 10,000 people to agree on who is going to take what pay cut, but there has been a collaborative process. Until now.
Late last year the UCP offered “proposals” to physicians outside of the AMA negotiations to cut a number of fees. The response was both an explanation from doctors as to why these ideas would not work, and an insistence that they be put in with the rest of the renewed negotiations. Meanwhile the Minister of Health, and several government health agencies began a social media campaign disparaging the value the province receives from physicians, including the usual misleading information about how much doctors “get paid” (gross billings). Eventually the government agreed to take negotiations into mediation (Jan 31), and declared it a failure on February 15, despite the AMA offering concessions to save over $150 million, and informing them they were working on others. On February 20th the government announced they were using the new powers they legislated to themselves last year to rip up the current agreement with doctors, and give themselves authority to unilaterally dictate physician compensation. They simultaneously rolled out their original proposals to go into effect on April 1. It is hard to believe they were ever negotiating in good faith, and the entire process appears to have been a sham with the intention to find an excuse to take over full control of physician payment.
Incredibly, at the same time they have offered (but only on Twitter) to give doctors the option to quickly sign up for a 3 year ARP (basically a complex fixed income arrangement – discussed here). The Minister tweeted a document that he claimed was sent to doctors the week prior (no physicians I know have received it), that included an out of service phone number to get more information. Those physicians who have tried to get more information have found little more than an answering machine (eventually) and some form letters implying that the details will be worked out later. No information has been passed on to the AMA’s ARP negotiation group that has helped establish all former ARPs. Who would sign an incomplete agreement with a government who just used its new power to break any legal contracts it is in and has been tweeting about how over paid you are? At the best of times ARPs result in doctors handing a great deal of control over their practice and income to the government, trusting them to honor the agreement with little recourse if they don’t. They are complex and require mutual respect and trust between both sides. It is unlikely this government will be successful at convincing many or even any physicians to give them that trust. The UCP’s negotiation efforts seem to have been all smoke and mirrors propaganda; used against a group who regularly hold frank life and death discussions with the people of Alberta.
In addition to fair pay, physicians have a vested interest that the health system works for our patients. We see them everyday, we care for them. We try to get them urgent care when they need it in a system that often makes it difficult. There’s a reason that health reform is a slow process. Politicians need to spend less and get more, managers have the pulse of day to day big picture business, and front line providers have the inside knowledge of how things really work, where the waste is, and what would work better. Collaborative efforts between these groups take time, but have always been the best way to reduce cost, increase efficiency, and improve health outcomes for patients. There are countless examples of this working well in Alberta and elsewhere.
The UCP government has never shown an interest in being collaborative. They have been adversarial from the start. It’s the government against doctors, against nurses, against all public employees. Patients are stuck in the middle. Anyone paid by taxpayers is a mooch on the system, and is the enemy of the current government. In an organization as large and complex as Alberta Health Services, and an expanded community health system that is even larger, how is that approach going to do anything but cause damage? Can the top down dictation by a handful of career lawyers and politicians make better decisions on healthcare than consultations with the experts? No one who works in the health care system wants it to fail or be financially unsustainable. But instead of inviting doctors, nurses and outside consultants to work with them to save the system, Premier Kenney and health minister Shandro have said we will tell you what to cut and what to change. We are not interested in your opinion. Does this approach make any business more successful? Or does it just drive people deep into their own silos, protecting their own livelihood, knowing they have no ability to improve or protect the whole? I would not buy stock in that company. It’s a recipe to destroy public health care, and maybe it is no accident.
The UCP’s new framework is an example of the incompetence this approach breeds, which I will explain next.
Third, this will immediately affect your health care.
While a number of fee cuts and physician benefit program reductions were just announced, the biggest, most short-sighted mistake is the decimation of family medicine time modifiers. When these codes were first introduced they were instrumental in giving Alberta one of the best “medical home” models of primary care in the world. It might be best explained in an allegory.
Imagine you are tasked with the upkeep of a large companies’ fleet of cars. Each requires regular maintenance to keep it out of the repair shop. You have a handful of mechanics who do this, and you pay them each $38 for a regular check up: change the oil, filters, top up fluids. Each mechanic takes about 10 minutes to do the basic work. It mostly works well, but as cars get older, some get more complicated and break down. When a car breaks down, it needs to be taken to the repair shop for urgent work. This costs $1000. If you’re lucky, it can be patched up and sent back to work. If not, it needs to stay in the shop for a week, usually costing about $8,000 for a full overhaul.
So you go to your mechanics and say “Hey, let’s keep cars out of the repair shop, it’s too expensive. I heard if you do a little extra work on them you can stop them from breaking down so often.”
Mechanic A says, “I tried to do that, but then I can only get 3-4 cars done an hour, I’d only make $1,216 a day at most, and it’s barely enough to cover expenses. Mechanic B over there only works on the easy newer cars, and whips through 6 an hour. He makes $1,824 and doesn’t help keep anything out of the shop. That’s not fair- I’d like to do quality work, but I can’t afford to.”
So you add in some money to encourage your mechanics to take a little extra time on those cars that need it. If they work on a car longer than 14 minutes, you pay them an extra $18 for every further 10 minutes they spend. Mechanic A is now happy to keep those older models running, and is making $1,648 a day, dealing with 1 simple and 3 complex cars every hour, as an extra 4-5 minutes is enough to deal with many of the extra problems. Mechanic B is still in it mostly for the money, hasn’t changed, and still makes about $1,824 on simple stuff. Others do a mix of both and make something in between. The mechanics willing to work on complex cars can now afford to do it, and you are saving a lot of money by sending fewer cars to the shop.
This is an exact allegory of primary care as it currently stands (or stood). Doctors are the mechanics and patients are the cars. A trip to the shop is an emergency department visit, and a prolonged stay is a hospital admission. The numbers are actual billing numbers, and estimates of the cost of average ER and hospital stays. Wise past negotiations have made it possible for good doctors who need and want to spend a little more time with their patients to do so, and run a financially viable practice. This revolutionized primary care in Alberta, making it possible to offer good care, and break out of the “10 minute medicine” paradigm that no one wants. Experts in medicine will tell you that every dollar spent on primary care saves many times its value in reduced ER hospital costs. We have an excellent primary care system due almost entirely to the existence of these fees.
To return to our allegory, what the UCP has just done is say: “You now don’t get paid that $18 extra unless you spend at least 25 minutes working on a car.” So if mechanic A keeps doing what he is doing, he will go back to being paid $1,216 a day. Maybe he will try to spend even more time on the needy cars, and see 2 each hour + 1 quick one, but that is only $1,200 a day. His only choice is to take a substantial pay cut, or return to mechanic B’s plan, and just do the bare minimum. He won’t be able to do the extra work needed to keep cars out of the shop very often, but can at least stay in business.
This is the sudden reality facing many Alberta doctors on April 1 who have built a practice on being able to spend 15-20 minutes with complex patients. Their average hourly business income will drop from $224 to $152 – a 30% decrease. Perhaps the government is encouraging them to spend even more time with complicated patients to get the bonus. Nope – doing that works out to $134 per hour when averaged over a day. This loss either comes out of their take home income, or their overhead – firing clinic staff. For most clinics there are only 2 viable solutions – return to 10 minute appointments (which will cost the government MORE per hour than they are currently paying) or close up shop. In musings on worried physician discussion groups on social media, I have seen doctors already making plans for both.
It’s not hard to see the insanity of this “solution.” The change is a clear incentive to spend less time with patients- to return to a model that provides inferior primary care, will result in sicker people making more visits to the ER, needing more hospital admissions and will ironically increase physician expense in both primary care and the much more expensive hospital care. This is only one example of the unintended (presumably) consequences that will stem out of one ill conceived change. Other initiatives announced at the same time will almost certainly impact front line care. The loss of stipends (bonuses) for being on call means specialists will need to book clinics or surgery at the same time they are on call. This will delay specialist consults in emergency departments and hospital units by hours, further compounding the problem of hospital and ER overcrowding. Wait times will rise. The loss of stipends in rural areas may lead to complete loss of emergency and/or hospital coverage in some communities. Deep cuts to AMA liability support programs risk making some obstetrics practices unsustainable because of the enormous insurance cost, especially for rural physicians. None of these payments were initially established without a good reason, and ignorantly eliminating them will dramatically affect front line care. This is why politicians should not vote themselves the power to make uninformed health care decisions all by themselves.
What can I do about it?
Please contact your MLA, Premier Kenney, and the Minister of Health. Insist they return to the bargaining table with doctors to negotiate a stable and fair deal. There is still money to save, but they are proving themselves not experienced or competent enough to do it without making short sighted decisions that will cause irrevocable damage to the health care system, and increase the very costs they are trying to cut. Consult with health care workers and they will show you more ways money can be saved – if they feel they can trust you. Do it genuinely, not with meaningless AHS “surveys” incapable of collecting information useful for anything beyond propagating a pre-determined agenda. Work with doctors and nurses instead of against them. If there is no acceptable way to lower costs enough to balance the budget, stop ignoring government revenue as a factor in the equation. Canadians are proud of their equitable health care system, and Alberta probably has the best one in the country. Don’t go down in history as the government that destroyed it.
[EDIT Feb 27/20: Please see this followup post for a brief snapshot of the impact of these changes on Alberta physicians just one week later as they struggle to find a way to continue practicing good medicine under a fast approaching deadline.]
[EDIT: Please sign and share this change.org petition asking the Minister of Health to return to the negotiating table with doctors to find sustainable health care savings that won’t decimate Alberta’s health care system.]
Minister of Health: Tyler Shandro
423 Legislature Building
10800 – 97 Avenue NW
Canada T5K 2B6
Premier Jason Kenney
307 Legislature Building
10800 – 97 Avenue