Fee-for-Service: Cashing in on the Canadian Medical Care System GEOFFREY YORK GUEST EDITORIAL rdg>g N a typical day, 8o to go patients would troop through O c} Dr. Smith's office in rural Manitoba. The doctor was a busy man, and he ran his office like a factory assembly line. After spending a few minutes with each patient, he usually handed out a prescription for a sedative or > s* another narcotic. Then he sent the patient away. A prescription was the quickest and easiest way to end the appointment. And it was what the patient expected -the promise of an instant cure. But then something wvent wrong. Within the space of a few months, two of Smith's patients killed themselves. In each case, they committed suicide just a few days after visiting the doctor. Because of Smith's revolving-door style of practice, he had failed to spot the signs of emotional turmoil in the two patients. His patients needed therapy or counselling something that could not be provided by a physician who saw go patients in a single day. After the suicides, Smith (not his real name) was investigated by the Manitoba College of Physicians and Surgeons. In the spring of I989, the college revoked his right to prescribe narcotics, and he was ordered to limit his practice to 50 patients a day. Smith's style of practice is increasingly common in the Canadian health care system. In I988, the assistant auditor-general of Quebec reported that some doctors were submitting bills for more than I 85 procedures in a single day. According to a survey in i 98, more than 38 per cent of Canadian physicians believe that "revolving-door medicine" is a serious problem. Dr. Gustave Gingras, a former president of the Canadian Medical Association, has described the national health care system as "a monstrous and gigantic sick parade, where hundreds of people are being pushed through, each given seven-and-a-half minutes and no more..." I40 Palgrave Macmillan is collaborating with JSTOR to digitize, preserve, and extend access to Journal of Public Health Policy www.jstor.org
YORK * FEE-FOR-SERVICE: CANADIAN MEDICAL CARE I4I There can be little doubt that the fee-for-service system is the biggest single reason for the "sick parade." More than go per cent of Canada's physicians are paid for by the fee-for-service system, which gives them a guaranteed fee for every medical task they perform. In effect, the system gives doctors a strong financial incentive to provide as many medical services as possible. Their income is directly determined by the number of medical services (and therefore patients) they can crowd into a typical day. In I985, an article in the Canadian Medical Association Journal acknowledged that the fee-for-service system is actually a "fee-for-income" system. "The physician is challenged to augment his or her income by increasing the volume rather than the quality of services," the article said. It admitted that the physician's daily decisions are often determined by his desire for "income generation" rather than a desire to serve the needs of the patient. The cost to the taxpayer is tremendous. By encouraging doctors to provide unnecessary services, the fee-for-service system is wasting billions of tax dollars each year. Health economists have estimated, for example, that one-third of all elective surgery in Canada is unnecessary. The number of medical services per patient has doubled in the past zo years and the consumption of prescription drugs is skyrocketing. As a result, health care is the largest and fastest-growing item in the budgets of our provincial governments. Within a decade, it could consume 40 to 50 per cent of provincial spending. Medicare already costs one-third of the budgets of most provinces. But the cost to the health of the patient is even more frightening. The fee-for-service system has encourage doctors to "medicalize" the problems of every patient they see. An estimated 50 to 8o per cent of all patients who visit a family physician are not suffering from any medical ailment. They are simply bearing the psychological wounds of stress, anxiety, depression, hypochondria or a variety of other psychosomatic disorders. The fee-for-service system gives doctors an incentive to treat these patients with medical remedies-especially prescription drugs, which require patients to keep returning to the doctor for further checkups and prescription renewals. The result is an endless cycle of illness and dependence-the "sick parade." Yet there is a practical alternative to this epidemic of needless medical intervention. Consider a typical day at the Group Health Centre in Sault Ste. Marie in northern Ontario. The centre's annual budget is divided
I42 JOURNAL OF PUBLIC HEALTH POLICY - SUMMER I992 among a variety of health professionals, including nurses and doctors, who receive a fixed salary. The physicians can afford to ignore the dictates of the fee-for-service system, since their income is not influenced by the number of patients they handle. On a typical day, a dozen patients visit the emergency ward at the health centre-and the majority are treated by nurses. Only the more complicated cases are sent to the doctors, who consequently can afford to spend longer with each patient. Elsewhere at the health centre, nurse practitioners are giving counselling to patients who need advice on premenstrual stress, birth control, obesity or other conditions. Some patients are referred to social workers or therapists for counselling on depression or anxiety disorders. A patient can spend 30 minutes or an hour with an experienced counsellor. As a result, patients at the health centre have reduced their consumption of mood-altering drugs by as much as 6z per cent, and they have reduced their visits to doctors by as much as 40 per cent. Community health centres, employing salaried doctors and other professionals, have a proven record of success. They benefit both the taxpayer (by keeping their costs about I 5 to zo per cent lower than the cost of fee-for-service doctors) and the patient (by allowing the patient to spend more time with a health professional, gaining advice and counselling on preventive medicine). Yet despite their obvious advantages, the growth of community health centres has been severely limited in Canada. For example, only two per cent of Ontario's population is served by salaried doctors at community health centres and health service organizations. There is enormous potential in the concept of the salaried system. Patients enjoy the luxury of spending more time with a doctor or nurse. Their biggest complaint about the fee-for-service system is the frustration of being ushered out of a doctor's office before they can ask all of the questions that are troubling them. A survey in Ontario in I986 found that 39 per cent of patients felt they were receiving insufficient information from their doctors. Many patients are receptive to the notion of salaried doctors. For example, a survey in I989 discovered that 41 per cent of Saskatchewan residents were in favor of salaries for doctors, even though the vast majority of the province's residents have had no experience with salaried doctors (because there are only four community health centres in the entire province). It is unrealistic to think that a system of salaried health professionals could completely replace the fee-for-service system. Yet a strengthening
YORK * FEE-FOR-SERVICE: CANADIAN MEDICAL CARE I43 of Canada's fragile network of community health centres could provide some valuable competition to the fee-for-service system, which currently enjoys a monopoly in most provinces. Monopolies tend to be inefficient, and this is certainly true of the fee-for-service system. Competition and freedom of choice would allow the salaried system to display its advantages. If patients were given a choice of a five-minute appointment with a harried doctor in solo practice, or a 30-minute session with a nurse practitioner who can give useful advice on healthy lifestyles and stress reduction, it seems certain that a large percentage of patients would choose the salaried system. This, in turn, would force the fee-for-service doctor to spend longer with his patients -or risk losing them. Meanwhile, from the perspective of the taxpayer, the growth of the salaried system must be encouraged. It has become obvious that the fee-for-service system has allowed doctors to generate unnecessary expenses. For the past zo years, the number of physicians in Canada has increased at triple the rate of population growth, yet each doctor has continued to provide a steady volume of medical services. As a result, the average patient is saturated with diagnostic tests, check-ups, follow-up visits, hospital services, and other medical procedures. When medical fees are frozen, doctors simply increase the volume of their billings to maintain the annual increase in their incomes. Health economists have found that there is no limit to the number of medical services that could be provided by the growing number of doctors. Only by altering the financial incentives (and curbing the growth of doctors) can the rising health costs be arrested. We cannot expect doctors to ignore the economic incentives that are built into the fee-for-service system. Governments are beginning to recognize the need to support alternatives to the fee-for-service model. In Ontario, the provincial government is launching an ambitious program of Comprehensive Health Organizations (similar to community health centres) that would abandon the fee-for-service system. The government is hoping to persuade I 5 per cent of Ontario's residents to join the CHO network within io years. It calculates that it could save $3o-million annually if just io per cent of the population joined the CHOs. In British Columbia, the provincial government is using salaried doctors and community health centres to try to reduce the cost of health care in Victoria, where a large surplus of fee-for-service doctors has sent costs soaring. And in Quebec, more than i 6o community health centres (known as CLSCs) with salaried doctors have been operating successfully since the I970s.
144 JOURNAL OF PUBLIC HEALTH POLICY * SUMMER 1992 Other innovative ideas are now being discussed. One of the most intriguing proposals has come from a group of nurses in Saskatchewan. They have suggested a network of clinics staffed by salaried nurses who would provide specialized health services for children, senior citizens and women. Patients could visit the clinics without a referral from a doctor. The nurses would provide counselling, nutrition programs, health assessments, screening for high-risk pregnancies and other services. Because the clinics would not require the services of a doctor, they would be much cheaper than a normal medical dinic. The proposal has already earned praise from the director of a Saskatchewan inquiry into the provincial health care system, who said the concept of nurse-run clinics is worth "serious consideration." Canada's medical associations, the chief lobbyists for the medical profession, are fighting aggressively to block the growth of the salaried health care system. They issue a steady stream of warnings and gloomy predictions, clearly designed to frighten the public. The Canadian Medical Association alleges that an increase in the number of salaried doctors would "decrease their ability to serve as the patient's advocate." The Saskatchewan Medical Association predicts that the salaried system would encourage the rationing of health services. The Manitoba Medical Association claims that "patients can be refused necessary care" as a result of the salaried system. The dire warnings of organized medicine are blatantly misleading. There is nothing in the salaried system that would prevent doctors from acting as the patient's advocate. And it is simply inaccurate to suggest that the salaried system will lead to a rationing of medical services or neglect of patients. Studies in Canada and the United States have consistently shown that community health centers and similar alternative systems are providing all of the health services their patients need. Indeed, some studies have shown that the quality of health services in the salaried system is superior to the quality in the fee-for-service system- largely because the salarie doctors are more likely to provide better counselling and fewer prescription drugs for their patients. One of the most absurd examples of organized medicine's battle against the salaried system can be found in Alberta. In I989, when the provincial government agreed to finance a new clinic specializing in sexual health for teenagers in Red Deer, there was a furious reaction from the Alberta Medical Association. The clinic was limited to basic services and educational programs, such as pregnancy testing, the supply of con-
YORK - FEE-FOR-SERVICE: CANADIAN MEDICAL CARE I45 traceptive devices, abortion referrals and screening for sexually tranmitted diseases. Yet the president of the medical association immediately attacked the clinic. He complained that the clinic was unnecessary and "unfair competition" for private physicians. Community health centres and other elements of the salaried system will continue to be advanced in the future-because they make sense for the taxpayer and the patient. However, by challenging the fee-for-service monopoly, they threaten the doctor's ability to control his income and generate new sources of revenue. The medical associations, therefore, will continue to fight against the salaried model. The political power of organized medicine should not be underestimated. Despite their loss in the famous Ontario doctors' strike of I986, the medical associations continue to win the vast majority of the behind-the-scenes struggles with provincial governments. Nobody should assume that the logical merits of the salaried system will overcome the political skills of organized medicine. Acknowledgment: This guest editorial is based on an article which appeared in the November I989 issue of the Canadian Pharmaceutical Journal.