Fee-Schedule Increases in Canada: Implication for Service Volumes Among Family and Specialist Physicians
Journal of Health and Human Services Administration, Vol. 38, no. 3, 2015
Posted: 17 Jul 2014 Last revised: 1 Feb 2016
Date Written: 2013
Physician spending has substantially increased over the last few years in Canada to reach $27.4 billion in 2010. Total clinical payment to physicians has grown at an average annual rate of 7.6% from 2004 to 2010. The key policy question is whether or not this additional money has bought more physician services. Using data from the National Physician Database for the period 2004-2010, this paper breaks down growth in physician remuneration into growth in unit cost and number of services to understand if we are paying more for the same amount of services or we are getting more bang for our buck. After removing general inflation and population growth from the 7.6% growth in total clinical payment, we found that real payment per service and volume of services per capita grew at an average annual rate of 3.1% and 1.4% respectively, suggesting that payment per service was the main cost driver of physician remuneration. Taking the payer perspective, it was found that, for the fee-for-service (FFS) scheme, volume of services per physician decreased at an average annual rate of -0.6%, which is a crude indicator that labour productivity of FFS physicians has fallen during the period. The decline in volume of visits/consultations per physician was -0.8%. However, the situation differs for the surgical procedures where labour productivity has increased on average at 2.1% per year. This finding is consistent with the Baumol theory, which hypothesizes higher productivity growth in technology-driven sectors.
Keywords: Physician Remuneration; Service Volume; Labour Productivity; Public Policy
JEL Classification: I11, I18, J33, J38, J44, J50
Suggested Citation: Suggested Citation