Public spending on physicians has become the fastest-growing expense to Canada's health-care system, a trend sparking growing calls for an overhaul to the payment system for doctors.
The findings are contained in a new report released Thursday by the Canadian Institute for Health Information, which also found drug costs are eating up an increasing portion of Canada's health-care budget.
The report provides a stark glimpse of the future of Canada's health-care system in a world where recessionary forces are squeezing hospital budgets but demand from an aging population for doctors and prescription drugs is only just beginning to ramp up.
These challenges are set to take on critical significance in coming months and years as governments across Canada start negotiating a new health accord, which determines the federal-provincial funding arrangement. The current accord is set to expire in 2014.
The report predicts overall health-care spending will hit $192-billion this year, or $5,614 a person, a rise of less than two per cent after adjusting for inflation and population growth. While it's the slowest growth rate in 13 years, health-care spending has been steadily accounting for a larger portion of Canada's gross domestic product in the past decade, reaching nearly 12 per cent this year.
In Canada, physicians are paid predominantly through a fee-for-service model, or payment for each service performed. Although it has led to what some consider a more equitable reimbursement system for the intense workload of doctors, growing evidence suggests it is emphasizing quantity of patients seen and services performed over quality of care.
"The system that we have in Canada incentivizes volumes," said Stirling Bryan, director of the Centre for Clinical Epidemiology and Evaluation at Vancouver Coastal Health Research Institute.
The growth of health-care spending dedicated to doctors has outpaced that on hospitals and drugs in Canada for the past four years, according to the report. In 2010, physician spending is expected to rise to more than $26-billion, an increase of seven per cent from last year.
Dr. Bryan said the figures demonstrate spending on physicians is threatening to spiral out of control while potentially eroding patient care. Doctors are paid for each consultation they provide or surgery they perform, which provides a perverse incentive to do more even when it may not be warranted, he said.
"What is the quality that we're getting for the volumes we're delivering?" said Dr. Bryan, who is also a professor in the School of Population and Public Health at the University of British Columbia. "Are we doing surgeries on people who might not need surgery? The incentive is to do the surgery, not necessarily to do the surgery on the person who really needs the surgery."
He said Canada urgently needs a "fundamental reassessment" of the fee system and to ask tough questions about the type of care being delivered.
The steady escalation of physician spending will add to calls urging an overhaul of the fee-for-service model. A report from economists at Toronto-Dominion Bank earlier this year concluded that public health care as Canadians know it is unsustainable without profound changes. Ontario Health Minister Deb Matthews responded to the report by warning doctors that she plans to pay more on salaries, replacing, in the process, a fee-for-service compensation system that has been in place for more than four decades.
Part of the growth in physician billings comes from the fact that there are more doctors. In Ontario, the McGuinty government has helped one million more people find a doctor since 2003, said a spokesman for Ms. Matthews. The government announced on Thursday that the province is creating 75 new residency positions in the province's medical schools.
A report released in September from the Organization for Economic Cooperation and Development said Canada's health-care system is in a financial crisis and recommended overhauling the fee-for-service model as one of the primary solutions.
Drug spending in Canada is also steadily escalating and is expected to reach more than $31-billion this year, an increase of about five per cent from last year. A majority of the cost is attributed to prescription drugs, and more than half of all prescribed and non-prescribed drugs were paid for out-of-pocket or by insurance companies.
There have been heated debates in recent years over how to control drug costs with some headway being made, mainly due to the fact many pricey blockbuster drugs can now be made more cheaply as generics. But many drugs purchased in Canada are still far too expensive, according to Dr. Bryon, with no system in place to guarantee they are even effective for patients. Research indicates that many new, expensive drugs don't perform any better than their cheaper, generic counterparts.
A report released in September by the Canadian Centre for Policy Alternatives called for a national drug plan, saying it could shave nearly $11-billion from Canada's drug bill by introducing a comprehensive system for reviewing drugs and negotiating prices.
Federal Health Minister Leona Aglukkaq said in a statement the government is committed to a publicly funded system but that it supports "a flexible and sustainable system that allows for innovation and reform" within the Canada Health Act.
With a report from Karen Howlett