Doctors buy into deal to slow health costs

A new deal aimed at slowing the growth of health costs will see Alberta’s doctors risk losing some of their pay while helping the province develop a plan to control the influx of new physicians into the system.

Reforms to how family doctors can be paid and other innovations are also featured in the complex agreement, details of which were shared with Postmedia ahead of a signing ceremony Wednesday between the NDP government and the Alberta Medical Association.

Heath Minister Sarah Hoffman said Tuesday the deal helps forge a new relationship with the province’s 10,000-plus physicians, in which both sides will share responsibility for cooling an increasingly expensive health budget threatening to overwhelm the cash-strapped province.

“Both parties acknowledge that being good stewards of the health-care system is a shared responsibility,” Hoffman said. “They acknowledge we have some struggles, particularly when it comes to sustainability.”

The deal was ratified with 74-per-cent support of AMA members last month, though full details of the agreement have not been released until this week.

Known as an “amending agreement,” it revises the terms of the final two years of a seven-year compensation pact with the AMA that is set to end in 2018.

Hoffman said the province couldn’t afford to wait until the agreement expires to take steps to control physician-based costs, which jumped almost eight per cent in 2014-15, and around nine per cent last year to well over $4 billion.

Hikes to doctors’ fees and population increases explain some of the recent increases. But the province has been most alarmed by a rise in so-called “utilization” costs, in which a growing workforce of doctors is providing services beyond what should be needed by the increase in population.

Hoffman said much of the new agreement is aimed at this trend, with the goal to reduce annual growth of physician services costs to between three and five per cent.

As part of the strategy, doctors have agreed to help the government control utilization costs and will lose some of their pay if the effort isn’t successful.

For the current 2016-17 fiscal year, doctors are risking their retention benefit, a sum paid to them each year as an incentive to stay in the province. Depending on years of service, the benefit is worth between $5,000 and $12,000 each, which the province says adds up to $74 million annually.

Doctors will forgo all or part of this benefit if, at year end, the actual costs for physician compensation wind up exceeding a pre-determined amount the government is willing to make available.

In the 2018-17 year, doctors will again risk their retention benefit, along with a cost of living increase they are due. That cost of living hike is projected to be worth about $4,000 to the average physicians.

All told, an average physician could lose between $14,000 and $28,000 over the next two years if costs greatly exceed the predetermined funding levels.

Alberta doctors recorded an average gross income of $365,765 last year, which represents payments received ahead of any overhead costs.

AMA president Dr. Padraic Carr said his organization made the deal, in part, due to recognition of the financial struggles of the province. Though doctors are risking a portion of their pay, the return is a bigger role in making the system sustainable, he said.

“With a risk-sharing model comes increased responsibility and I think that’s something doctors are keen to take on. They want to have more say in the system and how it’s run.”

He said the retention benefit is set to expire anyway after 2018.

The new deal includes a number of initiatives the province and doctors will work on together to reduce utilization costs.

Included is a peer review process — expected to save $55 million over two years — in which experienced physicians will educate other doctors to avoid billings that may not be appropriate.

Doctors will also be encouraged to exercise more caution when ordering tests, referrals and other services that may have little benefit to patients. As well, the deal calls for the development of a new optional compensation model for family doctors.