Physician Pay Inequity: Time to Act?
Lauren Eastman; Sukhy K Mahl; Shoo K Lee
Abstract
Canada’s primary health care system is in crisis, with increasing numbers of Canadians having difficulty accessing a family physician (FP). FPs form the backbone of our healthcare system and act as patient care coordinators and gatekeepers. In 2021, 4.7 million Canadians, or 14.5% of the population, aged 12 and over, did not have a primary care provider. Even more troubling are projections that the situation will worsen in the future. Between 2020 and 2022, the number of primary care network doctors in Alberta accepting new patients dropped by half. In 2022, the overall supply of FPs grew by only 1.2% versus 2.8% for specialists. A key issue underlying this problem is physician pay inequity. FPs are among the lowest paid physicians. In 2019, full-time specialists in Canada received 40% higher payments than FPs and the income gap continues to widen. This has led to fewer medical school graduates choosing family medicine as a career, reduced access to community-based FPs, and increased burden on hospital emergency rooms. Since the 1990s, provincial governments and medical associations have attempted to rectify this pay inequity, yet the problem continues to worsen. In this article, we discuss the significance of physician pay inequity, review provincial efforts to reduce these inequities, and provide policy options to resolve the problem.
Citation
Eastman, Lauren et al (2023). Physician Pay Inequity: Time to Act? Canadian Health Policy, DEC 2023. https://doi.org/10.54194/ZRBC8762; canadianhealthpolicy.com.
Authors
Lauren Eastman, BMSc, MD, CCFP, Family Physician; Assistant Professor and Assistant Program Director (Urban family medicine residency program), Department of Family Medicine, University of Alberta, Email: [email protected]
Sukhy K. Mahl, MBA; Assistant Director, MiCare Research Centre, Mount Sinai Hospital; Email: [email protected]
Shoo K. Lee, MBBS, FRCPC, PhD, DHC, OC; Professor Emeritus, University of Toronto; Honorary Staff Physician, Mount Sinai Hospital; Email: [email protected].
Funding statement
Although no specific funding has been received for this study, organizational support was provided by the Maternal-Infant Care Research Centre (MiCare) at Mount Sinai Hospital in Toronto, Ontario, Canada. MiCare is supported by a Canadian Institutes of Health Research (CIHR) Team Grant (CTP 87518) and the Ontario Ministry of Health. Dr. Eastman also receives an honorarium to sit on the College of Family Physicians of Canada Family Medicine Examination Committee. The funding agencies had no role in the design and conduct of the study; collection, management, analysis and interpretation of the data; preparation, review or approval of the manuscript; and decision to submit the manuscript for publication.
Publishing status
Peer reviewed. Submitted: 24 OCT 2023. Published: 15 DEC 2023.
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Introduction
Canada’s primary health care system is in crisis, with increasing numbers of Canadians having difficulty accessing a family physician (FP) (Jones, 2022). FPs form the backbone of our healthcare system and act as patient care coordinators and gatekeepers. In 2021, 4.7 million Canadians, or 14.5% of the population, aged 12 and over, did not have a primary care provider (Statistics Canada 2021). Even more troubling are projections that the situation will worsen in the future (Kumanan & Premji, 2022; Smart 2022). Between 2020 and 2022, the number of primary care network doctors in Alberta accepting new patients dropped by half (Lee, 2022). In 2022, the overall supply of FPs grew by only 1.2% versus 2.8% for specialists (CIHI 2022a).
A key issue underlying this problem is physician pay inequity. FPs are among the lowest paid physicians (CIHI 2022a). In 2019, full-time specialists in Canada received 40% higher payments than FPs and the income gap continues to widen (CIHI 2022a). This has led to fewer medical school graduates choosing family medicine as a career, reduced access to community-based FPs, and increased burden on hospital emergency rooms (Osborn et al. 2017; Van den Berg et al. 2015). Since the 1990s, provincial governments and medical associations have attempted to rectify this pay inequity, yet the problem continues to worsen (CIHI 2022a). In this article, we discuss the significance of physician pay inequity, review provincial efforts to reduce these inequities, and provide policy options to resolve the problem.
Is there a significant pay differential for physicians in Canada?
National pay differentials for physicians
In 2019-20, the average gross clinical payment per FTE was $331,000 for FPs, but $404,00 for medical specialists (MS) and $572,000 for surgical specialists (SS), and the gap continues to widen each year (CIHI 2022a). Between 1999 and 2020, the fee for service (FFS) pay differential between MS and FPs widened from 22% to 41%, while that between SS and FPs widened from 58% to 90% (CIHI 2022a). During the last five years, FPs’ average gross total payments increased by 4%, versus 5% for specialists (CIHI 2022a).
Although these payment data do not account for overheads, the differential between FPs and specialists persists when net income is considered (Petch et al., 2012). According to the CMA Physician Workforce Survey in 2017, 27.4% of the gross income of FPs went towards running their practice, versus 21.5% for specialists (CMA Physician Workforce Survey 2017). However, comparisons of average payments hide important sub-specialty level variation, with some sub-specialties earning more than twice the amount FPs do (Supplementary Figure 1).
Provincial pay differentials for physicians
There are also inter-provincial differences in physician payments and pay differentials (Supplementary Figure 2). Alberta and Saskatchewan do not provide the Canadian Institute for Health Information (CIHI) with total gross payment data (which includes both fee-for-service (FFS) and alternative payment plan (APP) funding).
However, even using FFS-only data in comparison to all other provinces’ total gross data indicates that Alberta’s physicians are higher paid than the national average for each of the 18 physician sections, other than neurosurgery, and 30% of Alberta’s physician sections made over $100,000 higher than the national average (CIHI 2022a). Saskatchewan and Manitoba also have higher payments than the national average for 15 of 18 physician sections (CIHI 2022a). Since FFS payments account for only 61% of total gross payments in Saskatchewan, the CIHI data are an underestimate of total physician payments (CIHI 2022a).
In contrast, the Atlantic provinces have some of the lowest payments per physician section in Canada, while Ontario pays close to the national average (CIHI 2022a). Supplementary Figure 2 depicts the highest and lowest paid physician sections in each province.
Has anything been done to address physician pay inequity?
Since the 1990s, many provinces have been working towards reducing physician pay inequity. Alberta and Ontario implemented their first new payment models to address equity in 2001 and 2003, respectively (AMA 2017; OMA 2018). Other provinces have also attempted to address pay equity, though little information is publicly available. In most cases, recommendations for new payment models or policies met fierce resistance from specialist physician sections and were not implemented (Fritz, 2017; Leslie, 2019).
What reforms have been attempted?
Alberta and Ontario developed models (Supplementary Table 1) to achieve fee-based relativity (i.e., equal pay for services with equal time requirements, intensity, complexity, risk and overhead costs), income-based relativity (i.e., equal pay for physicians with equal hours of work, overhead costs, length of training, etc.), or some combination of the two (AMA 2017; OMA 2018). These models were inspired by the “Resource-Based Relative Value Scale” (RBRVS) model in the US and meant to inform future physician pay agreements (Fritz, 2017).
The Ontario Medical Association (OMA) began developing relativity models in 1992 and implemented the Relative Value Implementation Committee (RVIC) and Comparison of Adjusted Net Daily Income (CANDI) models in 2003 and 2009 respectively, as tools to inform future physician pay negotiations (OMA 2018). In CANDI, each section is ranked according to adjusted net daily income (gross income adjusted for overhead, opportunity cost of training, training premiums and hours worked) (OMA 2018). The net daily income for each section is compared to the overall average for all physicians, with extra funding targeted to sections below the average (AMA 2017). Despite these changes, many members complained about persistent pay inequity, and in 2018, the Relativity Advisory Committee began work on the Fee Adjusted Income Relativity (FAIR) model (OMA 2019).
The Alberta Medical Association (AMA) began developing a model to recognize overhead costs, targeted funding for systems improvements and section funding based on a fixed amount per physician full time equivalent (FTE) in 2001, after a previous model was developed in 2000 but was never implemented (AMA 2017). The new model was implemented in 2002, and physician payments have since evolved to include intra-sectional relative values, priority funding for underfunded sections, changes to FTE calculations, individual fee review by the Physician’s Compensation Committee and schedule redevelopment; however, the redeveloped schedule has not yet been implemented (AMA 2015; AMA 2017; AMA 2020). The AMA agreement in 2022 attempted to address physician payment inequity by providing FPs with a higher increase in pay than other sections (Smith, 2022).
Leslie (2018) noted that other provinces have also developed models to address physician pay inequity. Yet many were not applied or only minimally applied, and publicly available information is limited. British Columbia has developed a number of pay equity models since the 1990s, but only the Modified Adjusted Net Daily Income (MANDI) model (similar to Ontario’s CANDI model) has been implemented. However, it is only applicable to pay increases of less than 0.5% per year, and consensus on future pay division among section heads is required for any larger pay increases (AMA 2017). In Nova Scotia, a 2018 report shows inconsistent income relativity gains (e.g., between 2011 and 2016, the gap between urology and FP compensation was reduced from 227% to 199%; however, that for ophthalmology increased from 240% to 278%) (Doctors of Nova Scotia 2018). Manitoba and Saskatchewan base relativity calculations on inter-provincial comparisons, reasoning that provincial relativity is more important than intra-provincial intersectional comparisons (AMA 2017).
Have reforms had any Impact?
Figure 1 shows the FFS-only and gross clinical payments (only available from 2014) trends for FPs, medical and surgical specialties in Canada from 1999-2020 (CIHI 2022a). Nationally, the pay inequity between FPs and specialists has continued to grow since 1999, irrespective of whether FFS-only or total gross payments are considered (CIHI 2022a). Supplementary Figure 3 shows that in all provinces, the payment gap between FPs and specialists continues to widen, especially for surgical specialties (CIHI 2022a). In Alberta, although the 2022 agreement attempted to address physician inequity, other changes implemented to FP pay (i.e., delisting complex care plans) meant that the overall increase was negligible (CIHI 2022a; Smith 2022). In Ontario, implementation of the RVIC model in 2003 similarly had no impact, but the CANDI model in 2009 appeared to slow growth in the payment gap (Supplementary figure 3; CIHI 2022a).
Why Haven’t Reforms Worked?
One reason is that the relativity models developed were only used to inform future payment increases, leaving current rates of pay unchanged. For example, if fees are increased each year by 1%, then the relativity models will only apply to the 1% pay increase. This approach will take an incredibly long time to achieve pay equity. Although some models proposed cuts to higher paying sections in order to achieve relativity in a timelier manner, they were never implemented due to push back from negatively impacted physician sections, who threatened legal action or separation from provincial associations to form their own negotiating bodies (Leslie, 2019). FPs often have minority representation on provincial medical association negotiating bodies, which reduces their effectiveness at advocacy. This raises serious questions about whether provincial medical associations are best placed to reform physician pay inequity. In addition, changes to the fee guides continue to favour proceduralists rather than cognitive service providers, further widening the gap by increasing the incentives to provide procedures (Leslie, 2016).
Has Pay Inequity Affected the Number of FPs in Canada?
In Canada, FPs comprise approximately 50% of all physicians (CIHI 2022b). However, over the past decade, the percentage of Canadian medical school residency applicants ranking family medicine as their first choice has fallen from 53% to 43%, and filled FP residency positions fell from 91% in 2013 to 84% in 2022 (CaRMS 2022). Vogel (2017) reported that in 2017, 68 Canadian medical graduates went unmatched, yet there were 64 unfilled residency positions, 56 of which were in FP. Osborn et al. (2017) reported that high income potential was an influential factor for career choice among 60% of fourth year Canadian medical students. To worsen the situation, many FPs are shifting from community-based practice towards better paying and less time-intensive positions as hospitalists, at walk-in clinics or specialized medical clinics such as sports medicine and emergency medicine (Hedden et al., 2020; Kabir et al., 2022). Horvey et al. (2022) reported that 73% of FP residents at the University of Alberta were interested in practicing clinic-based longitudinal care, however, when asked about their intentions in the next five years, that number had decreased to only 39%.
To address the shortage of FPs, the B.C. government recently announced a significant pay increase for FPs in an attempt to retain FPs and attract new ones. The average annual payment for FPs will increase from $250,000 to $385,000 – a 54% pay raise (Zavarise, 2023). The new system will take into account factors including time a doctor spends with a patient, the number of patients a doctor sees in a day, and the number of total patients a doctor supports through their office (Zavarise, 2023). Therefore, rather than rebalancing the physician “funding pie” to achieve greater equity, governments have resorted to growing the pie itself, causing further healthcare funding pressures on an already over-burdened healthcare system.
Policy Recommendations
Provincial medical associations have been unable to address physician pay inequity despite working on the issue for 30 years. This has significant negative consequences for both our primary care as well as the larger health care system and it is necessary for other actions. One option would be for government to impose a deadline for medical associations to implement a model that fully addresses current pay inequity instead of only future pay increases, or to appoint an independent commission to impose a binding settlement. To minimize hardship arising from payment re-allocations, the plan could be implemented in stages, beginning with new physician registrants and implementing the cuts over a number of years. Alternatively, the government can separate the primary care physician budget from all other specialists’ budgets. This will allow FPs to separately negotiate funding suited to their needs without conflict with other specialists. Primary care budgets can also be allocated regionally according to needs to improve regional access. Policy changes should be coordinated among provinces to avoid physicians relocating to better-paying provinces. The federal government can also motivate provinces to improve physician pay equity through the federal-provincial negotiations for renewal of federal health care funding transfers.
Figures & Tables
Figure 1: Fee for Service and Gross Clinical Payments for Family Medicine, Medical and Surgical Specialists per Physician in Canada (1999-2019)
Supplementary Figure 1: Canadian average gross clinical payments per physician (2019-2020)
Supplementary Figure 2: Provincial variation – highest and lowest paid specialties (2019-2020)
Supplementary Figure 3 (Series): Provincial Fee for Service and Gross Clinical Payments for Family Medicine, Medical and Surgical Specialists per Physician in Canada (1999-2020)
Supplementary Table 1: Development of new Payment Models in Alberta and Ontario
| Province | Commission/Committee | Model Used to Inform Future Pay? |
| Alberta: Reform Attempts | 1998 – 2000: The Relative Value Guide Commission | X |
| 2001 – 2010: The Fee Equity Committee | √ | |
| 2011 – 2018: The Physicians Compensation Committee | X | |
| 2020 – present: The Physicians Compensation Advisory Committee | In Progress | |
| Ontario: Reform Attempts | 1992-1997: OMA RBRVS Commission | X |
| 1997-2002: OMA & MOH RBRVS Commission | X | |
| 2003-2009: Relative Value Implementation Committee (RVIC) model | √ | |
| 2009-2018: Comparison of Adjusted Net Daily Income (CANDI model) | √ | |
| 2018- present: Relativity Advisory Committee (FAIR model) | In Progress | |
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