Winnipeg Free Press - PRINT EDITION

Ontario leads way with MD pay cuts

  • Print

TORONTO -- The Ontario government has promised to reduce its $16-billion deficit substantially over the next few years, and tackling health-care cost growth has to be part of the solution. When the minister of health ended discussions with the Ontario Medical Association and imposed fee cuts and freezes for Ontario physicians, she signalled where reducing Ontario's health-care costs needs to begin.

Premier Dalton McGuinty has asked other provinces to consider following Ontario's lead, and they are watching Ontario to see whether reducing health care costs in this way is politically possible.

In response, the Canadian Medical Association has speculated doctors may move to jurisdictions where physician earnings are on the rise, and wait times in Ontario might increase as a result of the cuts.

While there has been considerable discussion of a cap on spending on physician remuneration, the government has not actually implemented a cap on the Ontario Health Insurance Plan budget and is not looking to reduce the number of services provided. It has simply reduced or, in most cases, not increased the fees paid for those services. The $338-million of targeted cuts (which the province notes is likely to be reinvested in primary care in the next few years) is based on a reduction in fees and little change in the quantity of physician services supplied. The government targeted large cuts on a small number of medical specialists, with smaller changes to the fees charged by most doctors.

The health economics literature offers some insight into what we can expect from such a change. How does anyone respond to a decline in his or her wage? There are competing effects of a wage cut.

On the one hand, it has just become less costly in terms of lost income to see one less patient. Reducing the number of hours worked results in a smaller hit on the doctor's income. The fixed costs for most doctors (rent, salaried employees, equipment) haven't changed, however, so the cost of not working has not dropped by as much as it might if all these costs didn't need to be paid. On the other hand, there is an income loss associated with a fee cut (or even a fee freeze when the cost of everything else rises) so doctors also have an incentive to work more hours, not fewer, in order to recover this income. So overall, with a relatively small change in remuneration for most physicians, it seems unlikely we will see a big decline in the number of hours worked by our family doctors.

There are some economic models that predict when the price for each service a doctor performs falls, doctors might respond by increasing marginal treatments, such as follow-up visits or more tests, to make up this income. Four factors, however, make such a response unlikely to happen among primary care physicians.

First, one can safely assume doctors don't really want to do this. Doctors have little interest (other than a monetary one) in having their patients go through care they don't really need. Second, there is no shortage of patients looking to see a family doctor and lots of important work for doctors to do without increasing the number of follow-up visits. Third, an increasing number of doctors are moving away from fee-for-service payment, where they are paid for each service provided, and toward group practices, where they are either on salary or receive a per-capita payment for each patient. In this case, there is little incentive for doctors to increase unnecessary treatments. Those with a per-patient funding arrangement may even have an incentive to take more patients into their roster if they can manage it, as more patients increase the dollars coming in, whereas more follow-up treatments do not.

Finally, should we expect to see doctors leave Ontario for another jurisdiction? Pay is certainly one factor that helps determine where physicians work, but it isn't the only one. Hospital privileges, professional networks and a number of non-work-related factors also contribute. It is costly to relocate, and small changes in relative pay make this unlikely. Larger changes may tip the balance, but Canada's physicians remain very well paid, and those in Ontario are not an exception.

Recent reviews of physician salaries across the OECD place Canada among the top. Depending on how physician incomes are measured (converting currencies so that a dollar basically buys the same amount of goods in each country or comparing doctors' salaries to the average wage earned in that country), Canada's physicians do fairly well. When comparing incomes using purchasing power, they are paid less than their U.S. counterparts and slightly less than those in Britain or Germany but above most other OECD countries. When comparing incomes using the ratio of their salaries to the average in the population they are exceeded only the United States. Our specialists fare even better, although still behind their U.S. counterparts.

Finally, while Ontario may have been one of the first movers in Canada to try to contain physician costs (and deserves credit for taking concrete steps to do so), concern over health care spending is a national issue, and it is likely other provinces will wish to follow Ontario's lead in substance, if not style.

Mark Stabile is the director of the School of Public Policy and Governance and professor at the Rotman School of Management, University of Toronto. He is also an expert adviser with

Republished from the Winnipeg Free Press print edition July 4, 2012 A10

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes


  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.


Make text: Larger | Smaller


Trouba talks about injury and potential for Jets

View more like this

Photo Store Gallery

  • PHIL.HOSSACK@FREEPRESS.MB.CA Winnipeg Free Press 090528 STAND UP...(Weather) One to oversee the pecking order, a pack of pelican's fishes the eddies under the Red River control structure at Lockport Thursday morning......
  • MIKE.DEAL@FREEPRESS.MB.CA 100615 - Tuesday, June 15th, 2010 The Mane Attraction - Lions are back at the Assiniboine Park Zoo. Xerxes a 3-year-old male African Lion rests in the shade of a tree in his new enclosure at the old Giant Panda building.  MIKE DEAL / WINNIPEG FREE PRESS

View More Gallery Photos


Are you concerned about the number of homicides so far this year?

View Results

Ads by Google