A typical doctor working in a community hospital is not an employee of the hospital, but has been appointed to the hospital medical staff as an ‘independently contracted professional’, and is paid by the government on a fee-for-service basis. Structuring the relationship between a hospital and its doctors in this way is the historical norm in Canada, but is problematic. Two entities are created – the hospital and the medical staff – whose interests, driven by different incentives, will rarely be fully aligned. As one example, physicians will always want to do more fee-for-service work to earn more money; well-managed hospitals will often want to do less work in order to operate within their assigned budgets.

Hospital interests rub up against those of their doctors in other important areas. In Ontario, Hospitals are directly responsible to their Boards for ensuring the quality of medical services; doctors work in a self-regulated profession governed by the College of Physicians and Surgeons. Hospitals focus on service efficiency and patient flow; some physicians have little incentive to engage in these matters. Patient and staff satisfaction is critical for hospitals, but less important to doctors. Physicians develop a sense of ownership over facilities such as operating rooms that they use; periodically, hospitals must re-allocate such resources. A hospital may want nurse practitioners or other health care professionals to deliver certain types of care, upsetting physicians. The strategic goals of the hospital and the manner in which the hospital may choose to deploy its capital may not satisfy every doctor. Finally, in the critically important matter of recruitment of specialist doctors to meet population needs, the interests of a hospital and its physicians may diverge. Let us explore this latter issue in some detail, using the recruitment of kidney specialists (Nephrologists) as an example.

One would think that hospitals running chronic kidney disease (CKD) and chronic dialysis programs would have much to say about the number of Nephrologists they need. After all, they must ensure that patients with early-stage kidney disease are identified and have timely access to evaluation and treatment, that those who have progressed to kidney failure receive their life-sustaining dialysis care close to home, that the number of CKD and chronic dialysis patients cared for by each doctor is appropriate, and that Nephrologists are available to assist in the planning and organization of the complex array of services patients require.  What is the reality?

In recent years, Nephrologists associated with Ontario community hospitals have typically organized themselves into business partnerships and, frequently, the hospitals where they work have delegated the responsibility for physician recruitment to these partnerships. This is not surprising; the Ontario Hospital Association and the Ontario Medical Association support delegation of physician human resource planning to medical departments. However, this approach carries with it a disturbing potential for conflict-of-interest. Since the income provided to each Nephrologist partnership for providing care to a CKD and chronic dialysis population is both guaranteed and predictable, might not such partnerships limit the number of partners, in order to maximize the clinical income of each?

Soft evidence suggests that this does occur. Partners in some small Nephrology partnerships admit they are run off their feet. Other partnerships appear to maintain a small partner base while responding to program growth by hiring recently-graduated Nephrologists as ‘associates’, and paying them  salaries lower than they would earn as full partners. What about hard evidence? Payments from government to Ontario Nephrologists have increased dramatically over the past few years, not because of adjustments to fees, but because each Nephrologist has been working harder. This is further demonstrated by the fact that, while the dialysis population in Canada increased by 185% from 1993 to 2010, Ontario’s Nephrologist population increased by only 114%

Is quality of care being affected? Unmet patient needs exist. For example, greater availability of early kidney disease detection and intervention programs would undoubtedly lessen demand for chronic dialysis. Also, there continues to be a number of well recognized opportunities to further improve the care of those patients who do progress to kidney failure. Increasing the number of practicing Nephrologists would help address these unmet needs. Yet Canadian universities continue to produce superbly trained Nephrologists who cannot find hospital positions.

The typical structuring of the relationship between a hospital and its physicians in Canada is flawed. What is the solution?

Some may believe we should accept the way the hospital-physician relationship is structured, but work harder to make it better. In this scenario, hospitals would re-affirm their responsibilities and accountabilities relative to the matters described above, but seek to fulfill these within a framework of a genuine partnership. In my opinion, this approach will merely perpetuate the need for endless work-arounds, as hospitals and physicians struggle to accommodate each other’s needs.

A second solution is to adopt a system where physicians are employed, as is common elsewhere. In the United States, over 50% of all practicing physicians are in employer-employee relationships, and, as of September 2010, 74% of hospital leaders intended to increase physician hiring within 12-36 months. Employing physicians facilitates development of aligned goals and incentives and a clear accountability framework, often formally enshrined within a ‘physician compact’. A trend toward non-fee-for-service remuneration of physicians does exist in Ontario, as exemplified by initiatives in Family Medicine, Geriatrics, Paediatrics and Medical and Radiation Oncology. Progress in this area with specialist physicians has been slow, however. A more interventionist approach is needed, and, in Ontario, will require changes to the Public Hospitals Act.

Bottom line: How physicians are paid and the manner in which the relationship between hospitals and doctors is structured in Canada is problematic. Change is necessary.

Dr. Robert Bear is a former Professor of Medicine at the University of Toronto and the author of Sorrow’s Reward, a novel set in a dialysis unit.  He blogs on health care at sorrowsreward.com.  Follow Bob on Twitter @RobertAllanBear.

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Read the Toronto Star’s coverage of this issue.