Hiring doctors – whose interests should come first?

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.

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  • Hanssen Tulia says:

    Fascinating. Definitely bookmarking this page. Really valuable info, thanks for posting.

  • Graham A. Jacques says:

    Dr Bear forgets that as a physician I already have an employer – my patient in the singular, my practice in the aggregate. I would not wish it any other way, since I believe my responsibility must always be to my patient. Having practised in a hospital environment, at least in part, for most of my career, I have experienced many instances where the best interests of my patient and the best interests of the hospital do not coincide. In these instances my responsibility is to my patient, first and foremost. I am afraid that as a hospital employee, my first responsibility would be to my paymaster – and not my patient. I understand the problems with fee for service, and believe that for most instances this is not the optimum model for doctor patient relationships. However I believe that to become hospital employees, would, certainly for family physicians, lessen their ability to serve the best interests of their patients, and increase their risk of conflict of interest.

  • alex says:

    Im in Australia which has a similar health system, although the public system doctors are employees and in private practice function as a business. There is no facility fees payable to private hospitals and there is a carrot & stick taxation incentive to force private insurance onto people earning more than a certain amount.
    As an anaesthetist having worked in both, I can say whole heartedly that in public system as an employee…i couldnt care less how many cases we do, and the less we do the better, we get paid anyway and there is every reason to cancel cases that turn up at inconvenient times. The employee system doesnt pay enough to justify any inconveniences that one might suffer at 3am.
    In our private system, turnover is king, insurers dont pay for time, they pay per case. So shorter, higher value work is preferred and skews the range of practice. the best is ophthalmology or dental where a GA fee maybe $600-800 and the whole case takes 20 min end to end…then you have money and quality of life.
    I note there is a lot of talk about improving the health system, and so on…in my view there is a lot of room for automation in medicine and quality of care is a function of the quality of processes. Every other industry has sought to automate mundane tasks and streamline processes, the same can not be said in medicine. It remains a one to one interaction. The problem is physicians deliver a high value service for which the community does not wish to pay. Its not that its unaffordable judging by the sales of all the non-essentials items rising year after year…it is simply that we no longer wish to pay for health services. So…the challenge is how to scale medicine…how to scale expertise of a few physicians, so they can be more productive and earn the money they should, and patients recieve excellent care at a lower cost!

  • aras balsys says:

    I agree wholeheartedly. The fee for service system is at the root of the problem. We need more “disease” to keep everyone occupied. The system functioned best when there was a slight shortage of all physicians. There is really no shortage of any MD in urban centers.We then overservice patients under the guise of “better patient care”. How many patients with a creatinine of 120 and stable really need to see a nephrologist every 6 months other than for the A-i33 + E078 code.

  • Robert Bear says:

    I thank Dr. Cunningham, Mr. Lau and an anonymous contributor for their comments. The title of this eLetter is Healthydebate – and as the name implies, different points of view on health care matters are both sought and welcomed.
    First of all, allow me to acknowledge how difficult it is for a health care system to ensure that system incentives are always set up to encourage desired behaviours. A positive incentive for one participant may well prove to be a cross-incentive for another, and the system itself is often caught in the cross-fire. However, I don’t believe health system designers and managers have paid sufficient attention to the issue of incentives, and through my post hoped to draw further attention to it.
    Each of your comments is thoughtful, and I understand where each of you is coming from. To the physician commentators I would respond as follows: Each of your letters evidences a subtle or not-so-subtle anger toward or distrust of hospitals and their CEOs and managers. I have worked in hospitals in various capacities enough to understand this. But it is an issue. How can hospitals – important and expensive components of our health care system – be the best they can be absent full alignment with medical staff? Indeed, physician alignment is generally seen as one of our health care system’s greatest needs, and fundamental to the delivery of true patient-centered care. Somehow, this issue of alignment must be addressed.
    The physician comments to my post also reveal another issue. Doctors who are prepared to reflect upon the health care system, who feel passionately about it and who want it to be excellent are not the issue. But not all physicians are the same. Some hold their own interests over any others. This attitude expresses itself in different ways. A doctor may undermine recruitment because it will impact his/her market share; unseemly disagreements may surface over allocation/reallocation of hospital resources to physicians; doctors may refuse to fully engage in discharge planning initiatives; physician behaviour may negatively influence staff and patient satisfaction. There are advantages to a medical staff comprised of ‘independently contracted professions’ – as has been pointed out – but there are significant disadvantages also, and one purpose of my blog post was to surface these, so that they could be better understand and managed.
    The matter of patient advocacy is complex. In my experience, good doctors will always put their patients’ interests first, irrespective of the system in which they function. Linking medical quality to physician employment is, in my opinion, quite a stretch. The issue of how a health system should best ensure medical quality is an important one, and will be the subject of a future post.
    Should doctors be employed? If I were asked to debate this, I could line up strong arguements for or against. But it is a fact that in both Canada and the U.S., employment of physicians is a growing trend. Will this be a positive development? As always, ‘the devil is in the details’. An interesting sub-trend is the increasing use of performance-based physician compensation. In this model, a doctor can earn more through employment than through fee-for-service, but salary is tied to performance in matters such as volume, quality, team-engagement and attitude.
    Once again, thank you for your thoughtful comments.

  • R. Cunningham says:

    A physician’s first obligation is to his patient. By billing the government directly for services, one could postulate that the patient is “the boss”, since the patient has paid the taxes required to obtain the physician’s service. Though hospitals and other bureaucratic organizations try hard through their inefficiencies to limit the physician’s ability to provide the best care for the patient, the physician has no fear in being persistent in his demands to the hospitals for the best care of the patient.

    Contrast this to a primarily employed model. Here, the physician does not work for the patient but instead works for the hospital, which is a very large conflict-of-interest.. The hospital and its non-medically-trained CEO is “the boss” and can dictate the physician’s practice patterns based not on patient care but on budgetary concerns. The physician, if unhappy with the hospital’s managing of the department, has little say in how it should be improved. Should the physician persevere anyway, he runs the risk of being fired. The hospital acts as an un-necessary middle-man between the patient and the doctor.

    Look no further than the current crisis in pathology. Newspapers are deluged with articles about pathology diagnostic errors, many of them gravely serious. I believe that the fact that many, if not most, pathologists are employees of hospitals rather than advocates for patients is the core issue here. Pathology departments are fairly invisible, even though they provide a crucial function – diagnosis – without which the hospital would be unable to operate. This invisibility makes hospital CEOs lower the budgets to these departments, making them inefficient and introducing unnecessary redundancies. Workloads for practicing pathologists are increasing, yet hospitals do not want to add more pathologists to the employment roster because of budgetary constraints. This increases the rate of errors. The pathologists have been quite well trained by their hospitals to keep their mouths shut about any issues, no matter how dangerous, or else they be fired and unemployable.

    In closing, keeping the doctor as an independent practitioner free from the influence of CEOs is a cornerstone of proper medical practice. We are not here to “stay within budget”. We are here to diagnose and treat patients to the best standard we can. When our independence has been taken away, the patient loses their only personal advocate in their time of illness.

  • Jake Findley says:

    I love how Dr. Bear is so quick to point the finger at others. Who is responsible for training so many doctors for which they know there are no job? The university, NOT the community hospital. Perhaps the university should hire them, but the truth is that the University of Toronto is the most egregious offender in hiring associates. They string doctors along for years or decades paying shocking little, and making them do all sorts of extra degrees in the hopes of eventually getting a job. What a hypocrit. Sickening.

  • Anonymous says:

    I dispute the message in the message that physicians are not for work efficiency in hospitals. As a physician working in a hospital based practice, it is more clear to me than ever that physicians in a fee for service model are held at the whims of hospital inefficiency. We are financially motivated to work hard and be efficient as no one else is in our health care team.

    Everyone else that is an employee gets paid no matter how much or how little they accomplish in a day. In my experience, this means that we push for more patient care delivery in the time allowed everyday. It means that we rarely take breaks and rarely take time for meals during the day in favour of getting things done.

    While paying doctors a salary and making us hospital employees may make our goals more aligned with the hospital. I would caution that this will also lead to less service delivery for every Canadian dollar spent. Would anyone want to work as hard if work efficiency was not financially driven?

    Furthermore, speaking from a patient perspective, it pays to have a independent practitioner who is not under the thumb of the hospital. Today, your physician is someone educated in health care who does not have to be cautious about questioning hospitals policies when they are not patient focused decisions and is able to speak out against them without(or without much) fear of losing their livelihood.

    I think that it is time to look more closely at the problem of health care spending and management. Educating more physicians was not the sole answer to our doctor shortage. We must make sure that there are the resources and money to actually afford to employ them. And if that is not possible, we need to decide as a society where we draw the line in public health care spending.

  • Victor Lau says:

    I fully appreciated Dr. Bear’s article and his important analysis on the Doctor/Hospital relationship.
    Here in Saskatchewan, the Green Party has been focusing on a Prevention Model of Healthcare and applaud the provincial government’s move towards creating wait time lists. As Green Party Leader, my personal focus is on putting Doctors on salary (much like regular employees) similar to what was mentioned in your article and Speeding up response times in emergency rooms at hospitals. The line up at medical clinics are often no better.

    It really is time to move forward, to decide on a better relationship and especially Better Outcomes for the patients in the system.

    Thanks for really kick starting the debate!

    We politicians are listening :)

    Victor Lau
    Green Party of Saskatchewan


Robert Bear


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.

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