Binding arbitration with Ontario doctors should be avoided

Ontario’s physicians are vital caregivers in the province. Their salaries represent the second largest line item in health spending. And they are not happy. Negotiations between doctors, represented by the Ontario Medical Association (OMA), and the Ontario government, have been on ice for almost two years. During the past several years, they have been without a contract, and the Ontario government has unilaterally reduced their fees.

They might resume negotiations soon following a letter by the Health Minister that the government will consider the OMA’s demand for binding arbitration. However, agreeing to this demand will likely be costly to taxpayers and won’t solve overarching issues, such as how to make more efficient use of physicians’ time, skills and expertise.

Binding arbitration is a common method for arriving at settlements between governments and labour unions in the public sector. It is often used in negotiations between municipal governments and unions that represent those who provide what are classified as “essential services” and therefore don’t have the legal right to strike. (Agreements with police and firefighters are often settled through binding arbitration, for example). Although laws defining right to strike are changing fast, under current legislation Ontario doctors lack a legal right to strike.

Settlements through binding arbitration tend to be more costly for employers than freely bargained contracts, despite the fact that arbitrators are supposed to take employers’ ability to pay into account. In the private sector, with pressures from competitors and the possibility of bankruptcy, ability to pay is a concept that arbitrators might be able to frame in concrete terms. However, when the employer is a government, the money it pays comes from taxes, and while politicians may not like to collect more tax revenue, the view of arbitrators, not unreasonably, is that they can raise taxes if they have to. In addition, given that previous public employer binding arbitration agreements have been generous, these settlements become the arbitrated template for others, which lead to an ongoing upward cycle of compensation.

Binding arbitration is also addictive: once negotiators use it once, they are more likely to use it again. This suggests that one side is usually content with an arbitrated outcome, removing the incentive to seriously engage in the next round of negotiations.

What’s the alternative? One approach for governments unable to negotiate terms with monopoly provider groups is to create an opportunity for alternative providers to compete for contracts. For instance, municipal governments have entered into alternative agreements for garbage collection, transit services and other publicly-provided services, when contract impasses with regular providers persist. With doctors, however, capable substitutes are in short supply, to put it mildly. That said, some physicians services can be delivered well by nurse practitioners, who are growing in numbers but remain underutilized. However, the opportunities for governments to apply competitive pressure on medical associations are very limited.

Somewhat ironically, the inability of governments and doctors to apply pressure on each other for a speedy resolution is a consequence of our unique single-payer model of health care financing. We have created major legal and regulatory barriers for private medicine to compete with the public system, so the public is entirely dependent on the services that doctors are willing to supply under the government plans. Because of this, what remains as options for governments and doctors to speed up talks is, effectively, bargaining in the press and media for greater public support.

The rising cost of health care and the mediocre performance of Canada’s health care system in comparison with peer countries continue to be problems that provincial politicians urgently need to address. Policy initiatives require negotiations with the medical profession about more than just fees. Negotiations should also cover measuring care quality, reforming methods of physician compensation, and the utilization of non-physician professionals (such as nurse practitioners) who could perform some functions traditionally reserved for doctors. Major changes of this kind are more likely to arise from direct negotiations rather than through arbitrators.

Doctors are dedicated professionals who remain highly respected by the public, and their resentment with having compensation terms imposed is understandable. Despite some periods of conflict with governments over compensation, over time, the current bargaining system has helped medical associations be highly successful in negotiating agreements. Binding arbitration would go too far in strengthening doctors’ bargaining power, resulting not only in higher costs to taxpayers but also lowering the likelihood that needed reforms take place.

The comments section is closed.

  • John says:

    They either need binding arbitration or the right to strike. Pick one. Anything else is grossly unfair.

  • Ron says:

    When I was in high school our principle upheld a rule that was being challenged . The rule:”No pants or jeans permitted for female students. Dresses or skirts only to be worn to school.” And he went on to say “I understand this rule may change in the future , and even that this decision may look silly when looked at in the future” He was right on both counts. Girls are now allowed to wear jeans to school, and his decision does in retrospect look foolish.But also looked pretty foolish to most of us at the time.

    Now we have a group that has no right to work for anyone except the government and no right to strike and being refused binding arbitration to decide their funding. It is just so very obvious that negotiation cannot take place between one side who holds all the power and the other which holds none. Of course a group in this position will eventually be found by the courts to have been denied their basic rights, and the courts of course will eventually impose binding arbitration. But the wheels of justice turn very slowly. And at least for Primary Care I think too late.

    I was very involved with this issue in 1993, but now close to the end of my career I just have to leave this to a new generation to resolve.I have a definite sinking feeling in my stomach that I and my generation leave Primary Care in Ontario ( the part of medicine I know something about) in a significantly worse condition than when we started. But it was certainly not for lack of effort . We had no say on the key issues .

  • Paul Coolican says:

    I read this article with interest. I certainly would agree that Binding Arbitration is not a panacea, nor will it facilitate reform. The agreed to process of facilitation/conciliation which emanated from the 2012 Physicians Services Agreement was designed to provide a non binding process that would address any substative issues where agreement was not reached. But power and debt changed the equation. With a majority government the Treasury Board and the Ministry of Health followed the process without any meaningful negotiation. Chief Justice Winkler, while recommending that the physicians accept the financial cuts the Ministry demanded (as the best offer they would get), pointed out that the current model for funding of the health care system could not be sustained in future and pressed the government to work with physicians to effect real change. To that end he proposed a Task Force on the Future of Physician Services in Ontario and a Minister’s Round Table on Health Care Transformation.
    The Ministry has proceeded with Unilateral Action, cutting physician services funding by about 7% to date. They have targeted all groups, but have been particularly draconian in their treatment of new family physicians entering the system. They have radicalized a large group of younger physicians to the point where mistrust of and anger towards the Ministry is becoming the norm. This is not a good environment in which physicians and government partner health care and system transformation.
    Binding arbitration will not solve this issue. But it may halt the fiscal devaluation of physician services that was offered as a negotiated agreement by the government and then imposed unilaterally. Perhaps then physicians and health care system administrators can work together on health system transformation, based upon population health and patient care, not on fees and salaries.

  • Pran Manga says:

    I agree and made similar arguments more than 25 years ago. Binding arbitration was bad idea then , it still is now.

    • Mamadoc says:

      Bad for who? Certainly not bad for those without rights such as to strike, those who are prisoners of a single payer system…need I go on?

  • Dr. Alexander Bardon says:

    Budgets are important. I get it. The government wants to provide unlimited physician services… but at a limited cost. That’s unrealistic and frankly, ridiculous. Binding arbitration for physicians will no-doubt make it more difficult for the government to balance the budget in the short term. But is the notion that unlimited physician services can actually be provided at a tightly restricted budget really being taken seriously?
    Offering a service for “free” makes it difficult to predict demand, thus makes budgeting difficult… Not exactly advanced economics… The fact that this this conversation keeps repeating itself in Canadian politics over and over is disheartening.
    Yup. Budgets are important. And difficult. ~Yawn

  • Mamadoc says:

    How about municipal governments get non fire fighters to replace current ones as they have binding arbitration…or police officers…or …you get the drift. Replacing unionized employees by private employees (re garbage services) is not the same as replacing physicians with other lesser trained practitioners. And still, you would have to negotiate with physicians for the services only they can provide.
    Bottom line, your argument has more holes than fish net stockings.

  • MYU says:

    Competition is good, right? It will decrease costs and increase value for service to Ontarians. Why not open up the market to nurse practitioners to create pressure on doctors during negotiations to gain more bargaining power for the government?

    Let’s apply this logic to more specific areas of healthcare as well, shall we? There is a critical shortage of transplant hearts, kidneys, lungs, bone marrow, etc in Canada. Why not source this from other countries? Specifically, let’s allow harvested organs from executed “criminals” in developing countries. It will clear our transplant lists and if we outsource our surgeries to those source countries, we would save millions…except for the deplorable ethics and risks of transmissible diseases like hepatitis, hiv, tuberculosis, etc.

    How about allowing more alternative provider groups such as naturopaths to care for patients instead of medical doctors? Oh wait, survival from strokes and heart attacks will likely drop if NDs start giving essential garlic cleanses and oil of oregano for emergency treatment of these patients–but we would be able to save public funds!

    So those examples don’t work–lets try outsourcing medical hardware from other bargaining groups. Orthopedic plates/screws used to fixate fractures costs hundreds of dollars apiece–it would be far cheaper to source them from Home Depot. They are a large, reliable corporation that we can count on for efficiency…I’m sure we’ll be cutting costs at least 98-99% buying from the clearance bins compared to those expensive, sterilized titanium hardware we use now.

    OK OK. Those analogies are all ridiculous. No one will consider them. Let’s choose something more likely to happen. Let’s outsource things such as uniforms, scrubs, laundry, linens from all the hospitals to central supply companies, preferably in cheap developing countries where they can be made in sweat shops where we can pay exhausted workers a pittance, then do quality assurance in Ontario. Further, let’s replace current unionized workers with nonunionized employees that we can then pay minimum wage. Patient care will likely not suffer and the value proposition is significant, but is this what we want? Like many bean counters who have tried to “reform” our healthcare system and failed, you would be surprised with the results.

    Treat healthcare workers like numbers with a productivity coefficient in a large equation, and you will find this equation to be a lot more complex than you anticipated. You will find the gap in the coefficient of correlation between your “theories” and reality to be far larger than you anticipated.
    There can be no lasting efficiency improvements in healthcare unless there is buy-in from all parties. Business is not done by outsourcing to the cheapest contractor and finding that they did one quarter of the work for one half of the price and then ran off. It is about building long term trust with skilled providers who can then efficiently get the job done. Mediocre care for all should not be the final goal.

  • Dr.Robert H. Shih MD, CCFP, FCFP says:

    Like the article imply, we need to open up the health care market. The proper cost for health care is not dictated by unilateral govenment imposed service fee but rather by a free demand and supply market. Our current health care is imposing a stick supply of what government can support while doing nothing to control demand.

  • sam says:

    …You lost me at hello…”Their salaries represent …”
    When are you going to stop calling doctor’s billings, “salary”? it is unfair and it is misleading to the public, I would have expected better from two seemingly highly educated writers.

  • Marka says:

    After the first bit, I had been preparing to write a point-by-point rebuttal. However, this entire piece is so far off of the mark, that it’s not worth my effort.

    This feels like a piece somehow written ‘for’ Wynne/Hoskins.

  • J.Barr says:

    Nurse practitioners have been repeatedly demonstrated not to be cost-effective. There is obviously still an important role for them, but economic analyses for numerous health systems has been performed, including for Ontario, and they are not cost-saving. I find it hard to believe the authors would not be aware of this.

  • Gerry Goldlist says:

    The authors make some interesting points but most are not relevant to the title of their opinion piece that “Binding arbitration with Ontario doctors should be avoided”.It appears that the authors best argument against the process of binding arbitration here is that is that it likely be costly to taxpayers as settlements through binding arbitration tend to be more costly for employers than freely bargained contracts. In his 1984 commission report on the Canadian Health Care System that came out just before the government passed the act banning physicians from billing patients privately, Justice Emmett Hall said:
    “I reject totally the idea that physicians must accept what any given Province may decide unilaterally to pay.

    Much of the piece is about the failures of the Canadian Health Care System and not directly related to a bargaining system for physician compensation. A mechanism of negotiating compensation is different than a mechanism for fixing a health care system. That would be like arguing against binding arbitration for police compensation because there is still a lot of crime and the method of paying police does not fix crime.

    This opinion piece argues against the principle of Binding Arbitration itself and also discusses the failures of the Canadian Health Care System. These issues do not argue against the fact that in the context of the current government dispute with the physicians of Ontario, Binding Arbitration seems the most reasonable way to go.

  • WM says:

    If the authors think that replacing Doctors with Nurse Practitioners is cost effective, they should recheck their numbers . The average salary for NPs in hospitals are between $90,000 to $120,000 per year. Considering they have no overhead costs, and rarely work evenings or weekends, or provide on-call services, the relative value is less than what the authors are revealing. Now factor in the cost of pension, benefits, paid holidays, paid sick leave, etc. and you quickly learn that Nurse Practitioners in Ontario are making more than the average family physician. Of course if you foolishly believe that the numbers our Health Minister quotes regarding “average” physician income are accurate, you will likely believe anything. And of course, since NPs are unable to work except under the license of a physician, doctors are expected to provide oversight for them as well, for free, as usual.

  • MH says:

    Mr. Blomqvist, in his own March 29 lecture to economics students at Carleton extolled the virtues of the Dutch and British health systems. The quote from his lecture : “the fact that many other market-liberal economies manage to run less costly healthcare systems with equal or better results than our own.”.
    He ignores the roles of patients in this public-only funded that will soon collapse under the weight of patient demand. Nurse practitioners will not solve the problem. Binding arbritration is a piece of the puzzle, and Doctors should be treated fairly. Mr Blomqvist , come down from your ivory tower and admit the Ontario health system will only survive with a safety-valve of a combined public-private system which you support , and a system that treats Physicians with respect. Don’t you Mr. Blomqvist?

  • CC says:

    It has been proven time and time again that salaried nurse practitioners cost the government MORE money than family doctors. Dollar for dollar, they see less patients and increase health care costs by over-investigating patients. Please get your facts straight and do some research before proposing something you clearly have no understanding of whatsoever. Also, the majority of physicians in this province are fee-for-service and NOT salaried employees of the government. Surely a person writing an article about health care would understand this basic tenant?

  • BD says:

    The authors are already dead wrong by the 10th word of this opinion piece. Doctors are mostly not salaried, and the $11.2B line item for ‘physician services’ in Ontario actually pays for a lot of health care infrastructure making the actual ‘physician salary budget’ 25-35% less than that. Doctors payments are easily identifiable on any health report, nurses salaries are buried in other line items so it’s hard to know how much is being spent, though some estimates are that nurse salary/benefits/pension costs are comparable or greater than physicians as an aggregate.

    As for binding arbitration, the authors conflate issues of health quality and value-for-money with fee negotiations. Health quality is a systems issues dealt with by policy makers and stakeholders, while the negotiations issue is simply how much an individual physician service is worth in Ontario. The two are not related in the present impasse, though a negotiated settlement will bring physicians back to participating as active stakeholders in building a better system. Whether an NP or an MD performs a service is an issue totally outside of a negotiation between the OMA and government.

    To think that a better health care system is built via fee negotiations (and if negotiations break down, then binding arbitration) between doctors and governments is not true. I think the authors are missing the point here – that trying to continue using negotiations to achieve this as has been done in the past is failed. Time to get a settlement done, and move on to the important work of fixing the system.

  • CW says:

    The tag line for Healthy Debate is “unbiased facts. Informed opinions.” This piece is neither for reasons that have been well articulated by previous respondents.

  • Dale says:

    Replacing physician services with salaried nurse practitioners is more expensive and leads to more fractured, piecemeal care. I have a small remote telemedicine addiction practice serving Windsor and have found those with primary care provided by an NP through telemedicine to be poorly cared for at greater cost. For example, an NP can order a shoulder MRI for an injury that they have not personally examined. Upon taking a thorough history it is evident that an MRI was not warranted. This style of NP led primary care is prone to inefficiency and waste of resources. Please consider the downside of this alternative before advocating such reform.

  • Mihan says:

    The vast majority of physicians in Ontario are fee-for-service, not salaried. They get paid a specific fee for a specific service which is outlined in the publicly available OHIP schedule of benefits. For example, an intermediate assessment by a family MD costs 33.70. This obviously does not factor in costs like overhead, the cost of billing itself (eg. billing agent) and physicians also do not get a pension or any benefits. The more patients they see, ie. the more service they provide, the more they make. In other words, physician compensation is directly tied to healthcare utilization by patients.

    To say that the Ontario government negotiates with physicians is a farce. In 2012 when there was disagreement between physicians and the government, the government unilaterally imposed their will on the profession. The same thing continues to happen today. However, rather than participate in this charade any longer, the OMA will not return to the bargaining table until there is a fair process of conflict resolution (ie. binding arbitration) and I wholly applaud their decision.

  • SS says:

    Physician income is NOT a salary. Doctors are NOT “employees”, but independent contractors. Perhaps realizing this one little tidbit before embarking on a tirade of liberal-sponsored nonsense would have been helpful. If binding arbitration is “too expensive” when dealing with doctors, why give it to police, firefighters and others? If the province TRULY wants to salary all doctors, then that comes with vacation pay, assuming the cost of running the offices, and retirement benefits. Do you think that will save the province money? If so, please go ahead, as a lot of docs would be more than willing. Lastly, nurse practitioners can only be “cheap” if they are able to bear the cost of malpractice, and see as many patients per hour as a doctor. Currently, they are nothing more than glorified med students, who run to a physician the moment something goes wrong, and assume no liability whatsoever, while enjoying all the benefits of employees mentioned above. Private competition is great – a lot of Ontario doctors would welcome the chance to provide services at a rate set by themselves. Is any government brave enough to make that change?

  • Emma Mallory says:

    Utilization of non-physician professionals such as NPs has been demonstrated to increase the cost of the services provided when compared to family physicians in the majority of cases. NPs see fewer patients per day, and the government is responsible for providing the entire overhead for their clinic, and provides benefits, vacation and pension to NPs. Doctors pay their own overhead to run their clinics, and have no pension or benefits and see more patients per day. NPs are very valuable in our health care system but are not a cost savings as you imply.


Åke Blomqvist


Åke Blomqvist is an Adjunct Research Professor at Carleton University and a Health Policy Scholar at the C.D. Howe Institute.

Colin Busby


Colin Busby is a Senior Policy Analyst at the C.D. Howe Institute.

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