Two years ago, the B.C. government learned that its annual health-care funding transfer from Ottawa was going to take a stomach-churning dip – starting with a $220-million cut in 2014.
Pleas for special consideration – this province has an exceptionally high ratio of seniors – went nowhere. So the province's finance and health officials came up with an ambitious plan to rein in spending demands.
Until 2009, B.C. health-care spending had been growing at a rate of 7 per cent each year. A restraint program – greeted with dire warnings of a public health-care crisis – brought the rate of increase down to 4.4 per cent. This past year, the province aimed to limit its health-care budget increase to just 2.5 per cent in preparation for the shift to a strict per-capita health-care transfer program from Ottawa. The budget target was treated with skepticism – how could health-care services not be harmed?
The province was going to get tough with doctors, for a start. As B.C. Auditor-General Russ Jones reported this past week, the province's 10,000-plus doctors consume almost 10 per cent of the entire provincial budget. Physician salaries went from about $3.6-billion in 2011-2012 to $3.8-billion this past year.
The Health Minister and Finance Minister signalled they had their eye on those ever-rising costs: Then-health minister Margaret MacDiarmid said it was time to draw a line in the sand. "Over the last 10 or 11 years, [fees] have gone up by 22 per cent," she told Vaughn Palmer on the Shaw public-affairs show Voice of B.C., after the provincial budget was introduced this past year. The doctors had won "substantial" increases and now, it was time to have an uncomfortable conversation about the future.
Finance Minister Mike de Jong was blunt: He said his government was girding for tough negotiations with its doctors – it was time for them to do their part after other public servants suffered through wage freezes in recent years.
The government would be looking for savings, he said, and he expected the savings would come from renegotiated fees for services. Some services doctors provide would no longer be paid for by government and some would garner lower fees.
When asked whether the talks with doctors could lead to a demand for a pay cut, Mr. de Jong said this past year: "It is fair to say there will be an intensive negotiation."
What happened? Not much.
Payments to physicians climbed by about 2 per cent over the past year. Part of that is due to rising caseloads, but the four-year deal already signed in 2012 provided a lift to the fee schedule of 1.5 per cent – about $51-million in the fiscal year just ending.
The cost pressures were managed elsewhere. Lab services were consolidated, as were "back office" functions of the health authorities. Generic drug costs were squeezed.
Now, however, the government has an opportunity to extract new savings. The current deal can be renegotiated in April, and talks between the government and the doctors are continuing.
But the new Minister of Health, Terry Lake, isn't talking tough.
"The physicians, I would suggest, are being very collaborative to help us manage the costs," he said in an interview. "I think everyone gets it, that 2.5-per-cent increases in health care are the new normal … and you can't do that unless everyone is willing to do their part and I would say physicians are willing to do their part."
This past week, the B.C. Auditor-General gave the government a failing grade on managing the doctors. "Government is unable to demonstrate that physician services are high-quality and cannot demonstrate that compensation for physician services is offering the best value," Mr. Jones said in his report, released on Thursday. "This calls into question government's ability to make informed decisions regarding physician services."
The Auditor-General said it is time to rebuild physician compensation models. It could be excellent fodder as the government heads into negotiations with the doctors.
Instead, Mr. Lake suggested the current model simply can't be changed. "Canadian health care has always been based largely on the fee-for-service model."
Mr. Lake said he expects collaboration will yield savings. But the doctors haven't lost ground yet.