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Ottawa overstepped its bounds when it clawed back health-care coverage for refugee claimants without consulting the provinces and other stakeholders, doctors and lawyers charged Tuesday.OLEG PRIKHODKO

Do we get our money's worth for all the money we pay doctors?

In a bid to answer that question – which is as important for the administrators of public funds as for the overseers of the health system – B.C. Auditor-General Russ Jones and his team produced a report entitled "Oversight of Physician Services."

The 44-page document poses several questions that are directly relevant to B.C. legislators and policy-makers but are of equal importance to health-care leaders in jurisdictions across Canada:

  • Do we get value for money for what we spend on physician care? After, all, we spend $31-billion a year on physician services in Canada, almost 15 per cent of all health spending;
  • Is the way we pay physicians – 71 per cent rely on fee-for-service payments and the balance alternate payment methods like salary, service contracts and sessional agreements – appropriate and logical?
  • Are individual physicians remunerated appropriately? Canadian doctors have an average gross income of $328,000, and that ranges wildly from $2.9-million for medical microbiologists (who have massive overhead, it should be noted) to $145,013 for geriatricians;
  • Is the oversight of Canada’s 75,000 practicing physicians adequate? After all the profession is self-regulating and while most doctors get their income exclusively from the public treasury they don’t really answer to the state.

These sorts of questions are generally greeted with indignation and seen as a slight against doctors.

They are nothing of the sort.

Deification of the medical profession is not sound public policy – it's not good for patients and it's not good for doctors.

We put our lives in the hands of physicians – sometimes literally – so we should expect excellence and, along with it, accountability.

With limited resources (read: tax dollars) and ever-growing demand for health services, we should strive to get the most bang for the buck.

Of course, that applies to every aspect of health spending – hospitals, drugs, nursing, homecare, public health, administration, etc. – but this report focuses on physicians exclusively.

To know if we are getting value for money we need to have goals, we need to monitor how money is spent, measure if it is providing a good return, and then we need follow the evidence, to adjust.

What Mr. Jones and his team found in their audit is that we are not doing any of these things with any consistency, at least when it comes to physician services.

In fact, the opposite is true: There are systemic barriers to achieving cost effectiveness. The payments to physicians have been established in a fairly arbitrary manner and they only ever go one direction – up.

The nub of the problem is the fee-for-service payment model. Medical piece work made sense when doctors treated only acute illnesses and injuries; in an era where most people have chronic illness and we value prevention (in theory if not in practice), it is an anachronism.

Fee-for-service is also a major barrier to health system reform, the audit notes.

Under the fee-for-service model, physicians are paid by the act, according to a fee schedule. (In B.C. there are 4,578 fee codes, or billable act.) Most doctors – especially outside of hospitals – are paid for the volume of services they provide; payment is not linked the quality of care or outcomes.

The auditor-general noted that this creates a great potential for "over-servicing" but it's impossible to say if it's occurring because data on appropriateness of care are not collected. Fee-for-service payments also dissuade interdisciplinary care because doctors can only bill for what they do.

Alternative payment methods such as service contracts place more emphasis on quality and outcomes but the knock against them is they create no incentive to produce, resulting in fewer patients being seen.

But, again, the auditor-general says, patient volume data is not collected, so we don't know if that's true. Further, more than half of alternative payment contracts exceeded the payments agreed upon, so they are not proving to be a way to contain costs.

Beyond payment methods, there is little quality control.

Mr. Jones found there is quite simply no coherent performance management system for doctors. Rather, there are a number of entities working in silos.

The provincial College of Physicians and Surgeons regulates competence for safe practice; regional health authorities manage daily service delivery and oversee performance generally for hospital-based physicians (no one seems to do so for doctors working in the community); and the Ministry of Health pays the bills.

But no one in the bureaucratic structure is responsible for monitoring the performance of individual physicians or figuring out if the money is being well spent, or if funding is aligned with health system priorities.

One striking example: Technological changes meant the time required to do cataract surgery went from one hour to 15 minutes. Yet, it took six years for the government to negotiate the fee for that operation down to $420 from $534 – meaning ophthalmologist were being paid $1,680/hour rather than $534/hour and, in that period, the number of cataract surgeries performed more than doubled.

The take-home message from the auditor-general's report is that we need to rebuild the physician compensation model, from the ground up.

There is a lot of rhetoric about quality care, getting value for money and cost-effectiveness in healthcare. But what do we actually mean?

Until we have definitions and goals and measurement, we can't say if money is being spent wisely.

Mr. Jones is not saying that physicians are overpaid or that what they are doing is not valuable. He is saying that, just as we promote the practice of evidence-based medicine, we should strive for evidence-based payment of medical practitioners.

André Picard is The Globe's health columnist.