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Doctors operate on a patient at Toronto General Hospital in February, 2012.

Kevin Van Paassen/Kevin Van Paassen/The Globe and Mail

Months after handing its doctors a raise, Alberta now says it is looking to overhaul their pay formula, joining Ontario and other provinces in a move that could reshape health-care funding in Canada.

Economists and cash-strapped provinces warn that lofty health spending increases of recent years cannot be sustained. Early this year, Canada's premiers launched a committee to foster innovation and co-operation in the delivery of health care. Now, some are ready to risk a fight with doctors over their fees.

In a recent letter, Ontario Premier Dalton McGuinty cited the goals of the premiers' innovation group in encouraging his counterparts to follow his lead in rolling back doctors' fees for some services that technological advancements have made easier to perform.

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Mr. McGuinty's action has pushed one facet of the innovation group's work, an overhaul of physicians' pay, to the forefront. And while he might have considered Alberta – which gave its doctors a $181-million raise two months ago – an unlikely ally, its Health Minister, Fred Horne, said the province is revamping primary care, and will consider changes to fees.

"I think what the [McGuinty]letter does is it highlights there are some opportunities to look at physician compensation," Mr. Horne told The Globe and Mail. "Not only as a way to fairly remunerate doctors, which we want to do, but to also help drive improvements in the health-care system over all."

Doctors' pay is a frequent topic of debate at premiers' meetings. Other provinces also want to overhaul or cut fees, although the efforts aren't yet co-ordinated. British Columbia, Manitoba and Nova Scotia have all signalled they too are looking at changes to certain fees. If wealthy provinces such as Alberta go ahead, others have less reason to fear a brain drain if they do the same.

Don Drummond, the former chief economist with TD Financial who recently completed a sweeping review of Ontario government spending, said provinces must find efficiencies because health-care funding cannot continue to rise at its current rate.

"I think we are seeing the beginnings of the most dramatic changes we have seen in the organization of health care," Mr. Drummond said on Tuesday in a speech to Canadian pharmacists.

"I think we will see quite a bit of change in physicians' compensation" he said, "and, again, you are seeing Ontario take a leading position on that."

Doctors, however, are already fighting the moves. The Coalition of Family Physicians and Specialists of Ontario warned the trims to fees – $338-million, or 3 per cent of the $11-billion Ontario pays doctors annually – amount to "severe strain" and that physicians "should explore options in more hospitable practice jurisdictions." Mr. McGuinty, however, said his government has "hit that pause button for a couple of years," but isn't worried about a brain drain.

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In March, Alberta signed an agreement-in-principle on a short-term deal giving doctors an extra $181-million – days before the start of a spring election campaign in which Mr. Horne's party clashed with physicians. If finalized, it expires next year.

Alberta will then look for changes and "stability" in a new deal, and Mr. Horne said he hopes reorganization of his province's health system, specifically in primary care, will both deliver cost-savings and help retain doctors. He said Alberta doesn't see an opportunity to lure disaffected Ontario doctors west. "It's a much, much bigger question than who can pay the most," Mr. Horne said.

Manitoba Health Minister Theresa Oswald welcomed Mr. McGuinty's invitation, saying fees have been frozen for two years as Manitoba is "ensuring we get good value for the precious resources we invest in health care."

John Haggie, president of the Canadian Medical Association, criticized the Ontario government for unilaterally cutting fees without talking to doctors. "It kind of poisons the well for real transformation," he said.

However, Mr. McGuinty expected other provinces would join the cause, saying " ... I think we're going to see more than a few provinces take a very close look at what we've done and begin to adopt some of the approaches we've taken."

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