Doctors' pay should be based on the right blend of incentives

OTTAWA, May 22, 2014 /CNW/ - How we pay family doctors can have a significant impact on the quality of care and should be aligned with the overall goals of the healthcare system. The Conference Board of Canada report, Family Doctor Incentives: Getting Closer to the Sweet Spot, recommends that policy-makers aim for the right blend of pay incentives, guided by principles that consider health care goals, global experience, and human motivation.

"Pay structures need to support team-based care, align with doctors' basic motivations to provide quality care, and support improvements in health care," said Danielle Goldfarb, Associate Director, The Conference Board of Canada. "But there is no one single best payment method to reach these goals. Using a blend of different pay models maximizes the advantages of each model while reducing the impact of their weaknesses."


  • There is no single best pay model.
  • Instead, a blend of incentive models maximizes the advantages of each while minimizing each model's weaknesses.
  • Paying for performance can improve outcomes on targeted indicators, but giving too much weight to pay-for-performance can undermine doctors' motivations and health care quality.

Examples of  compensation models include:

  • Fee-for-service: Doctors get paid for each service provided.
  • Pay-for-performance: Doctors are paid based on achieving specific targets.
  • Salary: Payment of annual salary to work a set number of hours per week.
  • Pay-per-patient (or capitation): Payment made for every patient enrolled in the doctor's practice.

While some argue in favor of one pay model over another, past Canadian and international experience shows that there is no single "best" pay model which will achieve the best health care outcomes. Each model has its pros and cons, and is appropriate for reaching different outcomes and in different contexts. For example, the pay-per-patient approach creates incentives for collaboration and preventative care.

The report profiles three payment models which demonstrate important lessons while trying to design effective incentive blends:

  • Ontario's experience with paying doctors based on the number of patients under their care helped with doctor recruitment and retention, team-based care, and significantly reduced the number of people who don't have a family doctor. But too many loopholes, weak accountability, and little monitoring of performance may undermine the system's goals.

  • The U.K. National Health Service's experience with pay for performance introduced a significant financial incentive for meeting certain criteria. But the system rewarded meeting the measures rather than improving care or achieving better health outcomes. In addition, most family practices met the full set of criteria and received full performance pay, so it is not clear the system caused improvements to care.

  • In the United States, Kaiser Permanente's salary model constantly measures performance, but rewards it in a different way. In the 1990s, Kaiser Permanente's (KP) compensation scheme put a portion of doctors' pay at risk if they didn't achieve certain targets. This resulted in a negative environment focused too heavily on pay and led KP to completely change how it compensated its physicians. Its current model is salary-based and has a small bonus element. Bonuses are based on both individual and group performance, as well as patient satisfaction, and are awarded to each medical facility rather than individuals. This model also emphasizes non-financial incentives, such as an extensive systems of formal awards and frequent feedback from leaders when doctors are doing a good job.

This report was prepared by the Canadian Alliance for Sustainable Health Care (CASHC). Launched in 2011, CASHC is a program of research and dialogue, investigating various aspects of Canada's health care challenge, including the financial, workplace, and institutional dimensions, in an effort to develop forward-looking qualitative and quantitative analysis and solutions to make the system more sustainable.

Primary care reform, along with the sustainability of the health care systems, innovation, and wellness and prevention are among some of the topics being discussed today at the Conference Board's Western Health Summit 2014, held in Edmonton.

SOURCE: Conference Board of Canada

For further information:

Yvonne Squires, Media Relations, Tel.: 613- 526-3090 ext. 221


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