The Price of Peace. The Structure and Process of Physician Fee Negotiations in Canada

Canadian provincial governments and medical associations engage in periodic negotiations to determine how much will be available each year for fee payments to physicians and under what conditions those payments will be made. Collectively these negotiations determined the allocation of $250 per Canadian in 1989/90; in some provinces this represents nearly a quarter of all government health care expenditures. We know little about the negotiating structures and processes used to determine this large allocation of public funds. Neither has there been any systematic appraisal of how different provinces have adapted these negotiations to the changing context of health care policy since the inception of Medicare twenty years ago. This study synthesized the information from: interviews with over fifth individuals involved with fee negotiations in seven of Canada’s provinces; numerous studies, newspaper articles, reports, contracts, and legislative statutes concerning physician-government relations; and comparative physician utilization and cost data, to describe the existing fee negotiation structures and processes, and trace their evolution since the start of Medicare. The desire of governments to move the focus of negotiations from medical prices (fees), to average incomes (the product of fees and the quantity of services), and finally to total medical expenditures on physician’s services (the product of average incomes and the number of physicians) has been the most persistent and pervasive influence on negotiations. The response in the provinces to this, and the other issues in negotiations, has been strongly mediated by whether they adopted a model of bargaining which was adversarial, mutually accommodative or Gallic (Quebec’s more technical variant of mutual accommodation). By 1992 all the provinces has significantly increased the complexity and formality of their structures and processes. However, only those from a mutual accommodation approach (maritime provinces, Saskatchewan, and the recent converts of Ontario and Alberta) were negotiating both remuneration and related medical policy issues in a cooperative fashion. In Quebec, where ongoing negotiations are maintained, physician payment is resolved comprehensively and cooperatively by somewhat isolating it from the broader medical policy issues that may be contentious. Finally, in Manitoba and British Columbia an adversarial model appears to be driving the government toward legislated rather than negotiated solutions, and to be entrenching the medical associations within an industrial relations model of confrontational political and public bargaining. These observations on structure and process may, of course, be unrelated to the satisfaction of either or both parties with the outcomes of fee negotiations – outcomes were not the focus of this study. Nevertheless, each provincial chapter does include time series and comparative data on fee levels, total medical expenditure, utilization rates, and other indicators. These provide a context in which to evaluate changes in process and structure. The emerging approach of most provinces is to embed periodic fee negotiations in a larger web of ongoing consultations on broader issues. This is designed to accommodate the increasingly complex and interrelated issues which are encroaching upon fee negotiations. In the next few years these structures and processes will potentially have to absorb and resolve such contentious matters as: physician supply and distribution controls; equitable limits on the earnings of high-income physicians; the implementation of alternate methods of payment, as well as the ongoing negotiation of remuneration levels, benefit packages, working conditions, and so on for these methods; potential decentralization of physician expenditure budgets to devolved local authorities; assessment of, and action on, areas of poor quality or inappropriate care; and reflection of quality of car and clinical effectiveness concerns in the relative value and/or even the deinsurance of specific fee items. Failure to resolve these issues amicably is likely to lead to a return to the atmosphere of the mid-1980s, when important issues in the overall management of the health care system were displaced and neglected in many provinces by an all-consuming search for ways to manage the more narrow ongoing but unavoidable physician-government relationship.