Health Teams and Primary Care Reform in Ontario: Staying the Course

Attempts to reform primary care and introduce new compensation methods for providers have a long history in Canada. Although standard fee-for-service models remain dominant in most provinces, new models based partly on the principle known as “capitation” have been used in recent years in both Alberta and Ontario. This Commentary reviews the arguments in favour of an enrolment-based approach – using the principle of capitation – as an alternative to fee for service as a method for paying primary care doctors, and describes the way elements of this approach have been introduced in Ontario over the past two decades. Unlike fee for service, which pays for services after they have been provided, capitation is a prospective payment method – the amount paid for a patient is determined in advance, before any services have been performed. In a pure capitation system, the doctor’s compensation is then completely determined in advance, based on the agreed-on capitation payments for patients in different categories and the number of people in each category that are enrolled in his or her practice. In the Ontario models, there are elements of capitation, but all contracts are based on a “blended” model in which fee for service continues to be a major element in the doctor’s income. Supporters of primary care reform involving new payment methods argue that, if properly implemented, such methods could improve both access to and quality of care and also save costs, both within the primary care sector and elsewhere in the system. The evidence so far, however, with respect to the effect of the Ontario reforms on total healthcare costs is mixed at best. Our analysis suggests that the high cost and relatively limited effects on patterns of care can be explained at least partially by the many safeguards and loopholes in the options that doctors were offered when they had to decide whether or not to opt for capitation under the new models. As a result, the favourable incentive effects that supporters of capitation typically point to have been present only to a relatively limited extent in Ontario. In our view, the province, rather than abandon the attempt to reform payment methods, instead should take it further and offer patients and doctors an alternative model that incorporates these incentives more fully, and that more closely resembles the capitation models that have been used with greater success elsewhere in the world. This could be done in a way that would complement and reinforce the role envisaged for the Ontario Health Teams that the current provincial government plans to create.