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Question
How are physicians paid in Canada?
Answer

The provincial and territorial governments of Canada are responsible for healthcare services provided within their jurisdiction, including the remuneration of physicians and other healthcare professionals. They work in collaboration with the Government of Canada to administer Canada’s Healthcare System – Medicare – under the terms of the Canada Health Act.

There are two primary methods by which physicians in Canada are paid:

  • Fee-for-service is an arrangement whereby the professional, acting as an independent and private contractor, is paid a set amount for each service provided. In 2015-16, 72% of all clinical payments to Canadian physicians were made using this method1.
  • Alternative clinical payment includes all payment arrangements other than fee-for-service. This method is growing in popularity among new physicians, having increased from 10.6% of total clinical payments in 1999-2000 to 28% in 2015-16. Examples of alternative clinical payment include the following2:
    • Salary: Regular payment made to a professional who is an employee of an organization and is responsible to managers for services provided. In Canada, salaried physicians, although they provide services within institutions, generally receive their salary from the provincial insurer rather than the institution in which they work.
    • Retainer: A minimum salary provided to a physician that can be coupled with fee-for-service payments to encourage service provision in areas of lower patient volume.
    • Capitation: Payment made according to the number of people on a patient list. The fee structure can include a premium for complex cases and may be adjusted for the socio-demographic profile of the patient population.
    • Target payments: Payments made for reaching a target level of services delivered that are particularly useful for preventive services.
    • Blended: Payment made using a combination of several remuneration methods. Emerging interdisciplinary primary care practice models (e.g., Family Health Teams in Ontario) combine salary, capitation, and sometimes fee-for-service compensation.
    • Block funding: A funding arrangement commonly used in Canadian hospitals, in which the institution is paid an annual amount to provide services. This amount is generally calculated according to the type and quantity of services provided the previous year and is adjusted for changes in demographics, healthcare costs, and inflation.
    • Funding by episode of care: A remuneration method in which fees are scheduled according to the patient’s diagnosis and classified in a way that reflects the average cost of care required for that diagnosis.

 

For more information about remuneration methods:

A profile of physicians in Canada in 2016

New in Practice Guide, Canadian Medical Association

2014 Survey Results, National Physician Survey

Canada’s Health Care System, Health Canada

National Health Expenditure Trends, 1975 to 2017

Glossary

Alternative clinical payments: Payment arrangements by methods other than fee-for-service. Some preferred methods include salaried, by capitation, and blended.

Blended: Payment made using a combination of several remuneration methods. Emerging interdisciplinary primary care practice models (e.g., Family Health Teams in Ontario) combine salary, capitation, and sometimes fee-for-service compensation.

Block funding: A funding arrangement commonly used in Canadian hospitals, in which the institution is paid an annual amount to provide services. This amount is generally calculated according to the type and quantity of services provided the previous year and adjusted for changes in demographics, healthcare costs, and inflation.

Canada’s Healthcare System – Medicare: An insurance program managed by the federal, provincial, and territorial governments that is designed to ensure that all residents have reasonable access to medically necessary hospital and physician services on a prepaid basis. The provincial and territorial governments are responsible for the management, organization, and delivery of health services for their residents.

Capitation: Payment made according to the number of people on a patient list. The fee structure can include a premium for complex cases and may be adjusted for the socio-demographic profile of the patient population.

Funding by episode of care: A remuneration method in which fees are scheduled according to the patient’s diagnosis and classified in a way that reflects the average cost of care required for that diagnosis.

Retainer: A minimum salary provided to a physician that can be coupled with fee-for-service payments to encourage service provision in areas of lower patient volume.

Target payments: Payments made for reaching a target level of services delivered. They are particularly useful for preventive services.