tllg Medical dollars and data: collection, recollection.

Part IV: fee schedules and income disparities

By Milan Korcok
When

fec^

physicians first started informally listing their "pecuniary acknowledgements" for professional services, they could not have realized they were embarking upon a new science. Quite routinely, medical associations, licensing bodies and health ministries have used the fee schedule to monitor quality control, the use and abuse of publicly funded service programs, dis tribution of costs and services and the incomes of physicians. Because virtually each specific item of medical service is now recorded in computers, it is possible to reconstruct the patterns of practice of any indi vidual physician or group of physicians. This is of inestimable value in the compilation of retrospective data. But what started out simply as a means of providing uniformity among colleagues is now considered, by many, a potentially powerful mechanism for changing the face of medical care it self. In its more pristine state, the in dividual fee might be considered no thing more than fair pay for the time and expertise involved in a particular piece of work. But when tariff committees talk about a realignment of fees within existing schedules, there is usually a hidden agenda. There is more at stake than just putting a dollar value on the time required to provide a specific medical procedure or service. Because of the characteristics of fee their specificity and their schedules they can serve other malleability purposes. It is this use of provincial fee

tions of the people who tried to implement them. In Manitoba, Executive Vice Pres ident Richard Sprague of MMA claims there are just too many variables in professional practice to expect that manipulating fee schedules would remedy the disparities. The MMA has had some unpleasant experiences in using the fee schedule and government ben efit schedule 'to correct intersectional differences. Some people insist on working harder than do others; some are in a more favourable setting where they can serv ice more patients in a shorter time; some require more time with their pa tients because of some peculiarity either in the way they work or in the makeup of their patients; physicians in heavily populated areas may have their patient loads diluted when new offices open just up the street, while their unchallenged colleagues in rural areas have more work than they can handle. Says Sprague: "Let's make sure the fee itself is reasonable, practical and realis tic; let's see that it bears some resemblance to fees across the country, and let the chips fail where they may." OMA Director of Administrative Services Peter Fraser, who has used perhaps the most sophisticated approaches in trying to realign intersec tional disparities, is more receptive to this "let the chip fail" philosophy than he might have been a couple of years
ago.

trists, anesthetists and general practi

tioners. In all provinces where disparity cor rection is a priority the principle has been to apply the greatest share of negotiated settlements to the lowest earning groups, sometimes even freez ing the fees of high earners. Most of the problems have occurred where the size of the overall negotiated settlement has been so small that it was necessary to rob Peter to pay Paul. Nonetheless, since the advent of medicare, disparities have been con sistently narrowed in most provinces. Data provided by Dr. Robert A. Armstrong, director general of health insurance, Department of National Health and Welfare, substantiate the strides made in this area. In 1966, for example, for every $100 of average net professional income taken in by the Canadian general prac titioner, the orthopedic surgeon took in $185, the plastic surgeon $183 and the

cardiovascular and thoracic surgeon

otolaryngologist $166. By 1971 this 1 to 1.8 range had nar rowed. For every $100 of average net professional income taken in by a Ca nadian general practitioner, the ortho pedic surgeon took in $158, the allergist $157, the plastic surgeon $155, the
$144.

schedules to serve other purposes that has made them such contentious and politically explosive vessels. The existence of significant income disparities among equally hard work ing and dedicated groups of physicians has caused much anxiety. This anxiety has been translated, in most provinces, into attempts to use the fee schedule to reduce the disparities and to justify the remaining disparities by length of professional training, degree of ex pertise and the extent of responsibility for the overall life and wellbeing of the

patient.

As discussed in previous chapters, frustration abounds in some provinces where attempts to correct disparities have not met the hopes and expecta-

Despite massive efforts to rearrange the Ontario fee schedule to bring the general practitioner into closer econom ic kinship with the specialty groups, GPs' incomes just seem to remain static. And static, in these days of soaring inflation and overhead, is a euphemism for going steadily back ward. Jack Paul, secretary treasurer for the British Columbia Medical Association, is more optimistic about using the fee schedule to reduce intersectional dis parities. Settlements which give the profession large sums in addition to the across-the-board fee schedule in creases are being used precisely for to level disparate in this purpose comes. And over the past couple of years much has been done to bring up the earnings of groups such as psychia

The OMA policy is to reduce the differential to a 1 to 1.4 ratio but the association admits to considerable dif ficulty in hitting the target. In practically all cases, this reduc tion has been facilitated by hitting the top sections at the expense of the lower
ones.

But it is becoming more and more clear that some of the surgical sections, as well as radiologists, ophthalmolo gists, otolaryngologists and allergists, are getting tired of playing Peter. One of the major considerations for tariff committees in seeking to reduce intersectional disparities is that many specialists have a considerably shorter time in which to accumulate income. Studies by Dr. Armstrong's statis tical group show some sharp differences in earning potentials of different types of practitioner. Based on 1969 and 1970 data, the average general practitioner begins to enter his peak earning period at about 29 (peak here designated as the year

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most

of the support from disparity allocations. Looking at fee schedule levels an other way, for each $100 paid by Ontario's OHIP to cover general practi tioners' billings (excluding laboratory services) the BC plan would have paid out $116.19 to the general practitioner assuming the patterns of practice were uniform. By comparison, the New foundland plan would have paid

$78.65.

Pathologists, according

to DNH&W

statistics,

enter

peak

e;

during which
at least

averages as the threshold) total only 27 years for the cardiovascular sur geon, 32 years for the general surgeon and 28 years for the urologist, com pared to 38 years for both the psy chiatrist and the general practitioner. Of course the data also indicate that

he is expected to earn 75% of the average of all GPs in the nation). He continues at or above this level until age 67. The orthopedic surgeon, plastic sur geon, and radiologist don't enter their peak earning periods until at least 33, the cardiovascular surgeon 37. And then, most of these specialists find they must begin to taper off their activities at an earlier age. According to the data, the peak earning periods (using 75% of section

ophthalmologists and otolaryngologists, who are consistently among the top earning groups from province to province, experience very little delay in getting into the peak earning years and show considerable endurance re maining there. Compared to the 38 years of peak earnings for GPs and psychiatrists, the ophthalmologists and otolaryngologists total 36 and 37 years respectively at or above the 75% threshold range, assuming they stay in practice. One of the idiosyncracies of fee schedules is that higher fees do not necessarily mean higher incomes. It's a factor that continues to agitate physi

cians in British Columbia. For several years, British Columbia has had the most favourable ratio of physicians to population. It has also generally had the highest fee schedule for actual dollar amounts attached to specific medical procedures. Yet because of an unusually heavy

and Prince Edward Island stood in a middle group not far from the leaders; and Nova Scotia, Saskatchewan and British Columbia, in that descending order, occupied the lowest ranks. In 1971 British Columbia had the second lowest average gross earnings $49 900 (Nova Scotia was lower by a shade, at $48 900) and the lowest net earnings at $31 100. At the same time the overhead costs for BC physicians exceeded those in eight other provinces. By way of comparison, Alberta phy sicians averaged the highest gross earn ings $62 200 (compared to Ontario at $61 700), and the highest overhead (with Ontario second). The result was that Ontario physicians in 1971 ended up with the highest average net earn ings of all physicians in Canada. As of early 1974, the BC health in surance program paid $38.80 for re ferred consultation fee by a psychia trist. In neighbouring Alberta the pro gram paid only $28 for a comparable service, and OHIP in Ontario paid $36. The national average was $31.60. For a referred, complete examina tion in the office, the BC payout was, again, $38.80, in Ontario $22.32, the national average $24.12. Yet psychiatry in British Columbia is repeatedly the section that needs

province. In 1971, the first year in which all provinces participated in federal-provincial cost-shared medicare, Quebec, Ontario and Alberta stood at the high end of the net earnings range; New foundland, Manitoba, New Brunswick

concentration of physicians in Vancou ver and Victoria and a consequent competitive situation, physicians in British Columbia continue to be among the lowest earners of physicians in any

For each $100 spent by Ontario's OHIP to cover specialists' fee sched ule billings (excluding laboratory serv ices) the BC plan would pay specialists $107.48 (again the highest fee schedule payout in the country). Despite such levels, BC physicians continuously find themselves in the unenviable position of trying to catch up to the net incomes of their colleagues to the east. More and more* students of fee schedules are finding that the schedule can go only so far in changing the structure of medical services delivery and in countering the influence of so many variables. As Jack Paul of the BCMA em phasizes, some of these variables are voluntary a physician's decision to phase down his operation, to work less hard, to enjoy his surroundings a little more, to participate in family activities more. It has often been claimed that anyone moving to British Columbia who doesn't take advantage of the geography is committing a crime. But there are also the involuntary variables, again as manifest most clearly in some parts in BC high costs of practice and fewer services per physician because of a greater concen tration of practitioners in lower BC. When there is only so much in the pot and those who come to sup from the pot increase in numbers from day to day, everyone soon becomes leaner. It's a lesson that physicians in other provinces particularly Ontario are beginning to learn. Fee schedules can be manipulated; equity can be sought among the sec tions; various formulae can be devised to counter inflation, the cost of living and the cost of practice. But it is becoming more and more evident that with demand for physi cians' services no longer unlimited and with more and more physicians enter ing into competition, the natural law of supply and demand is going to make computerized manipulation of fee schedules either a much more exact science or an exercise in obsolescence.
.

Reprints of the entire four part series by Milan Korcok are available from CMA department of communications, Box 8650, 1867 Alta Vista Dr., Ottawa K1G 0G8.

996 CMA JOURNAL/APRIL 19, 1975/VOL. 112