Paying physicians more to get more — or to get less
November 30, 2011
TORONTO, ON – Labour economics can provide a valuable perspective in addressing the supply of doctors and access to care, says an article in the December 6, 2011 issue of the Canadian Medical Association Journal (CMAJ).
“Understanding and accurately predicting the response of physicians to incentives is essential if governments wish to increase the supply of physician services,” says Prof. Brian Golden, who holds the Sandra Rotman Chair in Health Sector Strategy at the University of Toronto’s Rotman School of Management, who wrote the article with Rotman Prof. Doug Hyatt and Rosemary Hannam of the Rotman School’s Centre for Health Sector Strategy.
Access to health care in Canada is a challenge in many regions, and while there has been an oversupply of physicians in the past, many people currently have problems getting care. “Central to the issue of access is the adequacy of the supply of physicians — specifically, whether the number of physicians and their work effort sufficiently addresses the health care needs of the population,” write the authors. “Supply is appropriately managed when there is neither a shortage nor surplus of services.”
Provincial and territorial governments can help increase access to care by setting policies that influence physicians to increase their working hours and thereby affect the supply of services they provide. Ironically, by having such a strong impact on hours worked, the authors report that increased pay to attract more physicians can also have the unintended consequence of reducing the hours physicians choose to work.
Governments may provide nonwage compensation such as recruitment or retention bonuses, repayment of tuition fees, relocation support or staffing costs. However, nonwage rewards not linked to hours worked “also reduce the fixed costs of a practice and create a pure income effect, thereby inducing fewer hours of work and fewer services provided.”
“Linking compensation to time worked or services provided, as opposed to forms of pay that are unrelated to time worked, will better ensure the goal of increased work hours,” the authors conclude. “Policy-makers should recognize that policies for compensation may result in just what we hope for — or just the opposite.”
CMAJ showcases innovative research and ideas aimed at improving health for people in Canada and globally. It publishes original clinical research, analyses and reviews, news, practice updates and thought-provoking editorials. In 2011, the journal celebrates 100 years of publishing medical knowledge in print and now online at cmaj.ca.
For the latest thinking on business, management and economics from the Rotman School of Management, visit www.rotman.utoronto.ca/NewThinking.
The Rotman School of Management at the University of Toronto is redesigning business education for the 21st century with a curriculum based on Integrative Thinking. Located in the world’s most diverse city, the Rotman School fosters a new way to think that enables the design of creative business solutions. The School is currently raising $200 million to ensure Canada has the world-class business school it deserves. For more information, visit www.rotman.utoronto.ca.
For more information, please contact:
Manager, Media Relations
Rotman School of Management
University of Toronto
Follow Rotman on Twitter @rotmanschool