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Report: Common payment model among Canadian doctors presents a conflict of interest

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Lloyd Braun May 10, 2017 6:03 am 1,349
Medical patient

One thing you might not know about your doctor is how he or she is getting paid.

That could be because 1. why would you?; and 2. because there are actually several different payment models doctors in Canada can pursue.

The three primary ones are salary, capitation (doctors are paid a fixed amount per patient), and fee-for-service, where doctors are paid based on the procedures they use to treat patients.

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As a duo of behavioural economists recently outlined in a Journal of the American Medical Association Viewpoint article, that last one carries some concern. Authors George Loewenstein and Ian Larkin argue that the fee-for-service method presents a conflict of interest that could be even more unscrupulous than doctors getting cozy with big pharma, for example.

“Paying doctors to do more leads to over-provision of tests and procedures, which cause harms that go beyond the monetary and time costs of getting them,” says Loewenstein. “Many if not most tests and procedures cause pain and discomfort, especially when they go wrong.”

What he’s suggesting is that doctors prescribe patients more and different treatments than would be best for them.

Almost 40% of all Canadian physicians receive at least some of their income from non-fee-for-service arrangements, according to a 2008 Canadian Institute for Health Information report.

Larkin and Loewenstein dismiss the full disclosure of a physician’s financial interests and better educating physicians about the potential for business model–related conflicts of interest as effective solutions.

Instead, they suggest shifting incentives to straight salary-based compensation. Such a move would benefit patients, who would receive the most streamlined care, as well as physicians, who are less satisfied when a higher share of their income comes from fee-for-service arrangements according to a 2006 Canadian Institute for Health Information report.

“The high levels of job dissatisfaction reported by many physicians may result, in part, from the need to navigate the complexities of the fee-for-service arrangements,” said co-author Larkin, an assistant professor of strategy at UCLA’s Anderson School of Management.

“Instead of focusing on providing patients with the best possible medical care, physicians are forced to consider the ramifications of their decisions for their own paychecks.”

A National Physician Survey (the largest survey of Canadian doctors), meanwhile, revealed physicians are looking to move away from fee-for-service compensation. The percentage preferring fee-for-service as their sole source of income declined from 50% in 1995 to 28% in 2004 and to 23% in 2007.

Arthur L. Caplan, a professor of bioethics at New York University’s Langone Medical Center, says Larkin and Loewenstein’s report is the first of its kind to explore “salaried compensation as a remedy for conflicts of interest that arise from fee-for-service incentives.”

Let’s hope this research catches on among the decision-makers of Canada’s medical industry.


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Lloyd Braun
I used to sell computers, now I write for them.

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