How are doctors paid?

The two most common forms of compensation are systems known as fee-for-service and salary. Fee-for-service is the most common form of remuneration, comprising 70% of the payments to physicians in New Brunswick. In every province, the professional association that represents doctors with government organises the input of physicians into negotiations. In New Brunswick, the Medical Society is formally consulted on salaried physician compensation, and formally negotiates fee-for-service physician compensation.

Salaried Physicians

Salaried physicians are employees of the government of New Brunswick. Much like other public sector workers, they receive a salary, a pension, and benefits. The Medical Society is consulted on the Medical Services Pay Plan, which is the arrangement by which their compensation is set.

Approximately 25% of New Brunswick physicians are either salaried employees of the Province of New Brunswick or are remunerated by an alternate payment plan.

Fee-for-service physicians

Fee-for-service physicians are independent from government and receive their income by billing fee codes to Medicare, the provincial health insurance plan. The Medical Society formally negotiates a contract with the Province for their compensation, which determines the Medicare Fee Schedule.

Fee-for-service physicians essentially run small businesses and pay their own staff, rent, office space, and other overhead costs. They receive no pension, vacation, or other common benefits. Estimates of overhead costs range from 25-40% for most physicians. This figure depends on how many staff they employ, what kind of medical equipment they need to operate to practice effectively, and the use of equipment like electronic medical records.

Fee for-service physicians bill their work to Medicare, the provincial health insurance plan, based on a fee schedule negotiated with the province. Different doctors bill different codes based on the services they provide, and their billings can always be checked by the government. The fee code schedule almost always lags the rapidly-changing practice of medicine – sometimes physicians can do evidence-based, safe, and advanced procedures for some time before an appropriate fee code is created for it. Therefore, government and physician cooperation on the maintenance of the fee schedule is essential.

The following is a sample of physician fees for common services:

Office Visit- $ 44.08
Delivering a Baby- $ 570.00
Newborn Infant Care- $ 106.40
Nursing Home Visit- $ 60.80
Rabies Injection- $ 12.16
Appendectomy $ 384.00
Tonsillectomy - Under 16 years - $109.20

Some fees can be paid at different rates depending on how they are billed and the time of day. For example, some physicians are paid for on-call services, which means they are responsible for providing care to patients in emergency or after-hours situations and receive additional compensation. It can also work the other way; a surgeon who starts a procedure and finds a life-threatening condition while the patient is in the operating room typically bills a reduced rate for the additional procedure, because they were also completing another operation at the same time.

The New Brunswick Medical Society’s Role in Negotiations

Doctors in New Brunswick are paid through a variety of different arrangements, typically negotiated with the Medical Society on their behalf. Negotiations and consultations typically occur over a four-year period. While under active negotiations, the Province and the Medical Society typically refrain from any public commentary.

NB Physician Compensation and National Comparisons

The Canadian Institute for Health Information shows that we are 7th of 10 provinces on per capita spending for physician compensation. A recent CD Howe Report names us as 8th of 10. Either figure means NB is in the bottom 1/3 of all Provinces in terms of how much we spend per person on physician compensation.  No matter how you look at it, we need to remain competitive with other jurisdictions. In practical terms, we are behind Nova Scotia and far behind Ontario and Alberta.

Per capita spending on medical services, 2010. Canadian Institute for Health Information.

Why do we need to remain competitive with other provinces?

Let’s be clear: doctors consider more than income when deciding where to practice.  They consider many things, including the ability to provide good care, use of their specialised skills, where to raise a family, where spouses can obtain employment, and how doctors are treated in specific provinces.

The fact is that physicians are highly mobile professionals who are constantly recruited to go to other jurisdictions. Those coming to or staying in New Brunswick have made a choice to stay in the province for practice, family, or community reasons. We need to ensure they have an incentive to stay, but also maintain a strong relationship between doctors and government.

NB Physician Compensation over time

The proportion of the health budget spent on physician services is only slightly higher than it was thirty years ago, according to the Canadian Institute for Health Information. In 1993, physician services payments were 16.3% of the health budget; that number increased to 17.9% in 2003, and back down to 17.6% in 2010. While health costs in general have gone up substantially, physician payments remain steady as a proportion of that spending.

Changes in the proportion of different types of total health spending (New Brunswick, 1975-2010)