Fee-for-service: an ethical conflict

Andrew Mitchell suggests that innovative institutional changes are needed to sustain universal healthcare in Canada.


When Canadian provinces instituted universal healthcare, doctors were reluctant to become salaried employees, so a system of fee-for-service was developed. This payment model creates incentives for physicians to focus on quantity instead of quality of care and turns patients into bits of piecework. Indeed, most of us have experienced the whirlwind consultation with a doctor eager to get to the next patient.

Fees for specialist services are greater than those for family doctors. This encourages physicians-in-training to specialize and reduces the supply of family doctors. On average, doctors in Canada earn over $250,000 annually. Specialists often make twice this amount. Some specialists earn more than a million dollars a year. These kinds of salaries encourage individuals to enter medicine for reasons of high income and status, rather than a true desire to serve those who are sick.


Healthcare services are expensive and so they are rationed by provincial governments that restrict both the numbers of doctors and specialists, and the availability of operating rooms and diagnostic equipment. In this way, governments create an artificial, administered market for healthcare characterized by a scarcity of healthcare providers and high costs. This rationing often results in wait times for treatment, with some patients waiting for more than a year in pain and distress.

Physician associations have bargained with provincial governments and received benefits for doctors that usually would be considered employee benefits. In British Columbia, for example, the benefits include a disability plan and continuing education benefits. Provincial governments also subsidize malpractice insurance which is provided by the physician-governed Canadian Medical Protective Association. This well-funded organization creates an uneven playing field in the courts.

Universal healthcare, a key element of social progress in the 20th Century, is being jeopardized by the failure of governments to control ‘big feeders.’ In most provinces, healthcare spending accounts for approximately 40% of taxes collected. We pay for a first-class system and yet we accept poor performance.

The Canadian government has already taken some initiatives to promote patient safety. For example, it has established the Canadian Patient Safety Institute.

It could show further leadership in developing a patient compensation scheme similar to that provided by worker compensation agencies. This could replace the present physician protection scheme that is largely taxpayer-funded and generally works against the interests of patients. A compensation agency would focus on quality improvement to reduce the cost of errors and protect patients.

In addition, in an effort to reduce costs, the Canadian government could also play a leadership role in facilitating bulk purchasing of drugs and medical equipment for all provinces. Other countries such as New Zealand and France have successfully implemented purchase methods that reduce costs.

The Canadian government could designate funds to encourage provincial governments to introduce a new medical education program. Key elements of this program could include payment of tuition and living expenses under a forgive-able loan program. In exchange, medical students would agree to work on salary once qualified, and they would only be required to pay back the loan if they left Canada for non-humanitarian work. A program of this nature would enable a transition to salaried arrangements for future doctors.

Universal healthcare is there to help those who are sick. Canadian taxpayers are willing to contribute to the large pool of funds required to provide healthcare to help those who are sick. Governments have a duty to manage these funds effectively and need to understand that “more money” is not the only solution and may be part of the problem. We need innovation in our institutional arrangements to help ensure the effective delivery of healthcare. These arrangements should encourage all healthcare providers to embrace an ethic of care for the sick.


Andrew Mitchell is a retired Professional Forester.

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