The modes of physician remuneration and their effect on direct patient contact

Initiatives such as primary care reform have allocated millions of dollars towards the Canadian health care system. The way physicians are remunerated affects the supply of physician services and as such is essential to these initiatives to facilitate policy goals. However, there exists a gap in understanding how different modes of remuneration affect physician-patient contact. This paper examines if there is a significant difference between the average full-time-equivalent (FTE) of family physicians (FPs) remunerated through fee-for-service (FFS), salary, and blended arrangements. We used Nova Scotia physician billings dataset which tracks every services performed by both FFS and salaried physicians over the fiscal year 2003 to 2004. We estimated two semi-logarithmic models to examine the relationship between (1) modes of remuneration and FTE, and (2) modes of remuneration and total services, using ordinary least squares method. The National Physician Survey shows a significant difference between the current modes of remuneration and the preferred modes of remuneration; thus ruling out the possibility of selectivity bias. The results show that compared to the FFS FPs, the salaried FPs and blended FPs produce on average 40.46% and 23.13% less FTE respectively. It also indicates that compared to the FFS FPs, the salaried FPs and blended FPs deliver 53.54% and 31.49% fewer services on average.