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Global physician budgets as common-property resources: some implications for physicians and medical associations
1Centre for Health Economics and Policy Analysis, McMaster University, Hamilton, Ont.
Insights
Canadian physicians face new economic challenges with fixed global budgets, shifting from fee-for-service. Applying common-property resource principles can help manage these budgets effectively.
Area of Science:
- Health Economics
- Public Policy
- Physician Payment Models
Background:
- Since 1990, Canadian physician payment has transitioned from open-ended fee-for-service to fixed global budgets.
- This economic shift introduces complex incentive structures for medical practitioners.
Purpose of the Study:
- To analyze the economic context of global physician budgets in Canada.
- To apply common-property resource management principles to physician global budgets.
Main Methods:
- Conceptual analysis drawing from economic theory on common-property resources.
- Examination of incentive conflicts between individual physician self-interest and collective budget constraints.
Main Results:
- Global physician budgets exhibit characteristics of common-property resources, presenting incentive challenges.
- Successful management of common-property resources involves boundary definition, rule specification, collective decision-making, monitoring, and conflict resolution.
Conclusions:
- Global physician budgets can be effectively managed by applying established common-property resource principles.
- Physicians and medical associations must adapt to these principles for successful long-term budget adherence and practice management.
Abstract:
Since 1990 payment for physician services in the fee-for-service sector has shifted from an open-ended system to fixed global budgets. This shift has created a new economic context for practising medicine in Canada. A global cap creates a conflict between physicians' individual economic self-interest and their collective interest in constraining total billings within the capped budget. These types of incentive problems occur in managing what are known in economics as "common-property resources." Analysts studying common-property resources have documented several management principles associated with successful, long-run use of such resources in the face of these conflicting incentives. These management principles include early defining the boundaries of the common-property resource, explicitly specifying rules for using the resource, developing collective decision-making arrangements and monitoring mechanisms, and creating low-cost conflict-resolution mechanisms. The authors argue that global physician budgets can usefully be viewed as common-property-resources. They describe some of the key management principles and note some implications for physicians and the provincial and territorial medical associations as they adapt to global budgets.