The facts about how physicians’ pay in Alberta has changed in the recent years
A detailed look at Alberta government’s own data on physician billings
It is really hard to pick what is the most egregious statement the Albertan government has said in its campaign to vilify doctors during the pandemic. However, if we had to chose, it would be the allegation that somehow doctors banked $1 billion into their accounts in the past four years while the rest of Albertans saw their incomes drop. Alberta’s Health Minister, Tyler Shandro, has directed his staff to repeat this claim well past the point of ad nauseam on social media and to news outlets. The thinking must be that this is how you get a voter base suffering from a struggling oil industry to turn on its allegedly “greedy” doctors.
If Alberta’s doctors made $1 billion extra over a four-year span, which suggests a whopping 25–30% increase in earnings, it would be shocking indeed. Good thing that this never happened.
In 2019, before Shandro shredded the doctors’ Master Agreement, the discourse between the government and doctors was more civil. But now that the Health Minister’s approval rating has plummeted, the rhetoric is elevated to new conspiratory heights. The Minister’s staff now endorse the idea that the NDP “wrote [doctors] a $1 billion cheque” when they were in power. This is part of a larger UCP smear campaign, pitching the idea that the Alberta Medical Association (AMA) and the NDP are a political coalition. But I won’t into that nonsense any further here.
All the payments the government has paid to its doctors, dating back to 2010/2011, is available in detail on Alberta government’s Open Data website. The amount of data is both impressive and overwhelming. It has everything we need to show the actual trend in physician payments over the years.
I’m a numbers guy, so explore where the $1 billion dollars claim might come from. The raw unadulterated data about physician payments is publicly available information for everyone to scrutinize. Numbers don’t lie. I encourage every reader to verify these numbers I present below for themselves.
Before we go on, it is imperative to remember that we are only talking about gross billings. This can’t be emphasized enough. What a physician bills is not what she or he takes home, not even close. From their gross billings, they pay for all their overhead expenses, including the staff they have to hire. This overhead ranges from 30% to 70%, depending on the type of practice and speciality. Even if we lived in a mythical world where the government cut a $1 billion cheque to its doctors, then about half of that would go right back into the province in the form of staff wages, rent, etc. and not into the pocket of doctors. Furthermore, physicians do not get any benefits. Insurance, maternity leave, sick leave, vacation, etc. all comes straight out of their own pockets. Of course, the premier, health minister, and their army of staffers will only ever talk about gross billings. After all, they are not in the business of tapering their hyperbole with facts.
Part I: The average gross billings of Albertan doctors in 2018/2019 was essentially the same as it was in 2015/2016
Let’s start off by looking how the average gross billing of Alberta’s physicians has changed since 2015–2019, and how that compares to average income of Albertans during that period. In the chart below, the average physician gross billing is calculated from total billings for that year divided by the total number of physicians. The average earnings in Alberta is calculated from reported average earnings. All values are adjusted for inflation as reported by StatCan.
If Jason Kenney is going to try to sow resentment towards doctors by saying their income has been rising “while Albertans’ incomes were cratering”, then Albertans need to hear the actual numbers. The average physician gross billing has both dropped and risen in the past four years. The average doctor’s billings in 2019 was only 0.7% higher than it was in 2015, well within statistical variation. In other words, the average physician’s earnings have been essentially flat.
However, let’s be clear: Albertans have had it tough for the past four years. It is no news to anyone that the average Albertan’s earnings have decreased and unemployment increased. I would not think to trivialize the impact the provincial recession has had on my fellow Albertans. It is fair to suggest that doctors’ earnings should reflect trends in earnings of the average Albertan. Doctors know the toll it has taken on their patients, and don’t think themselves as being immune to economic forces. This is precisely why the Alberta Medical Association (AMA) proposed across-the-board cuts for all billings during negotiations with the government to meet the savings the government was looking for, without compromising patient care. However, this was rejected by the Health Minister, followed by termination of the Master Agreement. He now has taken to unilaterally changing fees as he pleases, whenever he pleases.
Part II: The annual increases in total physician expenditures is directly related to maintenance of healthcare access for all Albertans in setting of increasing population as well as an aging population, and independent of any increases to physician incomes
Having established that the average physicians’ income has been essentially flat, next we turn our attention to the total expenditure on physicians. According to open.alberta.ca data, between 2014/2015 to 2018/2019, the province’s the total aggregate cost of providing physician services to patients increased by $745,623,598. The reasons for this are also clearly demonstrated by Alberta government’s own data. In the sections below I will lay out all the numbers, but to summarize, the three main reasons are:
- Total number of physicians in the province increased year-over-year, in pace with increased number of patients
- The average number of physician services provided to each patient has increased
- Increased complexity and and aging population has lead to large year-over-year increases in costs of providing care
Reason 1: Alberta’s population has significantly grown, and physician supply has kept pace to maintain high-quality care for Albertans
The chart below shows how the population of Alberta and the number of physicians in the province has changed in the past half-decade. While in percentage terms the physician supply has grown faster than population, this growth was necessary to maintain a steady ratio of patients and physicians in Alberta. The ratio of the number of people eligible to receive healthcare in Alberta and the number of available physicians to provide care for them has been flat (red line). It goes without saying that any disturbance in this equilibrium will lead to loss of continuity of care for complex patients and increased wait times across the board.
Reason 2: The average number of physician services sought by each patient has increased
The chart below demonstrates the cumulative increase in the number of physician services each discrete patient has received since 2015. In 2019, the average patient had access to 12% more physician services than in 2015 (red line). The exact cause of this is not clear, but increased medical complexity, and improved access to family doctors and specialists alike can be a driver. Patients seeking and receiving more care leads to increased physician expenditures. This is fairly independent of how much more services each physician is providing. As shown, although the average number of services each physician is providing has modestly increased compared to 2015 (blue line), the pace of this increase has been significantly lower than the services each individual patient received.
Reason 3: The number of people in the 65+ age group has been accelerating in Alberta. The cost of providing care to seniors is many times higher than any other age group.
The fact that the Canadian population is aging isn’t news. The chart below shows that the fast growing age group in Alberta has been individuals reaching the 65+ age group.
We arrive at perhaps the most important chart in this whole post. The chart below plots the average cost of physician services per each patient based on their age. The cost of providing care to those in 65–74 age group is nearly three times higher than the average of all the other groups. The cost for those 75 or older is 4–5 times higher. Older patients have more complex needs, and the vast majority of what our healthcare spends on each Canadian is heavily weighted on the final decades of life. Now combine this with the fact that the 65+ age group is the fastest growing proportion of our population. It doesn’t take advanced calculus to understand that this is the perfect storm hitting our healthcare system and perpetually increasing costs annually. Physicians have no direct control over this.
A fair question is whether the cost of providing individual services to seniors has increased. The average cost of each physician service is between $60 to $70, slightly varying between each age group. According to open.alberta.ca, this average service cost in 2019 was the same as it was in 2015 for all age groups. In other words, physicians have not at all seen an increase in the compensation they receive for each service they provide. Rather, more patients have required more services. This ties in to the earlier point (see Reason 2) that the average number of services provided by each physician has increased, in addition to an increase in the supply of physicians in Alberta.
Final point: To blindly insist that healthcare costs should be “maintained” directly translates to reduced access to healthcare for Albertans
The UCP are holding fast to the rhetoric that “we are not cutting physician payments, we are maintaining it”. Make no mistake, this directly translates to reduced healthcare services for Albertan patients. As demonstrated, in the context of increasing population and increased medical complexity of an aging population, the only way to “maintain” physician costs is 1) reduce the number of services offered to all patients or 2) reduce the number of physicians available per patient, which amounts to the same thing. Both of these are part and parcel of UCP’s “physician funding framework”.
Here is another way to look at it: if in 2015 the government had decided that physician expenditures should be “maintained” year-over-year until 2019, there would have been only two ways to achieve that: 1) deny Albertan patients access to a total of 11,130,000 (yes, that is 11 million!) services from physician during that time period or 2) reduce physician billings by about 20%. The latter would of course lead to many practices closing shop as running clinics would become financially infeasible, leadings to reduced access to healthcare for patients. Tyler Shandro’s strategy for Alberta’s healthcare system is a confused dog’s breakfast, but we see elements of both of these strategies in what he has done so far.
The financial issues facing our healthcare system are complex. There needs to be a plan and there needs to be a system view so we can meet the challenges without compromising quality of care for Albertan patients. Tyler Shandro has taken his own unilateral approach, with the bizarre strategy to go to war with all its doctors and to point all blame on the Alberta Medical Association for everything that is backfiring in his plan. He is shunning doctors when he needs them the most. His reasons can only be personal and ideological, and entirely detached from what is best for Albertan patients.
The only right step forward for the Alberta government is to reinstate the Master Agreement, go to arbitration with the AMA, and get back on the side of patients and doctors. i.e. the right side of history.
