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Addressing physician spending

The Alberta government is addressing health spending by looking at current physician compensation models.

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The Alberta government, Alberta Medical Association (AMA) and other partners work together on initiatives and programs that strengthen the health system for all Albertans.

This collaborative relationship with the AMA is very important and has resulted in a wide range of health system improvements, including: enhanced patient access and quality care, the creation of Primary Care Networks, Electronic Medical Records, Connect Care and the development and implementation of opioid response strategies.

Addressing health spending

Past successes, however, do not preclude us from having tough but necessary conversations today.

We are committed to addressing health spending in order to meet Albertans’ health care needs and ensure sustainability of the health system for future generations. The goal is to find efficiencies, reduce costs and get better results for Albertans.

Physician spending

Physician costs are the second highest expense in the Health ministry’s budget.

There is $5.3 billion or almost 25% of the health budget being spent on physician compensation and development this year.

Average payments to Alberta physicians are 24% higher per person than comparable provinces, such as Ontario, Quebec and British Columbia. Today, a doctor in Alberta earns approximately $100,000 more every year than a doctor in British Columbia.

The report by the Blue Ribbon Panel on Alberta’s Finances, known as the MacKinnon report, found physician expenditure growth was close to 300% since 2002, while the average of comparator provinces was 200%. Alberta also has one of the highest numbers of physicians per 100,000 population.

How have physician costs grown in Alberta since 2002? Since 2002, Alberta's physician expenditure growth per capita was 69%.

Need for change

The MacKinnon report indicated a major impediment to reducing the cost of physician services in Alberta is the terms and decision-making process in the agreement between government and the AMA.

The report pointed out several factors that make it difficult to make significant changes in how physicians are paid and to effectively control increasing costs. These factors include the AMA’s position that reduction in fees paid for one type of service must be offset by increases in other areas, as well as the voting structure of the Physician Compensation Committee.

In its recommendations, the MacKinnon report said government should limit the increasing cost of physician services by providing incentives for physicians to move to Alternative Payment Plans and by renegotiating the agreement with the AMA.

AMA Agreement

The AMA Agreement is negotiated between government and the AMA and outlines how physicians in Alberta are compensated.

The current AMA Agreement has been in effect since April 2011, and was preceded by other agreements between government, the AMA, and at times, Alberta Health Services. The AMA Agreement can only be terminated through mutual agreement of the parties, or through legal routes.

Only certain financial matters in the AMA Agreement ever expire:

  • the annual percentage changes to compensation rates and prices for physician benefit and support programs
  • the term over which those percentage changes apply

Financial matters in the current agreement expire on March 31, 2020.

Negotiations for a new agreement have begun with physicians. We will work with physicians to establish a new model that is respectful to them, while being more affordable to taxpayers. It is important that the agreement works in ways that enable Albertans to realize better health outcomes and build a stronger and more sustainable health system.