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News Release

Social Contract Clawback
Magnifies Fee-for-Service Distortions

December 18, 1994

Ontario's doctors will find their pay cheques docked by six per cent starting this month under a Social Contact provision negotiated between the provincial government and the Ontario Medical Association.

The clawback, which the OMA has decided to apply on a straight percentage basis rather than on a sliding scale based on income, will penalize lower-billing physicians who typically take more time with patients, says the Medical Reform Group, a physician group critical of OMA policy.

"This will be demoralizing for the most conscientious physicians who are already under considerable stress," said MRG spokesperson Dr. Gordon Guyatt, "and therefore could potentially compromise patient care."

Under the social contract, Ontario physicians are subject to a "hard cap" of $3.654 billion in billings for the 1994-95 fiscal year, which ends March 31. Billings in excess of that amount have to be paid back. So far, the cap has been exceeded by $219 million, an amount expected to rise to $240 million by the end of the fiscal year. The current clawback will result in about $120 million being deducted, leaving another $120 million still owing.

According to the Medical Reform Group, the fee-for-service system under which most physicians are paid encourages "revolving-door" medicine. Doctors who practice high-volume medicine are the ones who bear the greatest responsibility for the increase in billings, but the clawback will be felt most severely by those at the lower end of the income scale whose billings haven't increased and who typically spend more time with patients, the MRG says.

"Instead of addressing the distortions caused by the fee-for-service system, the OMA and the government are acting in a way that will demoralize conscientious physicians while encouraging those who practice revolving-door medicine to make their doors revolve even faster," said Dr. Guyatt.

The Medical Reform Group believes that capitation and salary are preferable to fee-for-service as a method of paying primary care physicians.

The MRG also fears that the clawback will encourage more physicians to resort to charging their patients so-called "administrative fees" as a way of supplementing their income. "Administrative fees are a form of extra-billing, which is clearly prohibited by the Canada Health Act. The government should be acting to outlaw these regressive fees, not to encourage them", said Dr. Guyatt.


Dr. Gordon Guyatt
Dr. Rosana Pellizzari
Dr. Mimi Divinsky

Administrator: Ulli Diemer

Medical Reform Group of Ontario

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