Canada - World Health Organization Regional Office for Europe

78
Health systems in transition Canada
3.8 Payment mechanisms
3.9.1 Paying for health services
To the extent that hospitals are integrated in RHAs in Canada, there is no
purchaser–provider split. In the case of those hospitals that contract with
RHAs – for example, all hospitals in Ontario and Catholic hospitals in Western
Canada – most payments are generally made on the basis of the previous year’s
allocation adjusted for inflation and budget growth. However, some RHAs have
introduced or experimented with other modes of funding, including activitybased,
patient-centred and incentive-based funding models (McKillop, 2004;
Sutherland, 2011a). There has been limited study of payment systems for health
care organizations in Canada.
3.9.2 Paying health workers
Most non-physician health care personnel are paid a salary to work within
hierarchically directed health organizations. Within this group, regulated nurses
are the most numerous. Most nurse remuneration and conditions of work are
negotiated through collective bargaining by nurses’ unions and province-wide
employer organizations, often with provincial governments setting broad
fiscal parameters. Nurse dissatisfaction with working conditions and stagnant
remuneration during the provincial health reforms led to labour strife and rising
sick leave by the latter part of the 1990s. Since that time, staffing levels have
climbed and nurse remuneration has improved considerably as governments
and health organizations have attempted to recruit nurses in a tight labour
market (CIHI, 2011a).
The majority of physicians continue to be remunerated on the basis of fee
for service (FFS) although alternative payment methods including capitation,
blended (salary and fee) payments are also applied – most commonly salary
and fee or capitation and fee. In recent years, incentive-based bonuses have
become more common. While many health policy analysts have been critical
of the incentives created by FFS – including the incentive for overprovision of
medical services – the system remains popular among many physicians and the
organizations that represent them (Grignon, Paris & Polton, 2004).
Since family physicians continue to provide the majority of primary care
services in Canada, primary care reform has involved some shifts in payment
systems. Provincial ministries of health have considered the advantages and
disadvantages of fee for service, capitation and mixed payment systems. In