1. 1 Canadian Institute for Health Information

2. Physician Cost Drivers 2

3. Contents International comparisons Prices, utilization and population Analysis of growth in utilization per capita Analysis of changes to the mix of services and specialties 3

4. Canada Has a Relatively Low Physician per Capita Rate in Comparison With OECD Reporting Countries 4

5. Canada’s Rate of Growth in Professionally Active Physicians During the Last Five Years Has Been Greater Than That of Most Countries Reporting to the OECD 5

6. Canada Has a Relatively High Nurse-to-Physician Ratio in Comparison With OECD Reporting Countries 6

7. Physician Supply Higher Than Ever 7

8. Alternative Payment Programs (APPs) and Fee-for-Service (FFS) Expenditure Have Both Grown Rapidly During the Last Decade 8

9. Rates of Increase in Physician Fee-for- Service Prices Are Accelerating After Several Years of Moderate Increases 9

10. Fee-for-Service Price Increases Have Exceeded Rates of Increase in the Government Current Expenditure Implicit Price Index During the Last Decade 10

11. Rates of Increase in Physician Compensation Prices Have Exceeded Rates of Increase in the Industrial Composite Wage Index 11

12. Rates of Change in Prices and Utilization Have Followed Similar Trends in the Past Decade 12

13. Utilization per Capita Is Increasing After a Period of Relative Stability 13

14. Increases in the Prices of Physician Services Have Been the Major Cost Driver of Physician Expenditures Over the Last 10 Years 14

15. Key Points—Prices, Utilization and Population Effects 15 1.Rates of increase in physician compensation followed rates of increase in the government current expenditure implicit price index prior to 1998. Since 1998, rates of increase in physician compensation have exceeded rates of increase in the government expenditure IPI. 2.Physician compensation has grown faster than wages for other health and social services workers. 3.Physician compensation increases accounted for approximately one-half of annual growth in expenditure since 1998. 4.Population growth and aging have accounted for average annual increases of 1.6% per year in expenditure. 5.Utilization per capita adjusted for aging has accounted for average annual increases of 1.5% per year.

16. Analysis of Real Growth in Utilization per Capita Population aging and expenditure Relative fees and volume of services for populations older and younger than 65 16

17. Physician Expenditure per Capita by Age and Sex, 2008 17

18. Population Growth and Aging Accounted for Growth in Spending of $3.3 Billion Between 1998 and 2008 18

19. Population Aging Has Had a Modest Annual Effect on Growth of Physician Services Expenditures in Most Jurisdictions 19

20. Rates of Increase in Expenditure Have Been Higher for the Elderly, but Rates Are Also Relatively High for Those Younger Than 65 20

21. Higher Expenditure Increases for Elderly Are Mainly Due to Greater Rates of Increase in Visit Fees 21

22. Most Jurisdictions Show Little or No Change in the Ratio of GP/FP Ambulatory Visits for Persons Older and Younger Than 65 22

23. Relative Rates for Specialist Visits per Capita by Persons 65 and Older Have Increased Slightly 23

24. Key Points—Population Aging and Rates of Increase in Utilization per Capita 1.Population aging has been responsible for a relatively modest rate of growth in expenditure: 0.64% per year. 2.Higher rates of increase in expenditure per capita for the elderly are due to higher rates of increase in visit fees for the elderly relative to the non-elderly population. 3.Relative rates of services for the elderly do not appear to have had a significant effect on costs. 24

25. Analysis of Changes to the Mix of Services and Specialties Mix of services: 10 provinces Mix of specialties: B.C. case study 25

26. The Mix of Services Within Specialty Groups Has Contributed to Increases in Expenditure 26

27. A Changing Mix of Services Has Added 0.19% per Year to Expenditure Over the Past Decade Expenditure per Capita at 1998 Mix of Services and 2008 Prices Actual Expenditure per Capita in 2008–2009 Value of Increase (000) Percentage Increase Average Annual Increase $346.85$353.56$223,2761.93%0.19% 27

28. Medical Specialists Have Had Major Increases in Consultations and Diagnostic/Therapeutic Services 28

29. Surgical Specialists Have Had Major Increases in Consultations, Major Surgery and Diagnostic/Therapeutic Services 29

30. Average Annual Increases From Fees, Population, Volume, Mix of Services and Mix of Specialties, British Columbia 30

31. Key Points—Cost Driver Summary 1.Fee increases were the major cost driver for physician expenditure during the last 10 years. 2.Nationally, per capita utilization (adjusted for aging) was the second major cost driver, and population growth and aging were the third and fourth most important. 3.Changes in the mix of services were relatively modest but accounted for measurable increases in cost. 4.As illustrated for B.C., changes in the mix of specialties may be an important cost driver. 31

32. Future Issues to Monitor Increasing supply of physicians Increases in fees and payments for physician services Utilization of physician services Impact of aging baby boomers on physician expenditure Relative rates of change in specialists versus family medicine Scopes of practice of non-physician health professionals Better measures of service provision from alternative payment plans 32

33. Questions? 33

34. 34 Thank You