Budget cuts, AMA Agreement: 3 key points

February 13, 2015

Dear Member:

An important topic in the media this week is the message from government in relation to the budget. This included the commentary on expenditure cuts of 5% from last year’s budget. Given that population and inflation are each running at 2% per annum, in real per capita terms this means a 9% cut.

This raises a number of questions in terms of: how it relates to our arrangements with government; what kind of impact it may have on the care of patients; and how can we move forward. I wanted to provide my perspective on some of these issues.

The AMA Agreement

The Alberta Medical Association (AMA) Agreement has four major components:

• There are detailed provisions related to setting of fees, both in terms of annual adjustments and relativity (i.e., for any given average fee level, how the fee for one service is set relative to all other fees).
• Several highly valued programs were protected.
• Government agreed to cover the cost of the utilization of medical services, regardless of the reason for any change.
• Government agreed to consult with the AMA on health care system matters.

The last two points above are tied concepts. Starting with the last point, the provision “to consult” was a movement away from the previous trend toward joint decision-making. The current AMA Agreement is markedly different from its predecessor agreement (often termed the “Tripartite Agreement”) in this regard.

How this is related to the third point is a matter of risk. Like energy, risk in this case cannot be created or destroyed, but it can be shifted around. Risk can be accepted by either party, to the extent that they have the means to manage it. In taking on the mantle of decision-making, government also agreed that it had to accept the financial risk for the utilization of services.

The AMA Agreement provides a foundation for physicians and government to work together, but due to its consultative nature, it will take the will and cooperation of both parties to make it work. As I will mention later, I believe we can build on this foundation, but first want to comment on some shorter term, more dramatic approaches.

Easy savings, long-term costs

One option open to government is to enact legislation aimed at changing all or some of the terms of the AMA Agreement. I don’t mind raising this spectre, because it has already been raised in the media and in direct questions made to the premier and others. The premier, as I understand it, does not wish to legislate against agreements made by government but they do intend to be tougher in future negotiations. A commitment to live up to agreements is good news.

Most obviously it is good news because the profession has to trust that there is some stability in the agreements it makes. Eroding that trust has consequences, especially given that there are many decisions that we have to work on together with government.

Even more fundamental, however, is the nature of health and health care. Treating health and health care as simple commodities is, in my view, wrong-headed. Rather, health is more like a capital asset, while health care investment is one factor that determines health. Avoiding investments in health care today may save short-term dollars, but with overall costs – as well as the consequent harm and suffering – going up. This applies to virtually all forms of medical care, whether it is surgical patients who wait too long and have their conditions worsen, or foregone preventative and health maintenance services that again lead to greater cost in the long run.

Taking a longer-term view

This is not to say that there is nothing we can do now to effect change. Rather, my point is that while we should be open to short-term efficiencies, I don’t believe the answer lies in simply doing things the same way, but less of it. Rather, we have to re-think and re-orient some of the fundamental relationships.

I want to be clear, so at risk of stating the obvious, there are three things I think should be happening.

First, there are inefficiencies in our current system that arise from a number of factors. The AMA Agreement does not prevent our working with Alberta Health and Alberta Health Services (AHS) to identify and pursue these opportunities. This includes initiatives such as Choosing Wisely, moving forward with the primary care network evolution and working with Strategic Clinical Networks. In other words, let’s do our best to maximize the value of the current AMA Agreement to the overall system and our patients.

Second, the relationship between physicians and other major players in the system needs to be rethought. Physicians need to be more involved in the decision-making processes at all levels. We do have excellent involvement of physicians in senior AHS leadership, but I am referring to something much deeper, down to the practice level. Based on what I have heard from many of you, physicians want this and believe it is necessary. With greater authority and responsibility will have to come greater accountability: I believe physicians understand this as well.

In regards to this second point, I believe we should discuss a strategic agreement between the AMA and government that sits beside and informs the AMA Agreement. We need a vehicle to commit to and focus our energy in the next few years on what is most important. The scope should be over the entire system and what’s best for patients, not just physician payments. It should be supportive and promote the best of care and include concepts such as meaningful and professional-based standards; improved information for better care; shared risk and rewards; funding and payment aligned with best practice and quality.

Third, I have stated in previous letters that quality and sustainability are not just physician issues. Government bears responsibility for creating a stable policy environment and pulling together the resources to fund necessary care. The public, as patients and taxpayers, also bears responsibility.

Thank you for your ideas and support.

Your comments are always welcome. Email president@albertadoctors.org or leave a comment below.

Regards,

Richard G.R. Johnston, MD, MBA, FRCPC
President

Note: The latest Physician Compensation Committee Update was released yesterday, February 12. It contains details on Allocation 2015. If you missed it, you can read it here.