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Canadian Institute for Health Information

Physician Cost Drivers

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Contents

• International comparisons

• Prices, utilization and population

• Analysis of growth in utilization per capita

• Analysis of changes to the mix of services and specialties

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2.2

2.2

2.5

2.6

3.2

3.4

3.6

3.8

3.8

3.9

3.9

Japan (2006)

CANADA

United Kingdom P

United States

Australia

France

Sweden P (2006)

Germany

Italy

Switzerland

Spain

Professionally Active or Practising (P) Physicians per 1,000, 2007

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

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0.1

1.9

0.51.0

-0.4

2.9

2.2

0.9

1.6

0.9

-0.1

1.1

2.5

1.8

0.9

0.3

Canada Finland France Germany New Zealand

Spain Switzerland United States

Average Annual Growth Rates (%): Physicians per 1,000

1998–2003 2003–2008

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

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1.2

2.3

3.0

3.0

3.8

3.9

4.1

4.3

4.6

Spain

France

Germany

Sweden P (2006)

United Kingdom P

Australia

United States

Japan (2006)

CANADA

Nurse-to-Physician Ratio, 2007

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

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150

160

170

180

190

200

Physicians per 100,000 Population, Canada, 1988 to 2009

Physician Supply Higher Than Ever

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0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

($0

00

,00

0)

NPDB Expenditure, 1989 to 2008

FFS FFS and APP

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

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1983

1992

1998

2008

-1%

1%

3%

5%

7%

9%

11%

13%

1976 1980 1984 1988 1992 1996 2000 2004 2008

Annual Rates of Increase

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

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9.5%

3.8%

1.1%

2.7%

8.6%

3.3%

0.5%

3.6%

0%

2%

4%

6%

8%

10%

12%

1975–1983 1983–1993 1993–1998 1998–2008

Average Annual Rates of Increase

Gov’t Current Exp. Implicit Price Index NPDB PCI

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

90

100

110

120

130

140

150

1998 2000 2002 2004 2006 2008

Growth in Indices of Industrial Wages and Physician Compensation: 1998 = 100

NPDB PCI Health and Social Services Industrial Composite

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

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8.6%

3.3%

0.5%

3.6%4.4% 4.2%

1.9%

3.2%

0%

2%

4%

6%

8%

10%

1975–1983 1983–1993 1993–1998 1998–2008

Average Annual Rates of Change in Price and Utilization

NPDB PCI Utilization

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

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3.2% 3.0%

0.8%

2.1%

1.2%1.2%

1.0%

1.0%

0%

1%

2%

3%

4%

5%

1975–1983 1983–1993 1993–1998 1998–2008

Utilization per Capita Population Growth

Components of Utilization Growth, 1975 to 2008

Utilization per Capita Is Increasing After a Period of Relative Stability

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1.5%

1.0%

0.64%

3.6%

0%

1%

2%

3%

4%

5%

6%

7%

8%

1998–2008

Utilization per Capita (Adjusted) Population Growth Population Aging FFS Prices

Average Annual Rates of Expenditure Growth, 1998 to 2008Average Annual Increase = 6.8%

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

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Key Points—Prices, Utilization and Population Effects

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.

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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

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$0

$500

$1,000

$1,500

$2,000

$2,500

Male Female

Physician Expenditure per Capita by Age and Sex, 2008

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$18,729,796

$22,052,951

1998 Population 2008 Actual

Simulated Physician Expenditure With 2008 Expenditure per Capita and 1998 Population (000)

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

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-1%

0%

1%

2%

3%

Average Annual Physician Expenditure Increase From Demographic Factors, 1998 to 2008

Population Growth Aging

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

0%

1%

2%

3%

4%

5%

6%

7%

8%

Annual Rate of Increase in Physician Expenditure per Capita, by Age Group, 1998 to 2008

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

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0%

20%

40%

60%

80%

100%

120%

N.L. P.E.I. N.S. N.B. Que. Ont. Man. Sask. Alta. B.C.

Rates of Increase in GP/FP Ambulatory Visit Fees, 1998–1999 to 2008–2009

Age 65 and Under Over 65

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

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22

0.0

0.5

1.0

1.5

2.0

2.5

N.L. P.E.I. N.S. N.B. Que. Ont. Man. Sask. Alta. B.C.

GP/FP Ambulatory Visits per 1,000 Population: Ratio of Visits by Elderly Population to

Population Younger Than 65

2002–2003 2008–2009

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

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2.59 2.822.66 2.86

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Medical Specialists Surgical Specialists

Consultations and Visits per 1,000 Population: Ratio of Visits by Elderly Population to

Population Younger Than 65

2002–2003 2008–2009

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

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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.

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Analysis of Changes to the Mix of Services and Specialties

Mix of services: 10 provinces

Mix of specialties: B.C. case study

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$162

$102

$82

$161

$105$88

$0

$30

$60

$90

$120

$150

$180

Family Medicine Medical Specialists Surgical Specialists

FFS Expenditure per Capita in 2008 Dollars With Mix of Insured Services, 1998–1999 and 2008–2009

1998–1999 2008–2009

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

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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 $223,276 1.93% 0.19%

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19,477

36,787

22,510

54,646

0

10,000

20,000

30,000

40,000

50,000

60,000

Consultations Diagnostic/Therapeutic Services

FFS Services per 100,000 Population: Medical Specialists

1998–1999 2008–2009

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

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19,009

6,585

20,68321,245

8,352

26,554

0

5,000

10,000

15,000

20,000

25,000

30,000

Consultations Major Surgery Diagnostic/Therapeutic Services

FFS Services per 100,000 Population: Surgical Specialists

1998–1999 2008–2009

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

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0.45%0.19%

0.72%

1.0%

2.5%

0%

1%

2%

3%

4%

5%

Average Annual Rates of FFS Expenditure Growth, B.C., 1998–1999 to 2008–2009

Volume Mix of Services Mix of Specialties Population Growth FFS Prices

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

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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.

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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

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Questions?

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Thank You