01/15/2015 03:45 EST | Updated 03/17/2015 05:59 EDT

Ontario doctors reject province's offer; ministry imposes fee-for-service cut

TORONTO - Ontario's doctors will see a cut to fee-for-service payments starting Feb. 1 after they failed to reach an agreement with the province, which is trying to eliminate a $12.5-billion deficit.

Year-long negotiations broke down and the Ontario Medical Association rejected the province's contract offer and the Ministry of Health announced Thursday it was implementing several changes to physician fee payments.

The ministry will apply a 2.65 per cent "discount" to all fee for service physician payments next month and will apply the reduction to non-fee-for-service payment contracts after the respective requirements for providing notice are met, it said.

If comparable savings can be found through other initiatives, the ministry will be "prepared to adjust the across-the-board rate reduction," it said.

The OMA warned that the deal they rejected would have a negative impact on patients, but Health Minister Eric Hoskins suggested pay was the real sticking point.

"The OMA argument is that pay raises should come before patients and we can't agree," Hoskins said. "We are talking only about physician compensation in this agreement, not patient services or quality of care."

OMA President Ved Tandan said the government's offer of a 1.25-per-cent increase to the budget for physicians' services would have a "negative and lasting impact on patients," providing less than half the necessary funding to hire new doctors the association says are required to meet the province's growing medical needs. The government's own estimates show the demand for health care will grow by at least 2.7 per cent annually, Tandan said.

"The fact is Ontario's population is already underserviced for health care and our population is growing and aging," Tandan said. "That increases the need for health service, but the government has decided to fund less than half of the additional care that will be required."

Doctors understand the financial challenges the government faces and have proposed a two-year freeze on medical fees, Tandan said.

"It is not responsible for the government to ignore its obligation to properly fund the health-care system and it is not right that patients will have less access to the health care they need and deserve because of the fiscal challenges resulting to a large degree from what was created by the government's own doing," said Tandan.

Hoskins said Ontario doctors are among the highest paid in Canada, with average gross payments to physicians at $360,000, and they will eventually have to agree to do the same amount of work as the previous year for the same amount of money.

"The OMA wants you to believe that doctors in this province can't provide the same level of care as last year unless they receive a pay raise and we simply don't agree," he said.

Hoskins said 10 cents of every dollar the Ontario government spends — about $11 billion a year — goes to compensate doctors, up over 60 per cent in a decade. More than 400 doctors bill more than $1 million annually and 28 bill more than $2 million, Hoskins said.

Ontario's health-care system consumes nearly half of every dollar the government spends.

The government will also remove a premium payment to some specialists, cutting weekend and holiday walk-in clinic premiums and stop funding doctors' continuing education such as courses and events.

The two parties brought in former Ontario Chief Justice Warren Winkler as a conciliator and he recommended the OMA take the deal, concluding the government's offer is "good for Ontarians, good for the health-care system and fair to doctors," Hoskins said.

"What's changing and what the OMA is objecting to is that doctors can't just bill more and more and more. At some point they'll have to accept that they can do roughly the same amount of work as last year for roughly the same pay."