“I’m worried that the deep cuts being proposed will make it near impossible for people to find a family doctor, and that will have repercussions for the whole health system,” family doctor Tara Kiran, vice chair of quality and innovation in the Department of Family and Community Medicine at the University of Toronto, wrote in an email.

The two sides have been arguing their cases before a board of arbitration, which completed seven months of hearings Sunday. The Ontario Medical Association contends the government has built its case upon faulty findings by the provincial auditor.

The arbitration board is tasked with resolving an almost-five-year-old contract dispute between the government and the OMA, which represents the province’s 31,000 practising physicians.

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The government’s proposed changes to family medicine (also known as primary care) are among the most controversial issues the board has been asked to weigh in on as part of its deliberations over the size of the physician services budget. Ontario now spends more than $12 billion — or 10 per cent of the entire provincial budget — on doctors.

The three-member board is expected to come down with binding decisions this spring, ending phase 1 of the arbitration process.

Phase 2, expected to be even more contentious, will address how to divvy up the pot of money among some 35 specialty groups.

All of this is happening at the same time the province is undertaking a massive restructuring of the entire health system. Next week, the government is expected to announce the creation of a new “super health agency” to replace more than 20 smaller agencies. Sources say the super agency will oversee primary care.

The 5,300-plus family doctors facing the prospect of pay cuts comprise about half of Ontario’s roughly 11,000 practising primary care doctors. They work in more than 800 group practices across the province, known as “family health organizations,” or FHOs.

FHOs were developed in 2007 to improve primary care — for example, by increasing access through after-hours availability — largely through changing financial incentives for doctors.

Twelve years later, the government argues it has paid for improvements in care, which have not materialized and that the price is too high to expand this model further.

In the past, family doctors were paid mostly through fee-for-service, which saw them reimbursed for every service rendered. There is an inherent incentive in the fee-for-service model to have high-volume practices; the more services provided, the more money made.

But under FHOs, doctors derive the bulk of their income through “capitation,” a form of compensation that reimburses them a set amount for each patient signed up with them — no matter how many times a patient is seen or even if a patient is not seen. The amount varies according to a patient’s age and health.

In 2016/17, the average FHO doctor (with 1,300 patients) made $406,390, according to the government’s written submission to the arbitration panel. That compares to $214,015 for a family doctor paid fee-for-service.

(Physician compensation is not the same as income. From their compensation, FHO doctors have to pay for overhead costs such as staff salaries and rent. Arrangements vary from practice to practice, with the health ministry, hospitals and local communities also pitching in for non-physician expenses.)

Some fee-for-service family doctors and specialists have even taken to social media to argue that their FHO peers are paid too much.

The government’s submission states that FHOs have become so popular, the number of doctors working in them has surged by 154 per cent since 2008/09. To contain costs, the ministry says it was forced to limit their growth starting in 2012.

The government is now seeking to cut the pay of FHO doctors by an average of 9 per cent each, or about $33,600. That would be on top of a cut of 2.65 per cent the province imposed in 2015, as well as a compensation freeze in place since 2012.

In making its case, the government relies heavily on the 2016 provincial auditor’s report, which states that FHOs have not proven their worth. FHO doctors were paid $522 million more in 2014/15 than they would have received if they were paid fee-for-service, according to the report.

That was, in part, because they were paid for 1.8 million patients rostered with them, even though they did not actually see those patients, the auditor wrote.

“The $522 million is significant, as it indicates that the physicians were not providing core primary care services as often as they should be (or expected to be) and/or that base capitation payments are excessive,” the report reads.

The auditor found that an average FHO doctor works only 3.4 days per week.

The province made significant investments in FHOs, but “most objectives (were) not met,” wrote the auditor, charging that they failed to increase access to care, quality and continuity of care and cost effectiveness.

FHOs have not delivered on commitments to provide after-hours care, the auditor said, adding they have also not done much to shorten wait times for primary care.

Many patients get their primary care elsewhere, including walk-in clinics, other family doctors and hospital emergency departments, meaning the province is paying twice for these patients to be treated, according to the report.

The auditor concluded by urging the province to review how much it pays these doctors to ensure taxpayers are getting good value for money.

In addition to seeking pay cuts, the province wants more work and accountability from FHO doctors. The government wants the average physician to put in a 36-hour work week.

“It’s a very expensive model to deliver primary care physician services and it is not performing optimally,” government negotiating team member Bob Bass told the arbitration board on a recent hearing day. “From the government’s perspective, significant change is required to both moderate the costs and improve the quality.”

But the OMA says the government has built its case on bad information from the auditor who failed to understand how they work.

“It was done by accountants, not by doctors,” OMA lawyer Howard Goldblatt told the arbitration panel, referring to the auditor’s report.

“The government is more intent on prescribing or dictating a solution without really diagnosing the problem,” he continued.

The OMA wants the government to join it in studying FHOs so that any decisions taken are based on what it contends is accurate information.

The auditor erred by calculating the workload of FHO doctors based on the number of patient visits, the OMA charges.

It stands to reason many patients would have fewer appointments, given one reason for creating FHOs was to move doctors away from high-volume, fee-for-service practices, the OMA argues. Financial incentives were changed to encourage doctors to deal with multiple conditions in a single visit rather than call patients back for multiple visits.

(Depending on the doctor, those working in fee-for-service family practices may also deal with multiple conditions in a single visit.)

The auditor also failed to take into account the fact FHO doctors are more likely to communicate with patients via email and phone since their pay is no longer based on face-to-face visits, the OMA adds.

Then there is all the paperwork that comes with working in a FHO, noted Kiran who practices out of one in downtown Toronto. Because FHOs provide full-service family medicine, there is much administrative work associated with appointments, tests and referrals, she explained, adding that FHO doctors also spend time communicating with other providers in a patient’s circle of care.

“This work is what can lead to burnout and frustration, and is not accounted for in the government’s proposals,” she wrote in her email.

Kiran and the OMA warn the proposed changes to family medicine will drive doctors back to practising high-volume, fee-for-service medicine.

“Family doctors would be forced to see a ludicrously high volume of patients in-person each day,” she said. “For patients, this would likely mean shorter appointments, less flexibility to bring up multiple problems in a single visit, and less flexibility to call or email your doctor about an issue.”

The OMA points out another reason for introducing FHOs was to address past shortages of family doctors by making family medicine more attractive. The proposed changes threaten to turn back the clock on those gains, doctors argue.

In a written brief submitted to the arbitration panel, the OMA used strong language to warn of dire consequences if the arbitrators and government get it wrong:

The ministry’s proposals have “the potential to cause huge destabilization in primary care … The very real risk to patient quality of care and provider well-being cannot be ignored.”

Theresa Boyle is a Toronto-based reporter covering health. Follow her on Twitter: @theresaboyle