Understanding how doctors get paid in Canada starts with the billing system, not the pay cheque. Because Canada runs a publicly funded healthcare system, also known as Medicare, patients usually don't receive a bill after a standard visit. Instead, taxes fund the provincial or territorial plan, which then pays the doctor.
But the billing method is only half the story. The other half is a doctor's working arrangement — whether they are an employee, a self-employed contractor, or an owner. That arrangement shapes who carries the costs, what can be deducted, and how steady the income is.
How doctors get paid in Canada: the main billing methods
The provincial or territorial plan pays the doctor through one of a few methods. The most common is fee-for-service (FFS), where a physician submits a bill for every service or procedure, the Canadian Medical Association (CMA) explains.
In 2023–2024, FFS accounted for 72% of gross clinical payments nationally, the Canadian Institute for Health Information (CIHI) reports. Alternative models made up the other 28%.
Capitation is another payment model and it works differently from FFS. A doctor receives a fixed annual payment for each patient added to their roster, adjusted for age and complexity. The CMA reports that in Ontario about 60% of family physicians now use a fully capitated or blended model.
Two other methods round out the picture:
Sessional and hourly fees: a flat rate per hour or day worked, regardless of patient volume. Emergency departments and rural clinics often use them.
Salary and block funding: a salary is a fixed annual amount paid by an employer, such as a hospital or university, often with benefits and vacation time. Block funding is a set budget paid to a group of physicians, such as an academic department, to cover clinical care, teaching, research, and administration. The group then pays its members.
The method matters because it shapes how steady the income is and who carries the costs. But it is only half the story. The other half is your working arrangement.
Three financial situations behind five job titles
Most physicians are not salaried staff. In practice, a doctor usually falls into one of three financial situations: employee, self-employed contractor, or owner. That is why how doctors get paid in Canada depends as much on the working arrangement as on the billing method.
An employee works for a salary and receives employer benefits. A self-employed contractor bills for services and runs a small business. An owner runs the practice itself and carries its costs and risks.
The four arrangements below map onto those three situations. Associates and locums are typically self-employed contractors.
Partners and solo doctors are owners. Some hospital and academic roles are genuine employment.
To compare them fairly, each section uses the same five lenses:
Overhead: who pays for space, staff, and equipment.
Deductions: which business costs can reduce taxable income.
Incorporation: whether the doctor can bill through a professional corporation (PC).
Lost benefits: the pension, paid leave, and insurance an employee would get.
Income predictability: how steady the take-home pay tends to be.
None of these arrangements is inherently better than another. The right fit depends on your goals, specialty, and stage of career.
Working as an associate
An associate is a self-employed contractor who works under a clinic owner. The owner provides the space, staff, and booking systems, while the associate sees patients and bills for their own services.
Overhead usually comes out as a percentage split. The associate keeps their billings and pays the clinic an agreed share — an overhead split — to cover running the space.
Because the associate is self-employed, legitimate business costs are generally deductible, and incorporation through a PC is usually available. There are no employer benefits: no pension, no paid vacation, and no employment insurance (EI). Income is moderately predictable, since it rises and falls with the hours worked and patients seen.
Working as a partner
A partner is a co-owner of a practice, sharing both the profits and the responsibilities with other physicians. This is an ownership situation rather than a contractor one.
Partners share overhead directly. Rather than paying a set split to someone else, they divide the real costs of rent, staff, and equipment among the owners. Business deductions are typically broad, and partners can usually bill through a PC.
As owners, partners receive no employer benefits and fund their own retirement and time off. Income varies with how the practice performs, so a strong year and a lean year can look quite different.
Working as a locum
A locum is a temporary self-employed contractor who covers for other physicians during a leave, a vacation, or a staffing gap. The role is contract work, often at several clinics over 1 year.
Because a locum doesn't run their own clinic, you might expect their overhead costs to be minimal. In practice, they often share overhead with the host clinic. Many arrangements involve a fee split, where the locum keeps a share of their billings and the host takes the rest — in British Columbia’s Locums for Rural BC program, for example, third-party payments to the locum come net of a 40% overhead deduction. Beyond that split, a locum’s own costs tend to be travel, licensing, and practice expenses, which are generally deductible. Incorporation through a PC is usually available.
Locums receive no employer benefits. Income is often less predictable than in the other arrangements described here, arriving in lumps tied to available contracts. Many physicians perform locum work early in their career, or between longer-term positions, for the flexibility it offers.
Working as a solo physician
A solo physician is a sole owner-operator who runs their own practice and carries the full overhead. This is a full ownership arrangement.
Because the practice is theirs, they pay for everything: rent, staff wages, equipment, insurance, and software. In return, they may claim a broad range of business deductions and can bill through a PC.
Solo doctors receive no employer benefits and provide their own pension savings and leave. Their take-home pay is essentially billings minus overhead, so patient volume and cost control drive the result. When overhead is high, gross billings and net income can diverge sharply.
Salaried and employed hospital roles
Some physicians are genuine employees. Certain hospital, academic, and residency positions pay a salary through an employer rather than through direct billings.
Here the employer carries the overhead. The hospital or institution provides the space, staff, and equipment, so the physician does not fund a clinic. Because the income is employment rather than self-employment, deductions are narrower and incorporation is generally not available.
The trade-off is stability. Salaried roles typically include benefits and vacation time, though they tend to pay less than other models. Salary and block funding are common payment models for residents in training and academic physicians.
Gross billings vs. take-home pay
Understanding how doctors get paid in Canada means separating gross billings from take-home pay. Most community-based physicians operate as independent small businesses, paying clinic rent, staff salaries, and equipment out of their gross billings first. Many carry the responsibilities of small business owners on top of patient care.
That overhead can be significant, and it varies widely by province, specialty, and practice model. Published averages are gross payments, measured before overhead and taxes, so they do not represent net income.
Gross figures can look misleadingly high on their own. In 2023–2024, the average gross clinical payment per physician was $383,000, CIHI reports. That figure is measured before overhead and taxes, so it is not take-home pay.
Unpaid work adds another gap. FFS pays per service, and for routine visits the fee is largely fixed regardless of how complex the patient is. Some work isn’t captured either — certain administrative paperwork isn’t billable at all.
To address the flat-fee limitation, British Columbia introduced the Longitudinal Family Physician (LFP) Payment Model in 2023. It pays family physicians for their time, patient interactions, and the number and complexity of patients, not a flat per-visit fee. Net pay after overhead can offer a more accurate comparison than gross billings alone.
