Budget 2025: What It Means for Physicians

The Bottom Line

Budget 2025 sets the physician compensation and development budget at $6,990 million in 2025-26, growing to $8,119 million by 2027-28, a 16.2% increase over three years. The new primary care compensation model co-developed with the Alberta Medical Association offers family physicians and rural generalists an alternative to fee-for-service. The health system is being reorganized into four agencies with Primary Care Alberta now operational at $322 million. Rural physician training gets $44 million in dedicated funding.

Top Measures That Affect You

1. Physician compensation and development budget: $6,990 million in 2025-26. While this is $29 million less than the 2024-25 forecast, it grows substantially to $7,215 million in 2026-27 and $8,119 million by 2027-28 as the new compensation model scales up.

2. New primary care physician compensation model: Co-developed with the Alberta Medical Association, this model provides family physicians and rural generalists an alternative to the traditional fee-for-service model. It recognizes extensive training, experience, and leadership in delivering comprehensive primary care, supports long-term patient relationships, and incentivizes expanding patient panels and full-time practice.

$44 million for the Physician Training Expansion Program in 2025-26, delivered through rural training centres. This provides rural, Indigenous, and other learners with increased access to medical education in rural areas, with the goal of attracting and retaining physicians in rural communities.

$15 million for recruitment and retention of physicians practicing full-time in underserved areas, plus a $12 million increase for the Rural Remote Northern Program.

Primary Care Alberta established with a $322 million budget in 2025-26. Primary care provider teams including family physicians, nurse practitioners, and pharmacists will provide comprehensive, timely access to care including after-hours, rural, and virtual services.

Market rate review continuing under the 2022-26 AMA agreement, where benefit rates for insured services are being negotiated. The goal is a fair and sustainable physician compensation framework.

New 8% income tax bracket on the first $60,000 of income saves you up to $750 per year, effective January 1, 2025. While modest relative to physician incomes, it applies to all taxpayers.

Direct Financial Impact

Compensation trajectory: The physician compensation budget is essentially flat in 2025-26 ($6,990 million vs. $6,958 million forecast in 2024-25), but it grows by $1,129 million (16.2%) by 2027-28 to reach $8,119 million. This growth reflects the rollout of the new compensation model and the market rate review process.

New compensation model: If you are a family physician or rural generalist, the new model offers an alternative to fee-for-service that compensates you for the breadth of primary care, including comprehensive care across all phases of a patient's life. The model is designed to incentivize expanding your patient panel and practicing full-time.

Rural and remote incentives: The budget allocates $15 million for recruitment and retention in underserved areas and increases the Rural Remote Northern Program by $12 million, plus $12 million annually for physician support programs. If you are considering rural practice, these incentives are available.

Income tax: The new 8% bracket saves you $750 per year. For a dual-physician household, that is $1,500. This is a small but guaranteed benefit.

Physician support programs: $12 million annually is allocated for physician support programs. Contact the AMA or relevant health agency for details on what is available.

Service Changes

Four new health agencies: The system is being reorganized:

• Acute Care Alberta: Oversees hospitals, urgent care centres, chartered surgical facilities, EMS, and cancer care. Works with Alberta Health Services, Covenant Health, and chartered surgical facilities.
• Primary Care Alberta: Coordinates primary care teams, after-hours care, virtual services, and community-based primary care.
• Recovery Alberta: Handles addiction and mental health.
• Assisted Living Alberta: Manages continuing care from home care to facility-based care.

An Integration Council aligns the four agencies. An Indigenous Advisory Council will advise on culturally safe care delivery.

Alberta Surgical Initiative: $265 million for capital to increase physical capacity, including more operating rooms, renovated spaces, and new equipment. If you are a surgeon or surgical specialist, this directly expands your infrastructure.

Diagnostic Imaging Enhancements: $168 million in new funding to expand diagnostic capabilities province-wide. This means more imaging capacity for your referrals and assessments.

Rural Health Action Plan (2024-2027): Continues across five focus areas: Workforce, Access, Models of Care, Community Care, and Prevention/Wellness. The $44 million Physician Training Expansion is a key component, aimed at creating a pipeline of physicians suited to rural practice.

Indigenous health: $45 million over three years for Indigenous health initiatives, prioritizing patient care and supporting frontline staff in rural, remote, and Indigenous communities.

Central Drug Production and Distribution: $61 million for a new Calgary facility (Edmonton facility opening in 2025), ensuring timely access to prescription medication production and distribution.

What's Missing

Near-term compensation flat: Despite the strong 2027-28 trajectory, physician compensation is essentially flat in 2025-26 compared to 2024-25 at a time when the CPI is projected at 2.6%. The growth is back-loaded.

Fee-for-service rates not specifically addressed: The budget notes the market rate review is ongoing under the 2022-26 AMA agreement, but does not announce specific rate increases. The outcome depends on negotiations.

No dedicated overhead support: The budget does not address rising overhead costs for community-based physicians (rent, staff, supplies), which are a persistent concern, particularly for family practices.

Specialist workforce strategy not detailed: While the rural training expansion focuses on family medicine, the budget does not detail specific plans for specialist recruitment or retention beyond the general recruitment incentives.

Wait time targets not specified: Despite investments in surgical capacity and diagnostic imaging, the budget does not set explicit wait time reduction targets.

Primary Care Alberta governance still evolving: The new agency is operational, but the budget does not detail how physicians will participate in its governance or how it will interact with existing structures like Primary Care Networks.

Key Dates

Date	What Happens
January 1, 2025	New 8% tax bracket takes effect
February 2025	Primary Care Alberta becomes operational
February 2025	Acute Care Alberta launched
April 1, 2025	Assisted Living Alberta launches; new fiscal year begins
After July 1, 2025	Tax cut visible on income withholdings
2025-26	New primary care compensation model available
2025-26	Market rate review continues under 2022-26 AMA agreement
By 2027-28	Physician compensation budget reaches $8,119M

Where to Get Help

Alberta Medical Association: Contact the AMA for details on the new compensation model, market rate review, and physician support programs. Visit albertadoctors.org.

Rural practice opportunities: Contact the Rural Remote Northern Program or the relevant new health agency for recruitment and retention incentives in underserved areas.

Primary Care Alberta: For information on team-based care placements and the new primary care model, watch for announcements as the agency scales up.

Physician Training Expansion: If you are interested in rural training opportunities, contact rural training centres funded through the $44 million program.

Income tax: The new bracket applies automatically. Contact Alberta Treasury Board and Finance at 780-427-5364 for questions.

Budget documents: Full details at alberta.ca/budget-documents.