TORONTO - The fight over Ontario's multibillion-dollar health care pie got downright nasty Thursday, after a report said physicians in the province cost significantly more than their counterparts elsewhere in Canada.

The Ontario Medical Association, which represents 31,000 doctors, is accusing the provincial hospital association of producing "maligning reports" and making "false allegations about physicians and others."

The report, called "Bending the Health Care Cost Curve," says Ontario is paying $842 per person per year for physician services overall, while the average for the other provinces is $675.

Taking into account Ontario's population of 13 million, the report says, those extra per person costs total $2.2 billion.

The Ontario Hospital Association is part of a coalition of health-care providers calling for change in the way doctors in hospitals are paid.

They say putting doctors on province-wide contracts for their hospital work could save the province millions of dollars each year.

However, the province says it has no plans to alter the way doctors are compensated.

Currently, the physicians are granted hospital privileges and are then paid by the province for each procedure they perform -- the so-called fee-for-service model.

The rate for each of those services is set in negotiations between the doctors and the Ontario government.

"Hospital CEOs are going to be on pay-for-performance. It's really important that we have doctors' accountability and hospitals' accountability aligned," said Tom Closson, who heads the hospital association.

Those contracts could spell out the number of patients doctors would be expected to see, the hours they would be available, expected results and the doctors' compensation.

The contracts should be negotiated between the doctors and the Ontario government but with flexibility for local modifications, Closson said.

But the Ontario Medical Association called the report's figures "misleading" when it compares Ontario's spending on physician services with other provinces.

"The OHA ... does not take into account volumes and differing demographics between provinces," said the doctors' association president, Suzanne Strasberg.

"The leadership of the OHA is out of touch with the rest of the province's health care providers, who are all working tirelessly to improve quality care for Ontario's patients," she said.

While saying she's open to all ideas, Health Minister Deb Matthews would not say whether she believes doctors are overpaid.

"I think we've negotiated a settlement with the OMA and that's something we will honour," Matthews said Thursday.

Targeting how doctors are paid is not "part of our plan right now," she said, while stressing the need to slow the rate of health-care spending.

"We cannot continue to increase spending in health care at the rate we have done in the past. Those days are over."

Physician services, says the report, make up the second largest portion of health-care spending in the province, ahead only of hospitals.

The report says health-care spending in Ontario has doubled in the last decade, from $21.6 billion in 1999 to a forecast $45.2 billion for 2009, and indicates hard choices may have to be made.

But "the way to save money in hospitals is to keep people out of them," said Closson.

That can be done by keeping people healthy, better managing chronic diseases, and expanding home care to treat end-of-life patients and those in long-term care at home, he said.

Hospitals themselves can make more use of nurse practitioners, physician assistants and other staff, lessening the need for doctors, said Closson.

"There's lots of money to be saved."

Rather than having hospital emergency departments clogged with mental health patients in crisis, for instance, it would be faster and more financially efficient to treat them in separate facilities in the community, the report says.

The report was released by the Ontario Hospital Association, the Ontario Association of Community Care Access Centres and Ontario Federation of Community Mental Health and Addiction Programs.

The recommendations come as the Ontario government tries to eliminate fees for pharmacists in an attempt to cut generic drug costs and lower escalating health-care costs.

The government is running a $21.3 billion deficit.