Doctoring Financial Incentives

Paul Levy

First posted 9/12/11 on Not Running A Hospital

Mixed results are reported in a recent paper entitled, “The effect of financial incentives on the quality of health care provided by primary care physicians.”  In the paper, Australian researchers collected and analyzed data from studies of incentive programs in the US, the UK and Germany.

As noted in this summary article by Reuters:

In those studies, researchers looked to see if financial incentives made a difference in how often doctors screened for different diseases, referred patients to follow-up care or achieved a certain health outcome — such as helping a patient quit smoking. Overall, the effects were mixed.


“Many doctors who already do well simply claim the money with no change in behavior,” Anthony Scott, one of the review’s authors from the University of Melbourne, told Reuters Health in an email.


“Incentives aren’t often targeted at those doctors providing the poorest quality of care. And (sometimes) the amount of money may not be enough, or doctors simply aren’t motivated by money by a great degree,” he added.

I don’t find any of this surprising.  If you are a primary care doctor, you simply have too much to do in a limited amount of time to calculate whether a given step in the clinical process is going to generate more revenue for your practice.

The authors raise an important cautionary note:

Despite the popularity of these schemes, there is currently little rigorous evidence of their success in improving the quality of primary health care, or of whether such an approach is cost-effective relative to other ways to improve the quality of care. There is insufficient evidence to support or not support the use of financial incentives to improve the quality of primary health care. Implementation should proceed with caution and incentive schemes should be carefully designed and evaluated.

Specifically, they say: 

Studies should also examine the potential unintended consequences of incentive schemes by having a stronger theoretical basis, including a broader range of outcomes, and conducting more extensive subgroup analysis. . . . Further research comparing the relative costs and effects of financial incentives with other behaviour change interventions is also required.

I have made this point with regard to plans to introduce capitated, or global payments, in the health care system.  There has been little analytical support for this kind of plan, and yet policy-makers seem to be in a big hurry to endorse it.

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