Physician Incentives

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Physician Incentives


The experience and research documented in this study show that incentive systems currently in place are more likely to link to productivity and utilization reduction than quality, but leading provider groups, health plans, and purchasers are starting to recognize the need for, and the potential of, incentive strategies to improve quality of care. Still, the process of aligning physician incentives and quality is complex, and entrenched — sometimes contradictory — incentive and operating structures will continue to make the health care system resistant to change. The experience of those who have “gone first” thus becomes all the more valuable to those who would follow. This report seeks to aid prospective innovators by highlighting a few specific pioneers and recording the thoughts and lessons learned by many others.

Q. What initiatives have been done recently to effect physician behavior, how successful have they been, and what would you as a manager recommend be implemented to improve quality measure of salaried physicians in a community setting.

Most studies of financial incentives conclude that incentives have a measurable impact on physicians' clinical decisions and resource utilization.3,4 While a few studies have reported that physicians are unresponsive to financial incentives, a number of researchers and other participants suggested that in these cases the financial incentives might have been too small. Research also suggests that financial incentives are more influential when based on an individual physician's performance.

Most of the health care executives interviewed for this study agreed with research findings indicating that the use of financial incentives is the most promising approach to change physician behavior. At the same time, some participants in the focus groups believed that financial incentives alone would not guarantee quality improvement at the individual physician level. Examples of non-financial physician incentives that were commonly cited included the dissemination of clinical practice guidelines, provider performance reporting, provider education, and championing change using local opinion leaders. One participant referred to his network's strategy as a “Hall of Fame” and a “Hall of Shame” approach for sharing performance data among medical peers and leadership. Research and experience indicate that each of these nonfinancial incentive approaches has been at least somewhat effective in changing provider behavior although some of the behavioral changes may be temporary.3 Ongoing personal and public accountability and visibility, at least among peers and stakeholders, were considered essential to establishing effective, non-financial incentives with physicians to improve care. In contrast, sharing performance data where the physician identities are blinded was not found to be effective in changing behavior. Participants in the executive focus groups generally believed that non-financial incentives alone were not very effective unless they have some indirect financial consequences, e.g., a potential for increased or decreased patient volume.

The many ways in which organizations have combined financial and non-financial incentives for physicians made the research and evaluation of different incentives challenging. Different types of financial incentives have been used in combination and have been found to amplify one another. Similarly, non-financial incentives have been used as substitutes for, or ...
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