Financial incentive interventions1

The ultimate goal of using financial incentives is to increase quality of care and by extension, improve patient outcomes, reduce costs, or improve access to care. To achieve this, financial incentives are used to persuade physicians to use evidence-based treatments and/or to change their clinical behavior with respect to preventive, diagnostic and treatment decisions. The types of financial incentives used in health care include: salary or sessional payment, fee for service (FFS), capitation, target payments and bonuses (pay for performance (PFP)), and mixed or blended systems. There are indications that although FFS, capitation and PFP may be effective for improving selected processes of care, little is known about their possible negative effects. Financial incentives are likely to have the twin aims of increasing the quality and efficiency of care, but it is not automatically the case that an incentive promotes both. There may be tensions between intrinsic motivation and financial incentives.