The effect of explicit financial incentives on physician behavior.

Publication/Presentation Date

5-28-2001

Abstract

Managed care organizations use explicit financial incentives to influence physicians' use of resources. This has contributed to concerns regarding conflicts of interest for physicians and adverse effects on the quality of patient care. In light of recent publicized legislative and legal battles about this issue, we reviewed the literature and analyzed studies that examine the effect of these explicit financial incentives on the behavior of physicians. The method used to undertake the literature review followed the approach set forth in the Cochrane Collaboration handbook. Our literature review revealed a paucity of data on the effect of explicit financial incentives. Based on this limited evidence, explicit incentives that place individual physicians at financial risk appear to be effective in reducing physician resource use. However, the empirical evidence regarding the effectiveness of bonus payments on physician resource use is mixed. Similarly, our review revealed mixed effects of the influence of explicit financial incentives on the quality of patient care. The effect of explicit financial incentives on physician behavior is complicated by a lack of understanding of the incentive structure by the managed care organization and the physician. The lack of a universally acceptable definition of quality renders it important that future researchers identify the term explicitly.

Volume

161

Issue

10

First Page

1261

Last Page

1266

ISSN

0003-9926

Disciplines

Business Administration, Management, and Operations | Health and Medical Administration | Management Sciences and Quantitative Methods

PubMedID

11371253

Department(s)

Administration and Leadership

Document Type

Article

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