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PubMed2001

Patient attitudes toward physician financial incentives.

BACKGROUND: Despite concern about the impact of financial incentives on physician behavior, little is known about patients' attitudes toward these incentives. OBJECTIVES: To assess patient attitudes toward physician compensation models and to explore patient characteristics associated with these attitudes. METHODS: We mailed a survey to 2000 adult patients in a large New England health maintenance organization. We asked about their trust in their primary care physician; discomfort with compensation models of salary with withhold (salary), fee-for-service with withhold, and group capitation (capitation). RESULTS: One thousand one hundred twenty-five (56%) of the 2000 patients who responded expressed varying levels of discomfort with the proposed compensation models: 16% for salary, 25% for fee-for-service with withhold, and 53% for capitation (P<.001). Patients who knew their primary care physician was paid through capitation did not report less trust in their primary care physician but still frequently expressed discomfort (46%) with capitation. Among all respondents, those who were younger, white, had better health, had a higher income, were more educated, and who lacked a very trusting relationship with a primary care physician were more likely to report discomfort with both capitation and fee-for-service with withhold. In multivariable analyses, discomfort with capitation was more common among white patients (odds ratio, 2.6; 95% confidence interval, 1.6-4.2), patients with incomes exceeding $20 000 (odds ratio, 3.7; 95% confidence interval, 2.3-6.1), and college-educated patients (odds ratio, 2.0; 95% confidence interval, 1.4-2.7). CONCLUSIONS: Most patients were uncomfortable with 1 or more of the 3 common methods used to pay physicians. Discomfort was highest with capitation and was more likely among wealthier, well-educated, white patients. With capitation increasing nationally, patients' concerns should be considered in the design of compensation agreements.

Adult↗
PubMed2006

A trial of disclosing physicians' financial incentives to patients.

BACKGROUND: Concern regarding financial conflict of interest for physicians has led to calls for disclosure of financial incentives to patients. However, limited data on the outcomes of disclosure exist to guide policy. METHODS: This randomized trial was conducted among 8000 adult patients at 2 multispecialty group practices based in the Boston, Mass, and Los Angeles, Calif, areas. Intervention patients were mailed a compensation disclosure letter written by the chief medical officer of their physician group, and all patients were surveyed approximately 3 months later. RESULTS: Disclosure patients were significantly more able to identify correctly the compensation model of their primary care physician, in Boston (adjusted odds ratio, 2.30; 95% confidence interval, 1.92-2.75) and in Los Angeles (adjusted odds ratio, 1.37; 95% confidence interval, 1.03-1.82). Disclosure patients also had more confidence in their ability to judge the possible influence of incentives on their health care: in Boston, 32.5% vs 17.8% (P<.001); and in Los Angeles, 31.8% vs 26.4% (P = .20). The disclosure intervention did not change trust in primary care physicians overall. However, of patients who remembered receiving the disclosure, 21.4% in Boston and 24.4% in Los Angeles responded that the disclosure had increased trust either greatly or somewhat, while in both cities less than 5% of patients responded that the information decreased trust. Patients' loyalty to their physician group was higher among disclosure patients in Boston (73.4% vs 70.2%; P = .03) and Los Angeles (74.1% vs 66.9%; P = .08). CONCLUSIONS: Among diverse patient populations, a single mailed disclosure letter from physician groups was associated with improved knowledge of physicians' compensation models. Patients' trust in their physicians was unharmed, and their loyalty to their physician group was strengthened. For physician groups with similar compensation programs, disclosure to patients should be considered an effective method to enhance the patient-physician relationship.

Boston↗
PubMed1992

Balancing incentives. How should physicians be reimbursed?

The May 15, 1991, JAMA theme issue presented 14 different proposals for reforming the US medical care system. Though these proposals varied widely, they encompassed only three proposed methods for paying physicians: fee-for-service, salary, and capitation. When examined from a perspective that considers the incentives affecting practicing physicians, each of these methods has serious flaws. I outline these flaws and suggest an alternative method for reimbursing primary care physicians: that of combining capitation and fee-for-service. Specialists would be paid fee-for-service, but the cost of specialty care would be limited by giving each primary care physician a budget for such care. Consistent failure by a physician to stay within the budget would result in ongoing review, but not in direct financial sanctions. This system of reimbursing physicians is intended to balance incentives so that physicians can concentrate on making medical decisions with a minimum of distraction by third parties and by personal financial considerations.

Capitation Fee↗
PubMed1999

Disclosing physician financial incentives.

Federal and state regulatory initiatives as well as court decisions increasingly require managed care organizations to disclose physician financial incentives and have raised the issue of disclosure by physicians themselves. These mandates are based on ethical and legal principles arising from the patient-physician relationship and the relationship between health plan sponsors and enrollees. Disclosing incentives also serves important policy objectives: it can inform enrollees' choice of plan, reinforce enrollees' capacity to understand and exercise other rights under managed care, and discourage use of compensation methods that might compromise patients' access to treatment. However, significant conceptual and practical questions remain about implementing a disclosure mandate. Unresolved issues include the timing, content, and scope of disclosure, the relationship of disclosure to patients' substantive rights, and the impact of disclosure on trust between patients and physicians. These uncertainties exemplify the challenges facing policymakers, plans, and physicians as they determine how best to inform patients about managed care.

Conflict of Interest↗
PubMed1987

Rules and incentives for hospitals: the Belgian financing system.

The purpose of the paper is to analyze the set of rules and mechanisms that control the financing of Belgian hospitals. It emphasizes their effects on economic incentives for hospital managers and physicians. For this purpose, it is first necessary to understand how the social security system and the health care sector are organized in Belgium. The paper first describes their main features. The paper then gives an historical overview of recent developments in the financing of Belgian hospitals. It emphasizes the double source of hospital revenues, i.e., patient per-diam prices and medical practice fees, although its main concern is with the evolution of the rate-setting process for the per-diem prices. Since the 1981 decision to freeze the per-diem prices and patient-day quotas for individual hospitals, proposals for changes in the financing system have been under study. Implementation of some of these changes began in 1986. The major modification involved is to correct historical per-diem prices by means of interhospital cost comparisons. The paper ends with a critical appraisal of these latest developments. It focuses on the advantages and shortcomings of the pre-1986 system and of the recent changes. The accent is put on the economic incentives and their effects on the behavior of hospitals.

Belgium↗
PubMed2005

Economic incentives and physicians' delivery of preventive care: a systematic review.

A systematic review of the randomized trial literature examining the impact of financial incentives on provider preventive care delivery was conducted. English-language studies published between 1966 and 2002 that addressed primary or secondary preventive care or health promotion behaviors were included in the review. Six studies that met the inclusion criteria were identified, which generated eight different findings. The literature is sparse. Of the eight financial interventions reviewed, only one led to a significantly greater provision of preventive services. The lack of a significant relationship does not necessarily imply that financial incentives cannot motivate physicians to provide more preventive care. The rewards offered in these studies tend to be small. Therefore, the results suggest that small rewards will not motivate doctors to change their preventive care routines.

Attitude of Health Personnel↗
PubMed2002

The impact of practice setting and financial incentives on career satisfaction and perceived practice limitations among surgeons.

OBJECTIVE: To study how practice setting and financial incentives affect career satisfaction and perceived impact on practice in surgery. METHODS: Data are from the Community Tracking Study (CTS) physician survey, a national survey of active physicians in the United States fielded between August 1996 and August 1997. Surveys with 1,738 practicing surgeons were completed. To be eligible, surgeons had to have completed their medical training (which excludes residents, interns, or fellows), be practicing in the contiguous United States, and be providing direct patient care for at least 20 hours per week. The dependent variables measured are career dissatisfaction and perceived limitations/pressures on time spent with patients, clinical freedom, income, and continuity. The dependent variables are regressed on practice setting, percentage of managed care practice revenue, individual financial incentives, age group, gender, international medical graduate, and board certification. RESULTS: Working in a small practice is the strongest predictor of career dissatisfaction, with about twice the adjusted rate of career dissatisfaction (26%) than other practice settings (13% in group practices, 16% in staff-model HMOs, 9% in medical schools, 18% in hospitals). Managed care plays a much smaller role; an increase in the dependence on managed care equivalent to the difference between 25th and 75th percentile only increases career dissatisfaction by 3 percentage points. Surgeons in solo or two physician practices are also more likely than surgeons in other settings to report that income pressure and limitations on clinical freedom and patient continuity compromise quality of care.

Attitude of Health Personnel↗
PubMed2001

The incentive effects of the Medicare indirect medical education policy.

Medicare provided teaching hospitals with US$ 5.9 billion in supplemental graduate medical education (GME) payments in 1998. These payments distort input and output prices and provide teaching hospitals with incentives to hire residents, close beds, and admit more Medicare patients. The structure of the GME payment policy creates substantial variation in input and output prices between teaching hospitals. We examine the extent to which hospitals responded to these financial incentives using a panel data set of 3,900 hospitals, including over 900 teaching hospitals. We find that teaching hospitals did hire residents and close beds in response to the Medicare policy, but did not increase Medicare admissions or alter their use of registered nurses (RNs).

Aged↗
PubMed2003

Cream-skimming, incentives for efficiency and payment system.

Reform proposals of health care systems in several countries have advocated variations of a risk adjustment/capitation system. These proposals face a serious objection: incentives to risk selection are prevalent in the system. By now, considerable literature has been devoted to finding ways of mitigating, if not eliminating, this problem, while at the same time preserving incentives to efficiency. We contribute to this debate presenting a transfer system that, under some circumstances, attains both provider efficiency and no risk selection. The transfer system extends typical linear payment systems. It can be interpreted as a fixed transfer in the beginning of the period plus an ex-post fund at the end of the period. The novelty rests in the way contributions to this fund are defined.

Capitation Fee↗
PubMed1998

Incentives for cooperation in quality improvement among hospitals--the impact of the reimbursement system.

Up to now, few analytical models have studied the incentives for cooperation in quality improvements among hospitals. Only those dealing with reimbursement systems have shown that, from the point of view of individual or competing hospitals, retrospective reimbursement is more likely to encourage quality improvements than prospective financing, while the reverse holds for efficiency improvements. This paper studies the incentives to improve the quality of hospital care, in an analytical model, taking into account the possibility of cooperative agreements, price besides non-price (quality) competition and quality improvements that may simultaneously increase demand, increase or reduce costs and spill over to rival hospitals. In this setting quality improvement efforts rise with the rate of prospective reimbursement, while the impact of the rate of retrospective reimbursement is ambiguous, but likely to be negative for quality improvements that are highly cost-reducting and create large spillovers. Cooperation may lead to more or less quality improvement than non-cooperative conduct, depending on the magnitude of spillovers and the degree of product market competition, relative to the net effect of quality on profits and the share of costs that is reimbursed retrospectively. Finally, the stability of cooperative agreements, supported by grim trigger strategies, is shown to depend upon exactly the opposite interaction between these factors.

Belgium↗
PubMed1994

Cost-benefit analysis of six alternative payment incentives for child therapists.

The outcomes and costs of 6 different methods of motivating therapists to meet service delivery goals at a community mental health center for children and adolescents were evaluated over a 5-year period. The costs and cost-savings benefits of each motivational method were compared with each other and with two baselines. Four incentive interventions generated more cost savings than they required in monetary outlays. Most cost-beneficial were bonuses paid to therapists for each hour of service they delivered over their monthly goals and bonus plans that rewarded therapists for exceeding their goals while also rewarding staff if total department goals were exceeded. The most cost-beneficial system saved $25,542 over 6 months that would have been paid to compensate for therapy hours not delivered, for an incentive investment of $9,726 over the 6 months. This yielded a net benefit of $15,816, or $31,632 annually.

Adolescent↗
PubMed2000

Need for an incentive-based reimbursement policy toward quality care for dialysis patient management.

BACKGROUND: In view of the growing dialysis population and the increasing reimbursement cost in the industrialized countries, a critical evaluation of the dialysis economy is warranted. METHODS: Data for the reimbursement and dialysis patients' statistics were collected from the National Medical Care Expenditure (NMCE), 1979-1996, which was published by the Japanese government, and the article "An overview of regular dialysis treatment in Japan," 1979-1998, by the Japanese Society for Dialysis Therapy, as well as unpublished data from the Yokohama Dai-ichi Hospital and 10 affiliated urban dialysis centers. RESULTS: From 1979 to 1996, the dialysis population increased 5.2 times and the NMCE increased 2.5 times, whereas the end-stage renal disease (ESRD) payment increased only 1.8 times. Because of a drastic reduction in the dialyzer cost and the dialysis-related technical fee, both the percentage of ESRD-related payment within NMCE and ESRD payment per capita per year decreased from 5.4 to 4.1% and from 16.3 million yen to 5.6 million yen, respectively. Despite this drastic cost reduction, the patient survival and quality of life determined by the social rehabilitation rate did not decline. CONCLUSION: The Japanese health insurance policy for dialysis management achieved a successful cost cut during the 1979-1996 period by using an incentive-based payment system toward quality care. However, the forthcoming further exponential increase in the dialysis population may put the dialysis economy and hence dialysis care quality in jeopardy. Effort must be made to reduce the ESRD-related cost through prevention of the progression of kidney diseases, propagation of renal transplantation, and internationalization of continuous ambulatory peritoneal dialysis and erythropoietin cost. A reduction in dialysis reimbursement, if necessary, must be achieved through an incentive-based system toward quality patient care.

Adult↗
PubMed1987

Financial incentives for physicians in HMOs. Is there a conflict of interest?

Do financial incentives used by health maintenance organizations (HMOs) to restrain the use of health care resources represent a conflict of interest between physicians' concern about their income and their concern about patients? To explore the contractual obligations of primary care physicians in HMOs, I mailed a survey to all 595 HMOs known to be in operation as of June 1986. In all, 302 of 595 HMOs (51 percent) responded. Sixty-seven percent of plans with capitation-based arrangements and 82 percent of plans with fee-for-service arrangements withhold a percentage of their physicians' income against potential deficits, but only 21 percent of plans with salaried physicians do so. Thirty percent of HMOs have other penalties in addition to this withholding. Eighteen percent of HMOs base the return of the withheld amount on the experience of individual physicians rather than on the collective experience of a group of physicians. For-profit HMOs are less likely to use salary-based payment, more likely to withhold a percentage of income, and more likely to base the return of this withheld amount on the experience of individual physicians. Most HMOs have mechanisms for sharing surpluses with participating physicians. I conclude that contractual arrangements in HMOs vary widely. Certain financial incentives, especially when used in combination, suggest conflicts of interest that may influence physicians' behavior and adversely affect the quality of care.

Capitation Fee↗
PubMed1992

Compensating and providing incentives for academic physicians: balancing earning, clinical, research, teaching, and administrative responsibilities.

Providing a comprehensive compensation and incentive plan for a group of faculty members in a department with multiple goals provides a challenge that few administrators may take. Many academic departments have given up on implementing a comprehensive compensation and incentive plan since department goals generate competing uses of a faculty member's time. Whatever the plan design your department adopts, you can be sure that it will generate controversy. The JPN department has attempted to reward and encourage faculty members to pursue scholarly activities balanced with clinical activities. As a result, this strategy has only considered physicians who can generate both clinical income and research funding. Thus far, the JPN department faculty have embraced the plan. Long-term effects are not known as this is the first year of the plan. The measure of a successful total compensation program is one that develops a sense of entrepreneurship among its members to develop new clinical programs, to pursue new research collaborations, and to devise innovative methods of training. The program described in this article is not intended to serve as the ideal model for all departments, even in academic institutions, but rather to provide a strategy that may have applicability to many other departments where the goals induce inherent conflict for faculty members attempting to decide where to place their time commitments. In addition, this strategy does not work well on an individual basis for young, beginning faculty members but does work well in the collective--to promote the goals of the department. Be prepared, however, to modify your plan after a trial period of perhaps two years. You must allow time to monitor the effects of your compensation plan and its impact on the goals and direction of the department.

Academic Medical Centers↗
PubMedDate not supplied

Productivity, efficiency, & effectiveness in the management of healthcare technology: an incentive pay proposal.

Modern healthcare managers are looking for better ways to motivate their employees as well as document and evaluate employee performance. The term productivity is familiar to most healthcare managers. The term efficiency is less familiar. These terms are defined and their significance for use as unique and valuable indicators of effective employee performance is discussed. Similar criteria were applied to make a general comparison between biomedical technician performance in two different hospitals in Tegucigalpa, Honduras, in Central America. A performance-based incentive program using an Incentive Pay Index chart is proposed as a tool through which hospital or company managers can provide technicians or technologists with ongoing motivation to improve both their productivity and efficiency on the job.

Biomedical Engineering↗
PubMed1996

Federal rules expanded for physician incentive plans.

All compensation arrangements contain incentives. Fee-for-service encourages physicians to render excessive services: capitation does the opposite. The federal government has published regulations that govern managed care organizations' physician incentive plans. Most health plans already comply with the new requirements.

Centers for Medicare and Medicaid Services, U.S.↗
PubMed2006

Effectiveness of an incentive-based online physical activity intervention on employee health status.

OBJECTIVE: The objective of this study was to test whether a financial incentive integrated with health benefits for an online physical activity program was associated with increased employee participation and improved health status among participants compared with nonparticipants. METHODS: Participation in the Virtual Fitness Center (VFC), an online physical activity program associated with a 150 dollars cash rebate, was assessed. Risk status for 2004 VFC participants and nonparticipants was compared using a health risk appraisal. RESULTS: A total of 53.8% of total eligible employees were VFC participants and reduced their risk for physical inactivity (8.4% points), life dissatisfaction (2.1), low perception of health (1.9), high risk status (1.3), smoking (0.4), and high body weight (0.2). CONCLUSIONS: Providing a cash incentive is one strategy for encouraging VFC participation and eliciting improved health status in an employer-sponsored, web-based physical activity program.

Adult↗
PubMed2001

Theory and practice in the design of physician payment incentives.

Combining the economic literature on principal-agent relationships with examples of marketplace innovations allows analysis of the evolution of methods for paying physicians. Agency theory and the economic principles of performance-based compensation are applied in the context of imperfect information, risk aversion, multiple interrelated tasks, and team production efficiencies. Fee-for-service and capitation are flawed methods of motivating physicians to achieve specific goals. Payment innovations that blend elements of fee-for-service, capitation, and case rates can preserve the advantages and attenuate the disadvantages of each. These innovations include capitation with fee-for-service carve-outs, department budgets with individual fee-for-service or "contact" capitation, and case rates for defined episodes of illness. The context within which payment incentives are embedded, includes such non-price mechanisms as screening and monitoring and such organizational relationships as employment and ownership. The analysis has implications for health services research and public policy with respect to physician payment incentives.

Capitation Fee↗