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The Effect of Explicit Financial Incentives on Physician Behavior
Brian S. Armour, PhD;
M. Melinda Pitts, PhD;
Ross Maclean, MD, MBA;
Charles Cangialose, PhD;
Mark Kishel, MD;
Hirohisa Imai, MD, PhD;
Jeff Etchason, MD
Arch Intern Med. 2001;161:1261-1266.
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.
From the Kerr L. White Institute for Health Services Research, Decatur,
GA (Drs Armour, Pitts, MacLean, Cangialose, Imai, and Etchason); Department
of Economics, Georgia State University, Atlanta (Dr Pitts); Department of
General Internal Medicine, Medical College of Georgia, Augusta (Drs MacLean
and Imai); Health Services Research Centre, Wellington, New Zealand (Dr Cangialose);
and Blue Cross Blue Shield of Georgia, Atlanta (Dr Kishel).
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