Knowledge Expansion

Incentives in Provider Compensation and Management

Fellowship Paper

Provider Compensation

Mark G. Davies MD, PHD, MBA, CPE, FACHE, FACMPE
An incentive is “something that incites or has a tendency to incite an individual or group to perform a desired action or actions”. The “incentive theory” believes that people are motivated to behave in certain ways in order to gain rewards. The presence of hygiene factors or dissatisfiers (company policy, supervision, interpersonal relations, working conditions, and salary) does not motivate or create satisfaction but their absence leads to job dissatisfaction.  In contrast, achievement, recognition, the work itself, responsibility and advancement are motivators (satisfiers) associated with long-term positive effects in job performance. Several common characteristics that can be considered hallmarks of viable provider incentive programs include 1/ focused performance measures derived from accurate data sources using agreed methodology that are within a provider’s control; 2/ design of the incentive scheme is easy to understand and administer, and which has provider buy-in; 3/ performance targets must be both challenging and achievable in an agreed and established time frame; 4/ incentives must be promptly applied and providers must receive timely feedback on their performance to allow for improvement as needed.  Systematic reviews have noted that payment for working for a specified time period is generally ineffective. In contrast, payment for distinct service, episode or visit, payment for providing care for a patient or specific population and payment for providing a pre-specified level or providing a change in activity or quality of care   When assessing the effect of financial incentives overall across categories of outcomes, they were of mixed effectiveness on consultation or visit rates; generally effective in improving processes of care; generally effective in improving referrals and admissions; generally ineffective in improving compliance with guidelines outcomes; and generally effective in improving prescribing costs outcomes Download Now

About the Author

Mark G. Davies MD, PHD, MBA, CPE, FACHE, FACMPE
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