Everyone enjoys a pay raise for a job well done – physicians are no exception – but in some instances, financial incentives for healthcare performance may actually backfire.

That’s the conclusion of a UCLA study, showing that patient-care performance ratings for 25 medical groups across California improved significantly following the launch of a statewide patient-care performance in 2004. Incentives focusing on doctor productivity were a different matter.

Hector P. Rodriguez, assistant professor in UCLA’s School of Public Health and his colleagues found evidence that certain kinds of financial incentives for the purpose of improving patient care, in combination with public reporting of medical group performance ratings, have a positive effect on patient care experiences. They also found that some types of incentives may have a negative overall impact on how patients experienced their care.

Rodriguez looked at how medical group performance ratings changed over time and found that ratings in specific measures, representing three broad categories – physician communication, care coordination and office-staff interactions – improved substantially during the period after the start of the Integrated Healthcare Association’s (IHA) patient-care performance program.

Incentives for addressing the quality of patient-clinician interaction and the overall experience of patient care tended to result in improved performance in those areas, especially when the additional funds were used broadly by medical groups to positively reinforce a patient-centered work culture.

The greatest improvements were seen within those groups that placed less emphasis on physician productivity and greater emphasis on clinical quality and patient experience. Within groups where financial incentives were paid directly to physicians, Rodriguez found that placing too much emphasis on physician productivity actually had a negative impact on the experiences patients had when visiting their primary care physician.

Medical groups were free to use the additional funds in various ways, with some groups paying incentives directly to physicians and others using the incentives more broadly, focusing on organizational priorities. The groups also participated in a public reporting program in which ratings in two of the three broad categories were released annually to the public in the form of a "healthcare report card" comparing the performance of the medical groups and insurers to one another.

Rodriguez’s research team based its findings on information collected from 124,021 patients of 1,444 primary care physicians at 25 California medical groups between 2003 and 2006. It conducted interviews with group medical directors to determine how financial incentives were used. All 25 groups, which represent six insurers, were awarded financial incentives for achievements in the broad categories of clinical care processes, patient care experiences and office-based information systems, in accordance with IHA’s program.

Rodriguez’s report was published in the Journal of General Internal Medicine

Ted von Glahn, of the Pacific Business Group on Health, in San Francisco was the principal investigator on the study. The research was funded by the Commonwealth Fund. The researchers report no conflict of interest.

Address: UCLA School of Public Health, 650 Charles E. Young Drive S., Room 16-035, Center for Health Sciences, Los Angeles, CA 90095-1772; www.ph.ucla.edu.

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