Put away that carrot and stick

Physician practice managers are in a central position because they interact with health plans that determine quality targets and financial incentives, such as pay-for-performance programs, and with the physicians and other providers in their organizations.

A study published in Medical Care Research and Review bears this out. Researchers interviewed practice managers about how financial incentives are implemented in physician practices and the attitudes and perceptions they had toward P4P programs.

They interviewed 28 practice managers in 25 organizations in Massachusetts. The researchers made five key findings about managers’ perspectives on P4P:

  • Quality incentives are better than utilization incentives,
  • Quality incentives are seen as bonus rewards,
  • Quality incentives are seen as agents for change,
  • Providers do not feel they have control over meeting quality goals, and
  • The ways in which quality is measured are problematic.

The general attitude of practice executives was that quality incentives are far more aligned with physicians’ clinical goals and professional philosophy than are utilization incentives. The researchers found that many of the practice executives believed that physicians already strive to provide good quality of care regardless of financial incentives. How incentives are distributed (e.g., give to all providers, retain by the organization, or base on a payer’s performance on quality targets) may have an effect on quality. Health plans take note: The authors suggest that performance monitoring and feedback may be enough to improve quality. So put away that carrot.

Distributing incentive dollars and impact on quality
Mechanism — and its potential mode of impact on quality
Equal distribution to all providers May enhance group work; may remove power of incentive from individual physicians.
Provider’s performance judged by payer’s quality targets Is the most powerful incentive to affect provider behavior directly.
Provider’s performance judged by practice-based incentive schemes Decreases power of the incentive direct from payer. May affect performance in other ways.
Money retained wholly by organization Least powerful incentives to physicians. May produce change in quality of care by implementing systems-level changes.
Hybrid approach May produce change at provider level and at systems level to improve quality of care.

Source: Incentive implementation in physician practices: A qualitative study of practice executive perspectives on pay for performance. Medical Care Research and Review. 2006 63:73S–95S.

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