Billions in incentives wasted

More than $20 billion a year is being misspent on incentive programs in which providers do not realize that they are getting an incentive or know how to distinguish between an incentive and regular pay, according to a survey by the consulting company ZS Associates.

“Many health care organizations — hospitals, group practices, and insurance companies — are missing a huge opportunity,” says Torsten Bernewitz, managing principal for the health care insurance and payers practice at ZS and one of the report’s authors. “They spend big dollars, but get little impact. To reform how health care is delivered and paid for, we must make incentives more meaningful and truly motivating.”

The online survey of 4,500 health care providers, taken between November 2011 and January 2012, finds that even though 85 percent of doctors and nurses earn an incentive, 74 percent are unaware of what the reward is or are unable to distinguish it from it from base pay.

In addition, communication about the incentive programs is so infrequent that meaningful guidance cannot be given.

The report suggests that the incentive payment should be spread out over a year so as keep recipients motivated.

Frequency of communication


Frequency of bonus payment


*Includes both payers and providers who hold executive/management roles and are involved in the design and administration of incentive programs for providers.

Source: “Incentives for Health Professionals,” ZS Associates, May 14, 2012

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