Financial Incentives to Encourage Value-Based Health Care

Abstract

This article reviews the literature on the use of financial incentives to improve the provision of value-based health care. Eighty studies of 44 schemes from 10 countries were reviewed. The proportion of positive and statistically significant outcomes was close to .5. Stronger study designs were associated with a lower proportion of positive effects. There were no differences between studies conducted in the United States compared with other countries; between schemes that targeted hospitals or primary care; or between schemes combining pay for performance with rewards for reducing costs, relative to pay for performance schemes alone. Paying for performance improvement is less likely to be effective. Allowing payments to be used for specific purposes, such as quality improvement, had a higher likelihood of a positive effect, compared with using funding for physician income. Finally, the size of incentive payments relative to revenue was not associated with the proportion of positive outcomes.

Keywords: financial incentives; pay for performance; value-based health care.