Report rejects carrot-and-stick incentives

A new report by the Health Care Incentives Improvements Institute (HCI3) challenges previous ideas on how to improve the quality and affordability of healthcare in the nation, announced the Robert Wood Johnson Foundation (RWJF).

While previous analysis has supported stronger Medicare and Medicaid incentives for providers and increasingly stronger sticks to discourage nonparticipation, the HCI3 report claims that carrot-and-stick systems of reward and punishment are ineffective.

"Incentives can and do work--but only when they are applied with the nuances of the clinical encounter in mind," RWJF said in the announcement. "The approach to incentives that we use in other work settings simply won't do for healthcare. If we don't get payment reform right, we risk not just failing to fix our cost problem--we risk exacerbating it further."

The report, entitled "Improving Incentives to Free Motivation," was developed with support from the RWJF and primarily authored by François de Brantes, a leading healthcare economist and HCI3 executive director. According to de Brantes, fee-for-service payments work well only if a clear set of rules and an obvious solution is present. Extensive research found in the report affirms that external incentives to change simple behaviors cannot be used for more complex behaviors.

"Financial incentives seem to dull creativity and inhibit motivation," states the report brief. "That's a problem when we're trying to solve big complex problems."

According to the report, misguided fee-for-service payment models that reward volume over value or lack clear guidelines on how to treat specific conditions alter good decision-making. Furthermore, financial and environmental factors can negatively affect patient's decisions.

The authors argue that reform should focus on identifying and eliminating the external incentives that don't work while also amplifying the powerful internal motivations that doctors and patients have to deliver or seek the best care. The HCI3 report suggests promoting self-direction and focusing on autonomy, mastery and purpose, states the report brief.

To learn more:
- here's the report brief
- read the RWJF announcement