Can Financial Incentive Influence Medical Practice?

Background: Economic policy determines the allocation of funds and provides the framework within which health services are initiated, maintained or abandoned. Its implementation introduces financial incentives/disincentives likely to influence the attitudes and/or conduct of the people involved. The literature review presented in this article documents the existence of personal financial interest as a factor in the clinical decision-making of medical personnel. Findings:. Allocated payments (including merit pay and profit sharing) appear to shift doctors’ practice to meet targets (e.g. population coverage, reduced spending) while generating possible perverse effects (e.g. emphasis on quantity vs. quality). Remuneration strategies (e.g. capitation, shared financial risk, fee-for-service and salary systems) alter spending patterns, interrelationships, medical protocols, work codes and statistical recording. Conclusions: The choice of payment mechanisms is not a neutral decision and has significant policy and practice implications. The extent to which these factors influence care patterns depends on the interplay of financial incentives/disincentives, urgency of patient need and the doctor’s value system.