Improving population health is not simple. Many instruments are available for changing behavior and consequent outcomes. However, the following basic principles should guide development of any incentive arrangement: (1) identify the desired outcome; (2) identify the behavior change that will lead to this outcome; (3) determine the potential effectiveness of the incentive in achieving the behavior change; (4) link a financial incentive directly to this outcome or behavior; (5) identify the possible adverse effects of the incentive; and (6) evaluate and report changes in the behavior or outcome in response to the incentive.

A wide range of financial and nonfinancial incentives is available to encourage efficient behaviors and discourage costly and unproductive ones. Evidence for the beneficial effects of incentive programs has been slow to emerge, partly because such evidence must show how behaviors have changed because of the incentive. Nevertheless, the potential for incentive programs in health care seems large, and research should support their design and assess their effect.

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