Improving Incentives to Free Motivation

A doctor discusses patient charts with two residents.

“Improving Incentives to Free Motivation,” calls for an approach to payment reform that harnesses the inherent motivation that doctors and patients have to make good decisions about health care. The authors reject the assumption that health care costs will drop and quality will improve if policymakers and payers simply find the right mix of rewards (“carrots”) and punishments (“sticks”).

The report draws on a large body of research that shows external incentives designed to change simple behaviors, like improving productivity in rote tasks, do not work for more complex behaviors. They can actually be harmful when used for complex behaviors, undermining assets like creativity and drive, which are essential to the success of health professionals.

For providers, the factors that distort good decision-making include misguided fee-for-service payment models, which reward volume over value, or a lack of well-established guidelines for how to treat specific conditions. For patients, they may include poor health care literacy, socioeconomic factors, and the structure of benefits provided by employers—among many other financial and environmental factors.

The report also analyzes cost and quality variability data for over 20 health conditions, identifying those (such as diabetes and coronary heart disease) most ripe for incentive experimentation and reform.

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Diabetes and coronary heart disease most ripe for incentive experimentation and reform.