Do Financial Incentives Make a Difference?

Forsberg, E. 2001. Do financial incentives make a difference? A comparative study of the effects of performance-based reimbursement in Swedish health care. Acta Universitatis Upsaliensis. Comprehensive Summaries of Uppsala Dissertations from the Faculty of Medicine 1077. 54 pp. Uppsala. ISBN 91-554-5123-3. Financial incentives have become important in health care all over the world. This thesis compares one council implementing a new payment system based on performance based reimbursement (PBR) with ten councils retaining an annual budget system. The aim of this thesis was to study the effects of PBR on physicians’ attitudes and behaviours, that may affect the conditions for cost effective care. Aspects highlighted are efficiency, cost awareness, quality of care, professional autonomy and power, job satisfaction and leadership. This thesis is based on data from seven studies, questionnaires, interviews and register based studies. One instrument, Incentive, Effectiveness, Environment (IEE) was developed within the framework of this thesis. It measures self-reported behavioural changes related to daily clinical work, judgements about work environment factors and the quality of care, and attitudes towards and existence of financial incentives. Physicians in the council with PBR experienced a greater pressure to improve their efficiency and they did so. The average length of stay decreased more both in relative and absolute numbers. Much of the efficiency increase, however, seems to emanate from “running faster”, not from working more rationally. Cost awareness increased in all councils studied although more so in the council with PBR. PBR was found to create a different financial incentive than an annual budget, stronger and more positive. Effects on quality of care were judged to be negative. Financial reductions were claimed to be the main reason for quality losses, but PBR was found to be more time consuming and therefore contributed to the negative outcome. Work environment factors, especially professional autonomy and power were judged to have deteriorated in all councils studied although more so in the council with PBR. Good leadership was shown to make a difference for quality of care as well as for professional autonomy and job satisfaction, regardless of context. The results seem, at least partly, to depend on the new payment system, creating an increased efficiency pressure. Additional reasons discussed in this thesis are financial reductions, repeated organisational changes and a size effect.