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  • Print publication year: 2011
  • Online publication date: October 2015

2 - Reforming Provider Behaviour through Incentives: Challenges and Reflections from the U.K. Experience

from Part I - Overview



Before exploring theories of motivation, trust, incentives and regulation, it is important to clarify a number of fundamental terms in health policy. These terms are often used by policymakers and academics in an inappropriate manner which confuses policy debate. Following this, the similarities of public and private health care systems throughout the world are outlined, and common deficiencies in health care markets are reviewed.

Next the motivation of health care professionals and the roles of trust and incentives in delivering health care are explored. The regulation of health care markets, and interventions such as pay for performance (P4P) incentive schemes, reflect an implicit judgment by policymakers that they do not trust the professionals who determine the nature and timing of health care. The dangers this creates are addressed before financial incentives are reviewed. This discussion poses questions such as whether it is more efficient to incentivize individual practitioners, teams, or organizations such as the hospitals in which they work. Are bonuses more or less efficient than penalties in inducing changed behaviour?

Throughout this paper, the need for careful experimentation and systematic evaluation in the development of health policy and reform is emphasized. Without this, powerful incentives may produce perverse outcomes that fail to give policymakers and societies expenditure control, value for money, efficiency, and equity or access to care for the population.


Structure, Process, and Outcome

The U.S. health services researcher Donabedian (1966) emphasized the need to distinguish between structure, process, and outcome in health care. The complex policy issue is whether the reform of the organizational structures through which health care is delivered affects patient care, or outputs, and if so, whether the changes improve patient outcomes. There is a propensity among policymakers to assume that if they alter organizational structures, this will improve care and benefit patients. But this is generally an evidence-free assumption. If reform takes place, these linkages have to be evaluated and proved rather than assumed.

Policy Goals

When societies invest in health care, what goals are they pursuing? How are these goals ranked? And what trade-offs have to be made among competing goals?