Follow the Incentives!

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Where will the future of population health take us? Follow the incentives!


The more I study health care, the more I appreciate the enormous contribution of incentives. I have often written that “Incentives drive behaviors” and “Behaviors drive results!”. And ultimately, “The problem with incentives is that they WORK!”. Although I believe this is a fundamental component of human nature in general, I particularly believe it drives our behaviors (and consequences) in health care.
Having done a great deal of work in physician compensation, it became very clear that the incentives within the compensation plans have tremendous power in driving the ultimate result of the program. Compensation is a huge incentive for all stakeholders. When I do strategic planning with hospitals, it is apparent that incentives drive the ultimate accomplishment of the Hospital Strategic Plan. I tell my clients that if the strategic plan says “turn right” but the compensation plan says “turn left” the organization with ultimately “turn left”!

Incentives do drive the behavior.

When I examine the types of incentives within organizations, I see two varieties: Overt and Covert.
Overt incentives are those that are directly stated in the plan, example “If the RVU threshold is achieved by doing X number of RVU’s, the incentive plan will apply.” These incentives are relatively straight forward and easy to understand.

More interesting, and perhaps more important are the Covert incentives. These are incentives that are not directly articulated in the documents, but behaviors that are implied by doing the incentives that are explicitly mentioned. These incentives may actually be interwoven with the underlying culture of the organization. They may not be apparent at first glance. They may be very difficult to change.

Physicians and health care executives are extremely driven and extremely intelligent. One did not make it through medical school by being average. Incentives will be accomplished. So when I look at health care initiatives, I must ask the question “Where are the incentives, both overt and covert?”.
Let’s look at Population Health as an example. Every institution I have ever encountered has spoken about the ultimate goal of providing better health in the communities that they serve. It has almost become a “motherhood and apple pie” issue. Who can disagree with population health as a strategic goal for every health care institution?

Having said that, what are the current incentives in place to attain true population health?
What incentives are in place for prevention? What are the incentives for the individual physician to spend time with the patient counseling that person about individual risk factors and specific lifestyle changes to improve health? It may be quicker and more efficient to write a prescription and go on to see the next patient. How do you compensate a surgeon NOT to operate if the operation is not in the best interest of the patient? What incentives are in place for the patient to take a more proactive role in his/her health?

I can go on and on, but when one looks at the present system, there are very few incentives currently in place that would drive the accomplishment of a healthier community.

So, you want to know the future of population health? Bottom line, I believe that the biggest barrier to achieving population health is NOT the concept or even some of the delivery models, but rather the LACK of incentives presently in place for the current stakeholders to achieve the goal of healthier communities.

Yes, the problem with incentives is that they WORK.

As we move toward true population health, we must make sure that all of the incentives for all of the stakeholders promote the end game of population health. Or else we may just be kidding ourselves.

One response to “Follow the Incentives!”

  1. Some examples of population health incentives would be appreciated. Thanks

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