At Kaiser Permanente, Seeing How Financial Incentives Affect Healthcare

Published on
May 12, 2010

I'd like to believe that dangling financial incentives in front of medical groups and doctors shouldn't influence the quality of my health care for better or worse.

But they apparently do exactly that, according to some intriguing new research on how financial incentives influenced health screenings and treatment for millions of patients at Kaiser Permanente, the giant HMO based in California.  

British researchers teamed with Kaiser Permanente researchers to examine the impact of incentives on measures of health care quality including screening for diabetic retinopathy and cervical cancer. Their findings are published in the British Medicine Journal (and kudos to the journal for offering full-text for free.) The Brits are interested in this question, since their government is preparing to end incentives to improve some types of health care.

So what happened? Karen Kaplan of the Los Angeles Times' Booster Shots blog explains:

Between 1999 and 2003, when (Kaiser facilities) were rewarded for screening diabetic patients for diabetic retinopathy -- a complication that can cause severe vision loss, including blindness -- the screening rate rose from 84.9% to 88.1%. Then the incentive payments stopped, and the screening rate dropped to 80.5% four years later.

In the case of cervical cancer, screening rates ticked up from 77.4% to 78% between 1999 and 2000, when financial incentives were in place. Kaiser stopped the payments from 2001 through 2005, and during that time, the screening rate fell to 74.3%. That apparently caused Kaiser to reinstate the incentive payments, and the trend reversed over the next two years.

Why should you care about this? Two reasons: because of Kaiser's size, its experiments with incentives will strongly influence what other large health care networks do. And while "pay for performance" may play a big role in health reform, what happens when the money for such incentives runs out?

These are questions worth asking of large health care providers in your community. Do they offer incentives for doctors or hospitals to reach certain goals? How effective are these incentives? And what happens when the incentives go away?