Financial incentives represent a powerful tool for changing clinicians’ behaviour. There is now plenty of evidence about the impact of financial incentives on clinicians, for example, incentives have been used to positive effect in primary care in the NHS, with the implementation of the Quality and Outcomes Framework.
But there are also examples of badly designed incentives that produce distorted results. A poorly designed reimbursement structure introduced as part of the NHS dentists’ contract led to a steep increase in tooth extractions as dentists avoided more complex, time-intensive procedures that did not generate any additional revenue.
Ruth McDonald, Professor of Health Care Innovation and Learning, University of Nottingham, explains to Vidhya Alakeson, Nuffield Trust Senior Fellow, how the government changed the dentists’ contract and pay structure in 2006.