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Physician Financial Incentives: Use of Quality Incentives Inches Up, but Productivity Still Dominates

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Publication Date: January 2007

Publisher(s): Center for Studying Health System Change

Author(s): James D. Reschovsky; Jack Hadley

Series: Issue Brief No. 108

Topic: Health (Health care financing)

Type: Brief


The proportion of physicians in group practice whose compensation is based in part on quality measures increased from 17.6 percent in 2000-01 to 20.2 percent in 2004-05, according to a new national study from the Center for Studying Health System Change (HSC). Despite this small but statistically significant increase, quality-related physician compensation is much less common than financial incentives tied to physicians’ individual productivity, which has consistently affected 70 percent of physicians in non-solo practice since 1996-97. Examining the trend in quality-related physician compensation since 1996-97 suggests that quality incentives are most prevalent among primary care physicians and in large practices that receive a substantial share of revenue from capitated payments, or fixed per patient, per month payments.