Financial incentives and the health workforce

Changes to the remuneration of medical practitioners are currently being considered in Australia. In this paper, we provide a discussion of financial incentives in healthcare markets and their effects on health professionals' behaviour. After defining incentives, the paper focuses on the design of incentive schemes for the health workforce. It discusses several issues that should be considered when designing incentives, illustrated with some Australian examples. What are the objectives of the incentive scheme? What types of incentives can be used and under what circumstances? What is the empirical evidence around the effects of incentive schemes? What unintended consequences might exist? The paper concludes with a set of principles around which incentives can be designed. These principles might be used to inform the current debate about revisions to the incentives that are faced by medical practitioners in Australia.