High profile initiatives such as the incentive programme introduced by the Centre for Medicare and Medicaid Services in the US¹ and the new general practitioner contract in the UK² highlight the enthusiasm of policy makers for using financial incentives as a way of improving the quality of care. This enthusiasm is understandable, given the burden of healthcare costs experienced by most countries. It makes sense to ensure that resources are targeted on buying desirable behaviours from health professionals and producing beneficial outcomes for patients.

But is the fascination with financial incentives based on sound empirical evidence? At a general level the answer is a guarded “yes”. We know from observational studies that the way in which doctors are paid is associated with particular patterns of clinical behaviour. For example, doctors paid under fee-for-service schemes undertake more visits and conduct more investigations than those paid under capitation schemes.³ In contrast, it is less easy to find a convincing causal link between targeted incentives and the behaviour of individual doctors, and little attention seems to have been paid to what might be termed “spillover” effects—that is, the impact of incentives on behaviours other than those incentivised. In part, this lack of evidence results from the methodological challenges associated with linking interventions to complex behavioural change. Even taking this into account, the evidence still leaves us with the impression that incentives do not induce the rational …