Financial incentives, cross-purposes, and moral motivation in health care provision

Financial incentives and disincentives are fundamental to a category of proposals, usually characterised as forms of managed care, whereby the pecuniary interests of health care providers are directly affected by their clinical decision-making. Presently, Australian health care administrators and private insurers are adopting financial incentives as a means of ensuring provider compliance with ‘health outcome ’ and cost-constraint objectives. To the extent that this has occurred, health-care relationships are transformed to emulate, more closely, a commercial transaction.

This paper questions the ideological assumptions which inform the use of financial incentives in the health care domain and raises concerns with regard to the potential for financial incentives to undermine the moral integrity of clinical decision-making. It also challenges the legitimacy of rationing health care resources through the use of this measure, particularly when adopted by private insurers of health care.