An Incentive to Innovate: Improving Health Care Value and Restoring Physician Autonomy Through Physician-Directed Reinvestment

Problem Many health care systems in the United States are shifting from a fee-for-service reimbursement model to a value-based payment model. To remain competitive, health care administrators must engage frontline clinicians in their efforts to reduce costs and improve patient outcomes. Engaging physicians and other clinicians is challenging, however, as many feel overwhelmed with clinical responsibilities and do not view cost reduction as in their purview. Even if they are willing, providing a direct financial incentive to clinicians to control costs poses ethical and legal challenges. An effective incentive in the current system must motivate clinicians to engage in creative problem solving and mitigate ethical and legal risk. Approach Evidence suggests the most successful behavior change interventions in physicians are multifaceted and combine intrinsic motivators, such as increased autonomy, with extrinsic motivators, such as access to funding or social recognition. Two academic health centers—the University of Utah Health and Stanford Health Care—have begun experimenting with an alternative value-sharing arrangement. Physician-directed reinvestment is an explicit agreement in which a health care system reinvests a portion of savings attributed to physician-led cost reduction initiatives back into areas of the physician’s choosing, such as capital investment, research, or education. Outcomes Both organizations reported similar positive outcomes, including increased engagement from clinicians and administrators, sustained or improved quality of care, reduced costs of care, and benefits from reinvested funds. Many savings opportunities were previously unknown to administrators. Next Steps Physician-directed reinvestment appears to effectively engage physicians in ongoing efforts to improve value in health care, although formal evaluation is still needed. This incentive structure may hold promise in other configurations, such as inviting nonphysicians to apply as project leaders (clinician-directed reinvestment) and expanding the program to nonacademic and ambulatory settings.