From When financial incentives do more good than harm: a checklist, by Paul Glasziou et al. (BMJ, 2012):
Current evidence on the effectiveness of financial incentives is modest and inconsistent. Outside healthcare, early research suggested that financial incentives improved employee motivation and performance, but a meta-analysis found this was not always true for complex systems, where careful design and integration within the organisation was needed.6 An overview of four systematic reviews in healthcare found none had examined the effect on patient outcomes.7 Financial incentives had mixed effect on consultation or visit rates (improving 10 of 17 outcomes from three studies) and generally improved processes of care (41 of 57 outcomes from 19 studies) and referrals and admissions (11 of 16 outcomes from 11 studies) as well as reducing prescribing costs (28 of 34 outcomes from 10 studies).7 However, they were ineffective in improving compliance with guidelines (improving five of 17 outcomes from five studies). A Cochrane review of seven eligible studies in primary care found that financial incentives were effective for some outcomes in some settings but concluded that there was “insufficient evidence to support or not support the use of financial incentives to improve the quality of primary health care.”8
My guess is that some view this as generally good news (mostly positive effects) or bad news (a large minority of cases with no effect). I’d give the statement “financial incentives work in health care” a “FraktCheck” rating of “somewhat true, though uncertain for primary care.”
As the title of the article suggests, the authors provide a checklist of necessary conditions for financial incentives to have a positive effect. They also apply their checklist to some real-world examples. For instance, they suggest that good outcomes from performance pay for low performing physicians are threatened if barriers and enablers are not studied, including
the nature of the intervention, its mode of dissemination, the clinicians, their environment, and the attitudes of patients.
This is just one example of several aspects of the checklist I find vague. I’m not sure how it is helpful to essentially suggest something is less likely to work unless designers carefully consider the conditions under which it will work. Of course that’s true, but it isn’t a very sensitive or specific test.
More on financial incentives in health care here.
 Jenkins GD, Mitra A, Gupta N, Shaw JD. Are financial incentives related to performance? A meta-analytic review of empirical research. J Appl Psychol 1998;83:777-87.
 Flodgren G, Eccles MP, Shepperd S, Scott A, Parmelli E, Beyer FR. An overview of reviews evaluating the effectiveness of financial incentives in changing healthcare professional behaviours and patient outcomes. Cochrane Database Syst Rev 2011;7:CD009255.
 Scott A, Sivey P, Ait Ouakrim D, Willenberg L, Naccarella L, Furler J, et al. The effect of financial incentives on the quality of health care provided by primary care physicians. Cochrane Database Syst Rev 2011;9:CD008451.