There's no shortage of examples of well-meaning, but ultimately failing, incentives in health care, but here is a recent one that I've come across as an intern. In the community hospital we all rotate through, interns are paid $5 dollars if they manage to discharge 2 patients by 10 AM. Early discharges are valued by hospitals because they help with turnover and flow: overcrowding in the emergency room is kept to a minimum if hospital beds are available in the morning. But discharges take time: as an intern, we have to round on all of our inpatients in the morning, any new patients we inherit from the overnight team, and write a bunch of orders and notes. Discharges require thought, often irritating paperwork and emails, and all of that crowds out time for these other tasks. Furthermore, discharging people only means that you'll get more new patients later. For most of us, that's usually exciting, but its easy to see how this may seem like a penalty for keeping the hospital's best interests in mind.
In most places I've worked, there are no incentives for residents to get people out by noon, other than to avoid having to be gently reminded (over and over) by case managers and nurses to get the work done. Obviously, since the (opportunity) costs far outweigh the benefits, I'm sure most interns and residents are not in real rush to discharge people when they could being doing other things for their patients (or themselves).
Enter the hospital where I am now. They've ostensibly addressed this incentive compatibility problem by offering a small financial incentive for a certain number of pre-10 AM discharges. However, I think their $5 scheme is doomed to fail for two reasons. First, $5 dollars is not much money and most of us value our time far more than that. Second, and likely worse, such small incentives may actually make us less likely to move people out the door. Indeed, a number of experimental studies in behavioral economics and psychology have shown that small monetary rewards may reduce effort, either by reminding us that we get paid less than our peers in other fields or by demeaning us (or the task) with the size of the offer. Several of the interns I've spoken to have interpreted the incentive scheme in the latter light.
So what is the right kind of incentive? There are several, likely more effective, options. One is to increase the cash value of the incentive: perhaps the intern or resident at the end of the month (or year, to reduce sampling error as far as the medical problems and sickness of the patient) gets $100 or more for getting the most people out by noon. Perhaps even better is to take the monetary aspect out of it, altogether. As physicians, many of us value the altruism that goes with the field. Why not make the hospital brass-resident relationship center around that aspect and reward the intern/resident who discharges most effectively with some kind of public, visible and worthy commendation that he/she is a good doctor (at least one valued by the hospital for his/her attention to patient care and the realities of health care delivery on a larger scale)?