Abstract
Given the rapid changes in health care, the economic consequences of substance abuse and the contemporary problems of substance abuse treatment must be acknowledged and addressed. These problems include poor treatment outcomes, difficulty of recruiting and retaining treatment staff, and failure of treatment programs to adopt effective research innovations. The authors suggest that these problems result from the incentives of the current payment system. To correct this, they propose an outcome-based incentive system to improve treatment outcome. This system is designed to enhance both treatment- and cost-effectiveness while being flexible and sensitive to local community circumstances.