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The authors describe the implementation and first three years (1997–1999) of a department-wide incentive plan of the Department of Family Medicine at the State University of New York at Buffalo School of Medicine and Biomedical Sciences. By using a consensus approach, a representative elected committee designed a clinical relative value unit (explained in detail) that could be translated to equally value and reward faculty efforts in patient care, education, and research and which allowed the department to avoid the imposition of a model that could have undervalued scholarship and teaching. By 1999, the plan's goal of eight patient-care-equivalent points per four-hour session had been exceeded for pure clinical care. Clearly, only a small financial incentive was necessary (in 1999, an incentive pool of 4% of providers' gross salary) to motivate the faculty to be more productive and to self-report their efforts. Long-term productivity for pure clinical care rose from 9.8 points per session in 1997 to 10.4 in 1999. Of the mean total of 3,980 points for the year 1999, the contribution from teaching was 1,146, or 29%, compared with 25% in 1997. For scholarship, the number of points was 775, or 20%, in 1999, compared with 11% in 1997. The authors describe modifications to the original plan (e.g., integration of quality measures) that the department's experience has fostered.Problems encountered included the lack of accurate and timely billing information from the associated teaching hospitals, the inherent problems of self-reported information, difficulties of gaining buy-in from the faculty, and inherent risks of a pay-for-performance approach. But the authors conclude that the plan is fulfilling its goal of effectively and fairly quantifying all areas of faculty effort, and is also helping the department to more effectively demonstrate clinical productivity in negotiations with teaching hospitals.