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Objectives Many strategies have been either used or recommended to promote physician compliance with clinical practice guidelines and clinical pathways (CPs). This study examines the relationship between hospitals' use of financial incentives to encourage physician compliance with CPs and physician adherence to CPs. Design A retrospectively cross-sectional study of the relationship between the extent to which patient care was consistent with CPs and hospital's use of financial incentives to influence CP compliance. Setting Eighteen public hospitals in three provinces in China. Participants Stratified sample of 2521 patients discharged between 3 January 2013 and 31 December 2014. Primary outcome measures The proportion of key performance indicators (KPIs) met for patients with (1) community-acquired pneumonia (pneumonia), (2) acute myocardial infarction (AMI), (3) acute left ventricular failure (heart failure), (4) planned caesarean section (C-section) and (5) gallstones associated with acute cholecystitis and associated cholecystectomy (cholecystectomy). Results The average implementation rate of CPs for five conditions (pneumonia, AMI, heart failure, C-section and cholecystectomy) based on 2521 cases in 18 surveyed hospitals was 57% (ranging from 44% to 67%), and the overall average compliance rate for the KPIs for the five conditions was 69.48% (ranging from 65.07% to 77.36%). Implementation of CPs was associated with greater compliance within hospitals only when hospitals adopted financial incentives directed at physicians to promote compliance. Conclusion CPs are viewed as important strategies to improve medical care in China, but they have not been widely implemented or adhered to in Chinese public hospitals. In addition to supportive resources, education/training and better administration in general, hospitals should provide financial incentives to encourage physicians to adhere to CPs. [ABSTRACT FROM AUTHOR]