Public Relative Performance Feedback in Complex Service Systems: Improving Productivity Through the Adoption of Best Practices

Abstract

Managers of service organizations seek to improve productivity without eroding service quality. We explore whether privately versus publicly disclosing relative performance feedback (RPF) about individual workers' processing times can help achieve this goal. Using three years of patient encounter data from two emergency departments, one of which changed from privately to publicly disclosing RPF to physicians, we find an 8.6% improvement in productivity and no significant reduction in quality associated with implementing public RPF. This benefit is greater when workers are carrying out unstandardized, rather than standardized, tasks. We conduct further analyses that suggest the benefit of public RPF may primarily stem from the identification and diffusion of best practices around workflow, rather than from the motivation to be top-ranked or the shame of being bottom-ranked. Thus, our results suggest public RPF can foster the sharing and adoption of strategies for improving the management of workflow.

The value of process friction: The role of justification in reducing medical costs

“…If providers have available time, they provide more services to each customer to increase quality (Delasay et al, 2015;Hopp et al, 2007). Researchers have found that in practice, when workload is visibly high, workers "cut corners" (Oliva & Sterman, 2001) and work at a faster pace (KC & Terwiesch, 2012;Schultz, Juran, Boudreau, McClain, & Thomas, 1998;Shunko, Niederhoff, & Rosokha, 2017;Song, Tucker, Murrell, & Vinson, 2015), and that congestion-induced speed often comes at the expense of quality (Anderson, Golden, Jank, & Wasil, 2012;KC & Terwiesch, 2012;Kuntz, Mennicken, & Scholtes, 2014;Oliva & Sterman, 2001). Researchers have found that in practice, when workload is visibly high, workers "cut corners" (Oliva & Sterman, 2001) and work at a faster pace (KC & Terwiesch, 2012;Schultz, Juran, Boudreau, McClain, & Thomas, 1998;Shunko, Niederhoff, & Rosokha, 2017;Song, Tucker, Murrell, & Vinson, 2015), and that congestion-induced speed often comes at the expense of quality (Anderson, Golden, Jank, & Wasil, 2012;KC & Terwiesch, 2012;Kuntz, Mennicken, & Scholtes, 2014;Oliva & Sterman, 2001).…”

“…Some physicians, whom we refer to as high reflectors, take time to reflect more, on average, before ordering tests than do low reflectors (Lundberg, 1998;Song, Tucker, Murrell, & Vinson, 2015;van Walraven et al, 1998). We also conduct a placebo test and show that these DD results are not a function of our data structure (Pierce, Snow, & McAfee, 2015;Song, Tucker, Murrell, & Vinson, 2015). Thus, we rank "average time to first test order" by attending physician, when justification is not present, and do a median split, where high (low) reflectors have higher (lower) average times to first order.…”

“…EDs are likely to have enough demand to fill the freed-up capacity because across the U.S., ED patient volumes have been increasing, forcing EDs to treat more patients with the same amount of resources Song, Tucker, Murrell, & Vinson, 2015). However, due to the shorter average LOS associated with justification, hospitals can counteract this loss with revenue gains from being able to see more patients in the same amount of time.…”

“…Nonetheless, to provide additional support we perform an analysis that utilizes the significant behavioral differences between physicians' ordering patterns described in the literature (McCarthy et al, 2012), and that we see in our data. Some physicians, whom we refer to as high reflectors, take time to reflect more, on average, before ordering tests than do low reflectors (Lundberg, 1998;Song, Tucker, Murrell, & Vinson, 2015;van Walraven et al, 1998). We assume that, on average, low reflectors' first tests are ordered earlier than those of high reflectors.…”

“…However, due to the shorter average LOS associated with justification, hospitals can counteract this loss with revenue gains from being able to see more patients in the same amount of time. EDs are likely to have enough demand to fill the freed-up capacity because across the U.S., ED patient volumes have been increasing, forcing EDs to treat more patients with the same amount of resources Song, Tucker, Murrell, & Vinson, 2015). At an average revenue of $750 per ED patient (obtained from an interview with ED management), this means an additional $869,250 (1,159 patients at $750/patient) over 26 months.…”