Piecework Economics and Slow Medicine: Churn Rate

“Piece rate is more suited to repetitive crew work (e.g., boysenberry picking, vineyard pruning) than to precision planting, fertilizing, or irrigating. As the tie between individual work and results is diminished, so is the motivating effect of the incentive on the individual.”     --Gregorio Billikopf

It’s the money, stupid.  I don’t write about money much, though I haven’t forgotten everything I used to know about it.  I try to keep both this blog and The Empathic Pediatrician about medicine.  Sometimes, however, te topics of money and medicine overlap.

Primary-care doctors like me are paid by the visit.  More visits, more money.  There’s a huge incentive to see patients as quickly as possible.  This can be called efficiency if you’re the insurance company paying for it.  If you’re the patient, what is it?

It’s certainly not to your advantage.  I strongly believe—more strongly as I become more experienced—that taking the time to get to know a patient, which in my case is typically a child, has enormous benefits and increases efficiency, though defined within a different parametric model.

I found this fantastic essay on piecework economics by Gregorio Billikopf when he was at UC Davis working on farm worker pay systems.  It’s balanced and well thought-out.  Farmers have to be fair and consistent in the way they pay people in order to keep them motivated.  Deception and mistrust are always possible in the context of thin profit margins and hard work, however, so they have to be careful to honor their commitments.
Doctors who do a lot of procedures have accomplished such dominance over the medical system that they are paid per procedure.  More procedures, more money.

Everybody, as far as I know, is stuck with the same 24 hours in a given day.  How many visits can you do in that day?  I know of physicians doing 40 visits in 8 hours, and taking an hour for lunch.  That’s about 5 or so minutes a visit.  With the time needed for physically moving from room to room, what do you think?  4 minutes?  You might have a chance to say that your chest hurts but not explain that you can’t afford your heart medicine.

The specialist doing procedures has even more incentive to perform quickly.  If a patient is seen who might or might not benefit from an intervention, which choice would the doctor make?  What if the procedure cost $2000?  What if they could do 10 or more in a day?
 
Obviously, I wouldn’t be writing about this if I didn’t think it was a problem.  As always, I hope, my view is not a dogmatic one.

As in so many things, the people who run medicine are so comfortable in their Procrustean Bed that it would be irrational of me to expect from them a measure of horizontal thinking.  That’s not quite fair, I guess.  They haven’t walked 30 years in my shoes.

This post is really about Portfolio Analysis.

About 7 or 8 years ago, I made a house call to a modest home.  I examined the toddler in the living room, while mom was in an adjoining room.  I had made a lot of house calls, and thought it was interesting that I was seeing the kid alone when the mom was obviously concerned enough to call me to come over.  The child was OK—I think she felt better just because I came to the house and looked her over.  It was a brief awkward moment, since I didn’t know if I should just call out to the mother that I was done.  The girl sensed this, and took me by the hand into the other room.  “She’s trading,” the child explained.

There, in front of 2 big screens filled with numbers, charts, and several moving tickers, was the child’s mother.  “I’m done,” I said.  After a brief discussion of the illness I added, “nice setup.”

She went on to tell me that she had quit her job and was trading stocks full-time.  She described a little bit about the amount of information she had at her disposal.  She also described her confidence in being able to make money consistently, day after day, by taking advantage of small movements in stock prices.  I wished her the best of luck, and left the house as quickly as I could.  I knew some things that she just didn’t know.
She had only limited experience of a couple of years with financial markets.  Nearly every model of market activity makes some fatal and incorrect assumptions.  I knew this because I had looked for and failed to find this kind of El Dorado she thought she knew.  For example, she and her model assumed that markets were continuous.  Which is to say that if things turned against her she could get out.  That’s true until it stops being true.  There are many times that the markets drift up or down for years at a time, until the one day that a world leader dies or a bomb goes off and all the markets are suddenly closed.  She could wake up broke.  And the illusion she had of information quality was astonishing to me.  She was getting information many minutes behind those who knew it first.  She wasn’t seeing trades—she was seeing the history of trades with a 15-minute delay.  The pros, just like used-car dealers, often kept the best for themselves.)

Sadly, this delusion applies to professionals, too.  Maybe that’s obvious from the amount of our money they lost in the last couple of years while getting paid so well for it.  There’s now a substantial body of important research that shows that professional investors—the managers of big and well-known mutual funds and pension funds of all kinds—simply don’t do better than you would do if you just bought one of those stock indexes and left your money sitting there.  In fact, the more they tried to beat the market by thinking they could pick the stocks that would outperform and get rid of the stocks that would underperform, the worse they did.  In professional jargon, this is called the Churn Rate.  It’s a measure of how often the manager was buying and selling, buying and selling, with every iteration costing transaction fees and causing taxable events.  For doing this, and doing worse than doing nothing, the manager’s substantial pay was deducted from your investment return.  You paid for it.

And this is a part of how I look at this aspect of the backwards financial incentives facing physicians.  There’s no financial incentive to get the patient well, but there’s a big incentive to increase turnover.  What patients need is simply not considered in any part of the system.

I would like to get to know each child, each family.  If insurers had the long-term perspective of somebody investing for their distant retirement, they’d see it my way.  Much slower, more thorough visits to cover every issue.  Continuity with a single doctor who can manage some of the burden of a chronic medical problem.  This would result in reduced need for future and costly interventions, fewer emergency visits for unaddressed problems, less need for expensive medications, and happier, healthier patients.  It would save money.  Most physicians, I think, want to provide really good care.  Let them, and they will.