Imagine a professional hockey team where some players earned income by scoring goals, and their teammates were paid just for showing up to play for games even if they did not score. Assume that both groups love hockey.
Imagine there are separate coaches and budgets for each group. One coach looks after goal-paid players; the other coach looks after game-paid players. The first coach pays players for all goals scored with a flexible budget. The second coach pays players for time spent on the ice with a fixed budget.
Which players would:
- Try to keep scoring goals after games officially ended?
- Push themselves for extra goals?
- Hold back from scoring to avoid penalty or injury?
- Take sick days and miss the game completely?
Which coach will:
- Want shorter games?
- Let the other coach play in overtime?
- Try to save money by limiting his players’ duties and time on the ice?
Welcome to Canadian hospitals.
Misaligned incentives create chaos. Just because players wear the same jersey, does not mean they are a team. Winning teams have aligned incentives and drive toward the same goal.
All healthcare providers and administrators want to help patients. It’s why they entered healthcare. But the system makes them pull in different directions.
Canadian Chaos
Nurses get paid for hours of work.
Physicians get paid for work accomplished.
Nurses get paid from the hospital budget.
Physicians bill the province.
Nurses negotiate contracts specifying duties, hours of work, benefits, and grievance processes.
Physicians negotiate contracts specifying billable services.
Instead of hiring staff, hospitals save money by making MDs do non-medical tasks. Only Medicare would make its most skilled, highest paid workers do clerical work.
Hospitals spend money to help more patients.
Physicians earn money to help more patients.
Helping patients must be the only objective that matters in healthcare. Incentives must be aligned towards one goal: helping patients. All providers must be rewarded for helping patients and how well they do so.
Medicare providers wear the same jerseys, but are they a real team?
(Photo credit: GetItNext Hockey)