Negative Externality on Service Level across Priority Classes: Evidence from a Radiology Workflow Platform

63 Pages Posted: 27 Sep 2022 Last revised: 5 Apr 2023

See all articles by Saman Lagzi

Saman Lagzi

UNC - Kenan-Flagler Business School

Bernardo F. Quiroga

West Virginia University, John Chambers College of Business and Economics

Gonzalo Romero

University of Toronto - Rotman School of Management

Nicholas Howard

Assurance IQ

Timothy Chan

University of Toronto, Mechanical and Industrial Engineering Department

Date Written: February 8, 2021

Abstract

We study the potential negative impact of imbalanced compensation schemes on firm performance. We analyze data from a radiology workflow platform that connects off-site radiologists with hospitals. These radiologists select tasks from a common pool, while service level is defined by priority-specific turnaround time targets. However, imbalances between pay and workload of different tasks could result in higher priority tasks with low pay-to-workload ratio receiving poorer service. We investigate this hypothesis, showing turnaround time is decreasing in pay-to-workload for lower priority tasks, whereas it is increasing in workload for high-priority tasks. Crucially, we find evidence of an externality effect: Having many economically attractive tasks with low priority can lead to longer turnaround times for higher priority tasks, increasing their likelihood of delay, thus partially defeating the purpose of the priority classes.

Keywords: Health Care Management, Negative Spillovers, Empirical Research, Incentives and Contracting, Platforms.

Suggested Citation

Lagzi, Saman and Quiroga, Bernardo F. and Romero, Gonzalo and Howard, Nicholas and Chan, Timothy, Negative Externality on Service Level across Priority Classes: Evidence from a Radiology Workflow Platform (February 8, 2021). Forthcoming, Journal of Operations Management., Available at SSRN: https://ssrn.com/abstract=3781929 or http://dx.doi.org/10.2139/ssrn.3781929

Saman Lagzi

UNC - Kenan-Flagler Business School ( email )

Chapel Hill, NC 27599
United States

HOME PAGE: http://samanlagzi.com

Bernardo F. Quiroga

West Virginia University, John Chambers College of Business and Economics ( email )

PO Box 6025
Morgantown, WV 26506
United States

Gonzalo Romero (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Nicholas Howard

Assurance IQ ( email )

Timothy Chan

University of Toronto, Mechanical and Industrial Engineering Department ( email )

Toronto
Canada

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