Negative Spillover on Service Level across Priority Classes: Evidence from a Radiology Workflow Platform
48 Pages Posted: 18 Feb 2021 Last revised: 31 Mar 2021
Date Written: February 8, 2021
Problem Definition: We study a radiology workflow platform that connects off-site radiologists with hospitals. These radiologists select tasks from a common pool, and the service level is characterized by meeting priority-specific turnaround time targets. However, imbalances between pay and workload of different tasks could result in higher priority tasks with low pay relative to workload receiving poorer service than low priority tasks. Using a large dataset, we empirically investigate this phenomenon.
Academic/Practical Relevance: Piece-rate compensation schemes, where workers are paid for each completed task regardless of the time spent on it, are common in practice. Detecting a potential negative impact on firm performance associated with their use adds to the literature on challenges of piece-rate compensation schemes.
Methodology: We employ an instrumental variable methodology to investigate whether low priority tasks with a high pay-to-workload ratio have a shorter turnaround time. Then, using the same approach, we investigate whether having many low priority tasks with high pay-to-workload increases the turnaround time and probability of delay of higher priority tasks.
Results: We show that turnaround time is decreasing in pay-to-workload for lower priority tasks, whereas it is increasing in workload for high priority tasks. More importantly, we find evidence of a spillover effect: Having many economically attractive tasks with low priority can lead to longer turnaround times for higher priority tasks, increasing the likelihood that those tasks are delayed.
Implications: Our results suggest that organizations where workers have task discretion from a common pool need to carefully align their piece-rate compensation scheme with the workload of each task. Imbalances may lead to a degradation in the system service level provided to time-sensitive customers.
Keywords: Empircal Research, Incentives and Contracting, Platforms
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