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

49 Pages Posted: 18 Feb 2021 Last revised: 14 May 2021

See all articles by Timothy Chan

Timothy Chan

University of Toronto, Mechanical and Industrial Engineering Department

Nicholas Howard

Assurance IQ

Saman Lagzi

University of Toronto - Rotman School of Management

Bernardo F. Quiroga

Pontificia Universidad Católica de Chile

Gonzalo Romero

University of Toronto - Rotman School of Management

Date Written: February 8, 2021

Abstract

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. 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 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. 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. 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: Negative Spillovers, Incentives and Contracting, Platforms.

Suggested Citation

Chan, Timothy and Howard, Nicholas and Lagzi, Saman and Quiroga, Bernardo F. and Romero, Gonzalo, Negative Spillover on Service Level across Priority Classes: Evidence from a Radiology Workflow Platform (February 8, 2021). Rotman School of Management Working Paper No. 3781929, Available at SSRN: https://ssrn.com/abstract=3781929 or http://dx.doi.org/10.2139/ssrn.3781929

Timothy Chan

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

Toronto
Canada

Nicholas Howard

Assurance IQ ( email )

Saman Lagzi

University of Toronto - Rotman School of Management ( email )

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

Bernardo F. Quiroga

Pontificia Universidad Católica de Chile ( email )

Av Libertador General Bernardo O'Higgins 340
Santiago, Región Metropolitana 8331150
Chile

Gonzalo Romero (Contact Author)

University of Toronto - Rotman School of Management ( email )

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

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