But little is known about whether financial incentives such as this work for professionals such as doctors, who have high autonomy and insider knowledge and often feel a commitment to “duty” for simple self-interest. Such professionals are notoriously difficult to manage by any means. They don’t want to be told how to do their job. And throwing more money at them isn’t likely to make them budge.
Kellogg assistant professor of management Gillian Chow she saw this phenomenon firsthand in her previous career as a health operations consultant. “Hospitals often point to doctors as one of their biggest obstacles in trying to improve the way they do things,” he says. (No fewer than four researchers in the past decade have compared it to “pasture cats.”)
So how could this be fixed? Chown wondered whether a more nuanced understanding of how these professionals do their jobs—particularly in areas about which they feel territorial—might reveal conditions in which financial incentives may, in fact, motivate them. He knew the results could apply to other professionals, such as lawyers and architects, who often have a similar mindset about their work.
It looked at five years’ worth of data from the Canadian health care system and found that doctors would reliably perform more tasks or services if they were paid more for it — but only under certain conditions. Under different conditions, financial incentives had no effect.
Chown’s results suggest that organizations need not accept the conventional wisdom about the difficulty of managing the work of professionals. Instead, Chown says, “financial incentives can work—but you have to be careful about how the different characteristics of occupations will shape that response.”
A different way of working
Most people generally think of professionals as employees who possess a specific field of knowledge and expertise. But Chown approached what she calls a sociological definition, which describes how work is done.
“The idea is that practitioners have to ‘diagnose’ the situation the client is facing, then translate that problem into that abstract body of knowledge, understand what it means, and then translate something from that knowledge into a real solution to the customer problem’.
Another key aspect of this more technical definition of professionals is jurisdictional control: professionals exercise their problem-solving discretion by performing a collection of tasks that are more or less off-limits to other professions. Only architects are allowed to design skyscrapers, for example, and only neurosurgeons are allowed to remove brain tumors.
Usually through licensing or self-regulation, “professions are often given a monopoly of their services by society,” says Chown. “But in return, they are expected to have this normative orientation toward serving society and acting above self-interest.”
Chown’s interest in how to motivate practitioners—or “herd cats”—prompted her to look at jurisdictional control as a starting point, because maintaining that control is a clear motivation that practitioners have.
This is especially true in certain professions (and specialties within them) that have unclear jurisdictional boundaries, such as architects and interior designers or doctors and nurses. Under these circumstances, “professionals always try to match tasks because they want to increase the number of tasks they control,” he says.
A New Theory of Judicial Review
Chown wondered whether practitioners’ desire for jurisdictional control might somehow influence how they respond to financial incentives.
A health care data set from Canada provided an ideal way to explore potential connections. It included all medical procedures performed in the province of Ontario between 2005 and 2010, amounting to more than 4,000 types of procedures performed in 17 specialties.
But before Chown developed a concrete case to investigate, she noticed something that changed her initial assumptions.
Jurisdictional control over professional duties has been understood by researchers for decades as an all-or-nothing situation: for example, cardiologists are supposed to have jurisdictional control over ordering angiograms, whereas pediatricians do not. By this logic, any financial incentive attached to ordering angiograms should only
they affect cardiologists, not paediatricians.
But when Chown looked at the data, she noticed that the jurisdictional control of these jobs was much less binary.
“Some tasks were shared between multiple jurisdictions,” he says. “Cardiologists certainly order angiograms, but pediatricians also order these types of tests because they involve children with heart problems.”
To characterize this nuance more precisely, Chown decided to categorize duties along two dimensions: jurisdictional dominance and jurisdictional salience.
Jurisdiction is similar to control, but on a sliding scale, he explains. This concept captures the extent to which a job is divided into occupations or specialties. For example, cardiologists may have more jurisdiction over the total volume of angiograms ordered, while pediatricians have less.
Chown hypothesized that the more dominance an occupation has over a task, the more effective an economic incentive attached to it will be. Because professionals want to maintain their “monopoly” on tasks, as those tasks become more lucrative, they will perform even more of them as a way of defending this newly valuable turf from adjacent professions or specialties.
Meanwhile, the second dimension devised by Chown—jurisdictional salience—describes how relevant or important a job is to an occupation or specialty, compared to other jobs. For example, an OB/GYN may spend 20 percent of her time doing prenatal assessments—an extremely important task. Chown hypothesized that practitioners would be more responsive to financial incentives associated with these tasks, compared to processes of less importance to their practice.
And, importantly, these two new dimensions can also intersect with each other: while almost all vasectomies in Ontario were performed by family physicians (high jurisdiction dominance), these physicians performed the procedure relatively infrequently compared to other procedures in their practice ( low jurisdiction ).
Response to financial incentives
Armed with these new distinctions, Chown analyzed the data to see how financial incentives affected physicians’ willingness to perform various procedures within their jurisdiction.
Doctors in Ontario are paid on a fee-for-service model based on rates set by the government. This means that doctors’ incomes are directly affected by the procedures they perform, but every doctor earns the same amount per procedure, regardless of their specialty. Fees for the procedures change approximately every four years. So when the fee for a procedure went up—creating a financial incentive to do it—Chown could see how each specialty responded.
First, he found that doctors respond to economic incentives, just like any other economically rational worker. For every 16 percent increase in the average fee for a procedure, the number of times doctors performed it increased by 4.6 percent.
That response may seem aggressive, but Chown disagrees.
“Professionals responding to economic incentives does not necessarily mean harming their patients or clients,” he says. “If the government says, ‘We really need to focus on smoking cessation counselling, so let’s increase the incentive for doctors to provide this kind of service’ and they respond, then that’s great.”
But, crucially, Canadian doctors didn’t just follow the money. How they responded to financial incentives for certain tasks depended on the subtleties of sovereignty and jurisdictional sovereignty.
A fee increase for a highly jurisdictional procedure in a specialty—say, prenatal assessments, which obstetricians spend a lot of time performing—increased the number of these procedures by 29 percent, compared with the number of procedures performed by experts in which the paper had an average visibility level. But increasing pay for a low-profile procedure in a specialty — for example, drawing blood, which urologists spend less than 1 percent of their time on — didn’t make doctors do it more.
Chown says this may be because because these frequently performed tasks tend to attract doctors’ attention by default, they are more likely to notice and respond to any motivation associated with these tasks as low-hanging fruit. .
This suggests that organizations may be able to financially incentivize professionals to do more of what they already do frequently – but that dangling carrots around infrequent services won’t accomplish much, Chown says.
“If you’re trying to push professionals to do things in the periphery [of their usual practice]you may need to make these tasks more visible or provide a greater incentive to really elicit a response,” he says.
Capturing more turf
To Chown’s surprise, she also found that providing financial incentives to highly jurisdictional tasks also had no effect.
In contrast, and contrary to her hypothesis, physicians responded to economic incentives associated with tasks where they had low jurisdictional dominance.
For example, in 2006 Canada raised the fee for a certain type of tendon repair surgery by 50 percent. Plastic surgeons had high jurisdictional dominance over the procedure, performing 90 percent of them, while orthopedic surgeons had low jurisdictional dominance, providing only 6 percent. However, while orthopedic surgeons increased the number of tendon surgeries by 11 percent after the fee increase, plastic surgeons ignored the incentive.
Chown posits that this is actually the same professional territoriality at work, but acting in the opposite direction. In other words, financial incentives compel physicians to “play offense” and chase scraps of newly valuable turf dominated by other specialties, rather than defend the jurisdictions they already dominate.
Chown says her findings show that, even with difficult-to-manage professionals, money talks—it’s just that the conversation is complicated.
“If organizations don’t understand that, then they can end up throwing money at things that professionals are never going to respond to,” he says. “Professionals are individuals, but their work is embedded in this larger system of duties, which we call jurisdictions. And understanding how these jurisdictions work can really make these organizational interventions more effective, hopefully.”
