The economists tell us that labor productivity is a measure of the amount of goods and services that the average worker produces in an hour of work. The level of productivity is the single most important determinant of a country’s standard of living, with faster productivity growth leading to an increasingly better standard of living. Given recent stagnation in wages, however, some are re-examining the link. It turns out if you make more things or produce more services, you don’t necessarily make more money. In the case of doctors, the reverse is true. If you make more money it does not necessarily mean you are more productive.
Continuing a decadelong trend, total cash compensation increased in 2019 for physicians across all major specialty groups, including primary care, medical, surgical and hospital-based specialties. This is driven primarily by a tight labor market — organizations are offering increasingly competitive pay packages as they vie for the same talent.
While pay increases, productivity remains flat, or has even decreased slightly. SullivanCotter notes that primary care physicians have seen a 14.7 percent increase in total cash compensation, while work RVUs, a measure of productivity, have declined 0.2 percent from 2014-19. Hospital-based physicians are the only exception to this trend. They’ve seen 5.2 percent growth in median wRVUs from 2014-19.
As noted in a recent WSJ article, perhaps we are experiencing a kind of Solow Paradox 2.0, with the digital age more around us than ever except in the productivity statistics. There are several reasons for this lag. First of all, we’re in the early deployment years of major recent innovations, including cloud computing, IoT, big data and analytics, robotics, and AI and machine learning. Notes McKinsey: “The challenge of adoption in the current digital wave may be even harder because of the broad range of uses of digital that not only help improve current processes but fundamentally transform business models and operations.”
While leading edge companies are already leveraging these advances, most are still in the learning stages. The most sophisticated companies have been pulling far ahead of everyone else in deploying these advanced technologies. According to McKinsey, “Europe overall operates at only 12 percent of digital potential, and the United States at 18 percent, with large sectors lagging in both. While the ICT, media, financial services, and professional services sectors are rapidly digitizing, other sectors such as education, health care, and construction are not.”
Given all the changes and demands on the sick care system, many experts are suggesting ways to increase sick care worker productivity.
One insurance executive points to two main reasons why our productivity in healthcare is not as great as some other industries. One is the economic model historically has been a fee-for-service–based model, where incentives are not aligned between payers and providers. And there are significant administrative processes that are in play today as a payer interacts with a provider and that causes inefficiencies.
The other area would be within a health system. For example, the administrative and operational processes are cumbersome and inefficient. If you look at the healthcare industry, it is a very labor-intensive industry which of course drives the cost up and creates some of this inefficiency.
If you are a clinician, the measure now is straight forward i.e. the number of relative value units you can generate and how much revenue and reimbursement that translates to for you or your employer. Some are trying to move the goals posts or change how we keep score, but, for now, most doctors are being measured and compensated by how many points they put on the board. One of these days, though, CFOs are gong to have to figure out what to do with all those doctor cash cows.
Healthcare is a key component of the US economy, but healthcare spending increases consistently outstrip GDP growth. Improving productivity in healthcare delivery could change this dynamic without harming patient care.
Charles Duhigg has written about what makes people productive in his book, Smarter, Faster, Better. For those of you who just read the conclusions sections of scientific and medical journal articles, here are the takeaways as they could potentially apply to sick care workers:
1. Make people feel like they are owners, not renters. Expand their locus of control, constantly reminding them about how the work they do is about something they care about. Remind yourself and co-workers that you are building a cathedral, not just laying stones. Suppose doctors and other employees were owners instead of cogs?
2. Many say you should choose a stretch goal and break it down into SMART (specific,measurable,achievable,realistic,timeline) objectives. When it comes to innovation, though, some think DUMB goals make more sense than SMART goals. Taking it one step further, HARD goals are better motivators:
Question #1: Animated. “Think about where you want your career to be, and describe to me exactly what you’re doing (what kind of work you’re doing, who you’re working with, what your days look like, etc.) one year, three years, and five years from now.”
Question #2: Heartfelt. “Describe at least three reasons why you want this goal (note: the reasons can be intrinsic, personal, and/or extrinsic).”
Question #3: Difficult. “What are the three to five most important skills you’ll need to develop to achieve this goal? How will you develop those skills?”
Question #4: Required. “What do you need to have accomplished by the end of the next six months to keep on track toward achieving this goal? What about by the end of the next 90 days? The next 30 days? What’s one thing you can accomplish today?”
3. Start with the end in mind, create a retrograde pathway, and focus. Ask, “what next and by when?”
4. Envision multiple futures and open yourself to multiple options
5. Make teams more effective by focusing on the how (give everyone a chance to speak and are safe) instead of the who.
6. Push decision making to the person closest to the problem. Rule makers , managers, bureaucrats and many physician executives have a very hard time with this one.
7. Innovation is mostly about doing old things in new ways. To connect the dots and harvest institutional history, become an “innovation broker”. Innovation brokers don’t just build network pipes and pumps, but instead accelerate the flow of information and fix the pipes that are clogged.
8. Customers buy emotionally and justify rationally. Inventors and innovators should do the same. The user defined value of an idea or invention is often more aptly measured by how it makes you feel, not what you think about it.
9. The productivity curve maxes out at some mean level of stress. Something that is boring or a task that is overwhelming does not drive productivity. In fact, excessive stress, change fatigue and administrivia crush productivity. Some seem to think that the way to make doctors more productive is to make them conform to rules and mandates telling them how to be more productive.
10. Just because you have realized a creative breakthrough does not mean it will create user defined value. Be open to the fact that your baby might, in fact, be ugly. Statistically, most are.
11. Get rid of the SHIT in your life. Mitigate technofatigue.
Sick care labor economists debate whether productivity is increasing or decreasing and whether it is contributing to an increased standard of living. If you want one answer, ask your neighbor, the pediatrician. Or, maybe we should just all learn from Leicester City to solve the Solow paradocs.