Haste or Waste? Peer Pressure and Productivity in the Emergency Department

TL;DR: It is found that physicians who on average spend more time and money do not achieve better outcomes, which is consistent with underlying physician productivity differences driving observed differences in intensity of care, rather than underlying differences in physician preferences, as presumed in the FOTC model.

Abstract: Motivated by wide cross-sectional variations in intensity of care that are unrelated to patient outcomes, researchers and policymakers commonly claim that healthcare providers waste considerable re- sources, engaging in so-called “flat-of-the-curve (FOTC) medicine.” A key yet elusive prediction of this hypothesis is that providers ought to be able to cut back on care without sacrificing quality. This article examines the effects of a particular form of provider cutbacks – those generated by physicians working in high-pressure peer group environments. Using expansive, time-stamped discharge data from 137 hospital-based emergency departments, I document that physicians systematically alter their pace and intensity of care across frequently shuffled peer groups. Peer groups that induce a physician to work faster also induce her to order fewer tests and spend less money. Contrary to the FOTC hypothesis, these cutbacks come at the cost of patients’ lives. However, in line with FOTC’s motivating evidence, I find that physicians who on average spend more time and money do not achieve better outcomes. These patterns are consistent with underlying physician productivity differences driving observed differences in intensity of care, rather than underlying differences in physician preferences, as presumed in the FOTC model.