Rankings in Healthcare Organizations

A key objective of relative performance rankings in healthcare organizations is to motivate physicians to improve the quality of care. Causal evidence regarding the effect of rankings and their design on the effort of physicians, however, is still lacking. We study different ranking schemes varying in the granularity with which they assign ranks to quality outcomes. Using an illustrative model accounting for the physicians' ability, altruism, and status concerns, we derive behavioral predictions regarding the effect of these rankings on the effort physicians choose to make. We test these predictions in a lab-in-the-field experiment with medical students. Overall, rankings motivate them to increase their efforts. Some rankings, however, also decrease efforts when compared to a non-ranking baseline. In line with theory, physicians' efforts increase with the granularity of quality outcomes achievable given a physician's ability, and decrease with the granularity of non-achievable quality outcomes. Our results are consistent with the existence of salience effects.