Imagine you could make big commissions selling a product that might kill your customers. Not a product like cigarettes or extreme sports, where customers know what they’re getting into. In this case, the customers would be so ignorant that, even as they’re dying, they’ll thank you for doing a good job. And nobody else — neither neighbors, friends, nor society at large — will say anything about your sales practices, except offer you praise and respect. Would you sell this product?
This is not a hypothetical question. Turns out that there truly is a type of “sales rep” who makes more money the more they secretly put their customers at greater risk of death. Who are those “sales reps”? They’re called physicians…
Turns out that both the poor quality of care in the United States and also the enormous burden of health care costs are largely the result of lousy sales practices and mismanaged compensation plans among many of the nation’s doctors and hospitals.
In the article “The Cost Conundrum” in the most recent issue of The New Yorker magazine, author Atul Gawande explains that quality of care goes down when doctors order too many procedures. Turns out that the main reason such procedures get ordered is not because of malpractice worries, but because many doctors (and the hospitals they work in) are compensated for each procedure that they sell to their customers.
In addition to being paid by the procedure (i.e. piecework), many doctors are paid a commission on referrals for other procedures. In some communities (like the one in Texas described in the New Yorker article), the system runs amok, creating gigantic healthcare costs, while simultaneously eroding the quality of care. This often results in additional ailments (hospitals are dangerous places) and even unnecessary deaths.
This shows what can happen when there’s no social pressure not to sell products that the customer neither wants nor needs. Most B2B sales reps know that their reputation will suffer if they screw a customer, and that selling stuff customers don’t need will kill a long-term relationship.
But the reverse is true in the case of a physician. Doctors who over-prescribe, over-test, and over-operate are often praised for being more diligent and more helpful than the doctors who play it more conservatively. And if their customers get sicker, why, so much the better, because then they continue to be sources of ongoing income. Sure, some customers may die because they’re put into risky situations that aren’t necessary… but the risk is apparently worth it, at least to the doctor.
Don’t get me wrong. There are plenty of doctors who are good people who want to serve the public. But the ones who are compensated on a piecework basis are constantly being tempted to sell products their customers don’t want and don’t need. Worst case, this can land those customers in the hospital morgue.
What I find amazing about this is that most parents, given a choice, would probably prefer to raise their kids to be doctors than to be sales reps. But the truth is that most of the sales reps I’ve known have been more careful of their customers’ well-being than many of the doctors I’ve run into.
UPDATE: 6/11: To clarify a point in this post, doctors should not be on commission but should have salaries. And hospitals should be non-profit, with administrator raises based upon quality of care, not revenue generated.
