Archive for October, 2011

An Operating Room Without Incentives is Very Expensive

October 21, 2011 12 comments

Last year I wrote about a few strategies for decreasing costs in the operating room.  Since being in fellowship operating many days per week, I’ve come up with a new idea, this time a bit more radical.

In Freakonomics, Leavitt and Dubner posit that in all things, human beings respond to incentives.  If you want to understand human behavior, all you have to do is identify the incentives that drive them, be they emotional, financial, or social.  In that vein, I wonder what incentives drive us to spend so much money on healthcare, and to waste resources when they need not be wasted.

I found a potential answer in another book, Chris Anderson’s “Free: The Future of a Radical Price”  In this work Anderson investigates how an economy is affected when the marginal cost of production of a good approaches zero.  Specifically, he investigates the economy surround digital goods, that while costing resources to develop, have a marginal cost of zero to produce and distribute.  He proposes that in such a system, it is quite natural that the price of such goods will eventually approach zero, and if it doesn’t, the goods will be routinely stolen rather than paid for.

The corollary to this idea is the concept of optimal use of a resource when its cost is zero.  That is, if one gets a real benefit from the use of a resource but it costs nothing whatsoever to use it, what is the right way to use that resource?  Anderson suggests that the correct course is to use that resource to its maximal extent, and even to waste it without thinking despite diminishing returns. Read more…

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