Negative externality on service level across priority classes: Evidence from a radiology workflow platform

We study the potential negative impact of imbalanced compensation schemes on firm performance. We analyze data from a radiology workflow platform that connects off‐site radiologists with hospitals. These radiologists select tasks from a common pool, while service level is defined by priority‐specific turnaround time targets. However, imbalances between pay and workload of different tasks could result in higher priority tasks with low pay‐to‐workload ratio receiving poorer service. We investigate this hypothesis, showing turnaround time is decreasing in pay‐to‐workload for lower priority tasks, whereas it is increasing in workload for high‐priority tasks. Crucially, we find evidence of an externality effect: Having many economically attractive tasks with low priority can lead to longer turnaround times for higher priority tasks, increasing their likelihood of delay, thus partially defeating the purpose of the priority classes. Highlights It has been studied that salaried hospital radiologists working on emergency images tend to sequence images to minimize their work queue. However, the advent of new radiology workflow platforms that aggregate images from multiple hospitals, where independent radiologists choose which emergency and nonemergency images to read, creates novel operational challenges that are becoming pervasive in the sharing economy. We find that independent radiologists behave as previously established when reading emergency images. However, for nonemergency images, they prefer to process images that provide a higher bang‐for‐the‐buck, meaning they lead to a higher monetary payout for the time spent on processing. Crucially, we also find that this preference exerts a negative externality on nonemergency images with high‐operational priority (for example, that can generate bed‐blocking), resulting in longer turnaround times and a higher frequency of delay. The delayed processing exerts a bed‐blocking and patient dissatisfaction cost on client hospitals. We suggest radiology workflow platforms use their information systems capabilities to hide nonemergency, high bang‐for‐the‐buck images from radiologists until the higher priority studies are cleared out.