The 800,000 physicians in the US comprise a large and intensely managed partner program for the drug companies. We are about to find out how intensely managed as the Affordable Health Care Act (AHCA aka Obamacare) now requires the drug companies to disclose how much they pay your doctor to prescribe drugs to you. It should not be a surprise that the drug companies pay doctors quite a bit, and those payments change doctor behavior. So it should be no surprise to find that some people may be diagnosed with ailments they don’t actually have -- so the doctor can prescribe the pills and get the money.
Sales managers know that salespeople are “coin operated”. Better performance from salespeople is purchased with commission plans that compensate for more sales, more upsells, more referrals, more attached sales, more anything. Since our business is technology sales, and specifically channel partner programs, we think a lot about how to properly incent our client’s partners to sell more. We have seen this produce intended (improved sales) and unintended (systemic cheating) outcomes. Broadly speaking, generalized incentives are better than highly specific incentives when it comes to getting a constructive result. Sure if you have to move one product by the end of the quarter and you don’t care about the long term effects – a specific incentive will do the job. But if you want customers satisfied and loyal for the long term, working with partners to grow their business for the long term is better than quick hits.
Over incenting salespeople in technology might result in a consumer or company with an overly large hard disk or a bigger video card or a router with enough capacity for 10 years of growth. Over incenting doctors might result in a generation of kids on Ritalin, parents on anti depressants, and in the worst case, deaths. Here is more reading on the subject should you be interested:
- On The Media: Great overview segment from yesterday’s show.
- ProPublica: Building a database of the payments to doctors.
- NY Times: Article on the subject
- 2009 Report to Congress on Physicians’ financial relationships
- NY Review of Books: The Epidemic of Mental Illness
- Medicine.Net: 10 most prescribed drugs
- IMS Institute for Healthcare and Informatics: The Use of Medicines in the United States
Update one week later: Great article in the NY Times today about the 3 million children on Ritalin -- and how there is not evidence that it helps!