Gordon Gekko is wrong. Greed is not good. Not when it comes to health care providers.

The socioeconomic study of what motivates people is a fascinating field of study, not the least of which is because of how counter-intuitive it is. For example, it seems normal to assume that the more someone is rewarded for their efforts, the more effort they will put forth toward those rewards.

These rewards (increasing salary, bonuses, benefits, status, etc) are known as “extrinsic” motivators and for menial and/or repetitive jobs that have little need for regular complex planning, evaluation, or creative problem solving like unskilled manufacturing, manual labor, or GOP membership, the system works as expected with bigger monetary rewards leading to bigger efforts.

However, this simple linear model of economic motivation begins to break down as “intrinsic” motivators start to dominate the picture. Intrinsic motivators are such psychological variables as the perception of autonomy, mastery of the task or role, and purpose. It turns out that not only do extrinsic variables not work as predicted for motivating a worker tasked with performing complex work that requires thought and problem solving skills but this kind of motivation actually reduces job performance (particularly time spent per task).

This counter-intuitive result is what economists refer to as “crowding out” of the intrinsic values with the extrinsic values. The offer of an extrinsic reward tends to cheapen or dampen the intrinsic rewards and the negative effect on your intrinsic motivations is enough to negate and even reverse any positive extrinsic motivators. External motivators tend to come with conditions that hamper autonomy, mastery, and purpose. A job that was once “fun” has now become burdened with the demands of higher expectations even though a reward is bundled in there somewhere. Extrinsic rewards also impair creativity and thinking by narrowing down the focus of the task (i.e. getting it done faster or more efficiently).

The key to having a happy employee who’s job involves cognitive skills, creative thinking, and problem solving is to 1.) ensure that they are paid enough to close the gap between what they are paid and what they think they should be paid based on their education, training, and experience so that base pay is no longer an issue and 2.) allow the intrinsic motivators of autonomy, mastery and learning, and purpose to flourish. There is a great “whiteboard” animation of a presentation on this by Daniel Pink for those who think I’m crazy. This is not neo-hippy, socialistic, Montessori style, feel-good new management methods. This is real world and is already yielding benefits for companies like Google.

This got me thinking about physicians and motivation. We like to say that what motivates us is the chance and desire to save lives and improve lives. That’s purpose. We like to be our own boss and work on our own schedule. That’s autonomy. And we like what we do. We find it interesting and strive to learn more and improve our skills. That’s mastery.

With so many intrinsic motivators for doctors, why then, do many appear to defy the evidence for the establishment of motivations stated above and simply increase their work loads to obtain the higher salary or bonus or base income? I have seen physicians who round on 15-20 complex hospitalized patients in an hour and others who see a complex medical patient in the span of a 3 minute office visit. Then there are those who push the boundaries of the vast gray area of test and procedure indications (like ordering expensive nerve studies on every diabetic patient regardless of symptoms) and then there are those who commit outright fraud.

Many doctors are employees but the type of excessive extrinsic motivated behavior I’ve seen comes from physicians who are self-employed, while the studies for the effects of extrinsic and intrinsic motivators were done mostly in the context of employee-management relationships. Is this the reason for the discrepancy? I don’t think so. Self-employed doctors function as employee-owners, doing the brunt of the work for their practices while being beholden to insurance companies and the government for their compensation. It’s still very much of an employee-like relationship with the promises of increased compensation for increased work. The same basic motivator mechanisms should still apply.

I believe that the problem starts with insufficient compensation which in of itself is an extrinsic motivator that compels the worker/doctor to try and close the gap between effort and proper compensation. This seem to help explain why higher paid specialists, though they work hard, tend not to follow a pure profit motive pattern. Surveys have found that specialists are more satisfied with their jobs than their lower paid colleges in primary care. Specialists are also more likely to be self-employed (autonomy) and in my experience, they tend to express more interest in and a desire for mastery of their field and skills than many primary care docs.

I believe that the second culprit is the per-patient or per-procedure way that doctors are compensated. This a system that already has multiple levels of bonus and reward built into it just like the unskilled laborer who gets paid more to move more rocks, so to do physicians get paid more to see more patients. So how does a physician with a high level of intrinsic motivators convert to a profit driven machine with the extrinsic motivation profile that is on par with an unskilled rock mover?

The key concept is that they convert the essence of their job from creative problem solving of multiple complex tasks to following more linear basic rule sets. In short, they go from practicing medicine to practicing “cookie-cutter” medicine. You would think that this would apply more for specialists who often deal with more linear decision making for their many technical skills and procedures they perform but I’ve seen profit driven “cookie-cutter” medical practice behavior more often in primary care docs and I think that it is their lower compensation that is to blame.

“Cookie-cutter” physicians try to minimize risk while maximizing profits. One way to do this is to minimize the time spent with the patient and on complex problem solving. It is more efficient and profitable to perform a very basic linear diagnostic and treatment evaluation. If knee pain then –> MRI. If nervousness then –> prescribe sedatives. If fever –> antibiotics. If chest pain then –> cardiologist referral. If vomiting then –> gastroenterologist referral. Most of the complexities and nuances of medical care are tossed aside in favor of a rote if-then decision tree that can be done by any couch potato who’s watched too many episodes of “er”.

Usually, this type of medical care increases overall utilization of resources. Expensive tests and procedures are more likely to be ordered both because the physician believes that they reduce their liability risk which they have acquired from spending too little time with too many patients and/or because they increase profit. Medications are more likely to be ordered for each and every symptom because it takes less time to explain to and convince a patient – who is usually expecting some type of medication – why they need the medication than why they don’t.

Needless to say, this type of medical practice does NOT improve overall care quality or patient satisfaction and may very well decrease care quality in many circumstances. This apparent paradox in decreasing health care quality in areas of high health care resource utilization has been extensively studied using natural geographic variations in Medicare spending. These physicians tend to prescribe too many referrals, tests, procedures, and medications and they all come with risks. Physicians who practice this way are likely to be too aggressive with diagnostic modalities and treatments for certain subsets of patients. For example, in patients with mild conditions in whom the side effects may outweigh the benefits or those with advanced disease for whom aggressive treatment is more likely to hasten death than to prolong life.

The study of economic motivation models may help to explain and predict that inadequate compensation is more likely to change physician motivation and practice patterns from an intrinsic system to an extrinsic profit driven system which increased health care utilization and ultimately higher costs for no quality benefits. This is particularly true for primary care practitioners and does not bode well for Obama’s new-American health care mecca.

There are some obvious solutions. First, pay primary care physicians an increased amount so that they are adequately compensated for their time, effort, and level of training and that this issue is “taken off the table.” Next, change the per-patient, per-procedure scheme to an annual fixed amount based on a set panel of patients.

Greed is “good” in that it leads to capital investment in macroeconomic systems but in the microeconomic context of skilled health care worker, greed – external profit motives – suppress intrinsic motivators and invariably leads to sub-par performance, increased costs, and decreased care quality and decreased satisfaction values among patients and physicians.

Chris Rangel is an internal medicine physician who blogs at RangelMD.com.

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