Could moral hazard and imperfect commitment arise from increased availability of dentists?
Terms such as moral hazard and imperfect commitment are often associated with the finance and insurance industry. But they can also be associated with the business of dentistry.
It appears since I have graduated that all we seem to hear about is the ‘oversupply’ of dentists – whether it’s in India, Australia, or my home country, the U.K – and how bad it is for the dentists wanting to find work. With my studying of economics I have given this broad-reaching topic much thought, and it has inspired a few articles such as this one. But first, what is moral hazard and imperfect commitment? Moral hazard, as defined by Begg et al.1arises when ‘…the adoption of a set of rules that would be ideal under perfect information then fosters unwelcome behavior because it is too costly subsequently to monitor individual behavior.’ This will be illustrated shortly with an example. Imperfect commitment, on the other hand, is basically what it says on the tin: for example, concerning the financial crash of 2007, if governments say they will be tough in the future (attempting to scare bankers into more sensible behavior today), but fail to keep this promise by bailing out banks when it comes to the crunch, then tough words today are really empty threats regarding future outcomes1.
Moving from the U.K to Australia I have noticed distinct differences in attendance patterns of patients, and although healthcare systems are not the same, part of me is wondering if increased availability of dentists are a contributing factor. This comes in two parts: the total number of dentists has increased (in part due to new dental schools being built, increased student intake in existing schools and previous overseas migration schemes)2,3,4,5; and the extended opening hours of surgeries. When I was doing my work experience before I decided to apply for dental school, it was unheard of a practice opening at weekends, or after hours on a regular basis. In fact, I knew of many practices who closed early on Fridays; no wonder it was such a popular career choice! A lot can happen in five years. Now most practices offer appointments at weekends as well as before and after office hours, at least in metropolitan cities in Australia. The question is, when you know a service is available pretty much at any time, does this reduce the incentive to keep appointments because you know you can get another appointment very easily, at the time you want, without having to wait too long?
In my opinion, the new surgery conditions in dentistry, particularly in metropolitan Australian areas, contribute to unhealthy attendance behavior of patients. Take the example provided by Begg et al1. You are sitting in a café and suddenly realize you’ve left your car unlocked. Do you rush outside, abandoning your coffee to go and lock your car? Not if you know the car is fully insured against theft. If the act of insuring changes the odds, then we have the problem of moral hazard, whereby the informed individual (the insured) has an incentive to engage in risky behavior (by not making the effort to minimize the chance of having their car stolen). This is why insurance companies insure your car or house only up to a certain percentage, so you have the incentive to minimize the chance of an adverse event from happening.
Regarding dental appointments, a few scenarios are evident. Firstly, for patients who are more likely to be symptomatic attenders, extended opening hours do nothing to help change this behavior, and reinforce the fact that it is not a challenge to be seen in an emergency. They can simply ring around for a dentist who is open for an immediate appointment, and they are likely to have more than one choice. This behavior is unhealthy on an individual level, as most causes of dental pain can be identified and prevented with regular dental maintenance. Of course, there will be trauma and other emergency cases, which people almost always cannot anticipate, but an emergency appointment due to pain from a decayed tooth need not have been an emergency if it was not left until it caused the pain. Hence, preventative attendance is not encouraged.
Second, for appointments that have been booked in advance, if a patient knows that there is a not a long waiting list – either because there are extended surgery hours or they know from experience when they make an appointment they can be seen the same day / in a few days / early the next week – then one of two situations arise. Either patients have more of an incentive to put off booking their appointments: “I’ll do it next week,” “I’ll book when I’m back from holiday,” et cetera, et cetera, because they know if they call to book then they won’t have to wait long. Why is this bad? Well, people can (and do) forget; life and any other appointments get in the way, especially if they’re told they need four fillings and they are in no pain. Sure, they know deep down if they don’t get the fillings at some stage in the future they risk having a bad toothache, or even worse risk needing more expensive or traumatic treatment, or risk losing the tooth altogether. If you know your doctor / dentist / specialist gets booked up in advance then there is a greater incentive to book your next appointment when checking-out of your current appointment. You book a day / time you know you’re most likely to be free, or far enough in advance that you can request work for the time off. If you know you can ring or walk in and ask for an appointment and be offered it immediately, why bother booking in advance?
Additionally, this lack of scarcity and abundance in availability can be the tipping-point in the decision of whether a client chooses to cancel an appointment last-minute or not. This is further compounded by imperfect commitment on the practice’s side. I have worked in practices that have policies on the number of late cancellations or failed attendances a patient has. For instance, patients may be given ‘three strikes:’ the first failed attendance or late cancellation (within 24 hours of their scheduled appointment) would be given a warning, and this would be for the second time also; and perhaps some consultation with the patient to determine the reasons for their cancellation, and if the practice can help. After, or on the third occasion, either a deposit would need to be taken for future appointments or they would be required to go somewhere else altogether. However, these policies were never implemented, and those late cancellations and no-shows were allowed to go on and on, wasting valuable surgery time and denying others those appointment slots.
The above points are overarching principles. Of course there are the nitty-gritty details about attendance patterns related to barriers involving time, cost, and fear, amongst others. But there is no doubt that certain policies and environmental factors will influence decision making and thus attendance by patients. Professors Richard H. Thaler and Cass R. Sunstein make the overwhelming case for this in their iconic book, Nudge. The authors put forward that accessibility and salience are closely related to availability6. Coming back to booking appointments, if you already have experienced toothache, and have had an emergency appointment for a dressing today, you are much more likely to book a follow-up appointment for further treatment than if you have had no pain today and need to book in for treatment to prevent pain. From numerous observations and mini-experiments, I’ve found that the age-old marketing principle of scarcity certainly has relevance with appointment bookings, also.
Of course, there will be people who disagree with me, and I accept everyone will have their own experiences, wholly different to mine. It wasn’t that long ago that offering weekend and evening appointments was a ‘stand-out’ feature of a practice, but now it is the norm. I say what I have said because I have been in practices with scanty appointment books which have not been improved, but worsened by offering more hours, and failing to implement cancellation policies. And I’m sure others will have had similar experiences. I’d love to hear other thoughts on this, especially what you think is the future of dental office hours. Please comment below.
References:
- Begg, D., Vernasca, G., Fischer, S., & Dornbusch, R. (2014) Economics. (11thEd) McGraw-Hill Education, Berkshire, UK, pp 275-276, 438
- Preiss, B. (12.01.2013) Many dentists, but not enough holes [accessed at: https://www.smh.com.au/national/many-dentists-but-not-enough-holes-20130111-2clas.htmlon 21.06.2018]
- Editor of Bite Magazine [no name] ‘The dental workforce fights for its life’ 16.11.2015 [accessed at: https://bitemagazine.com.au/the-dental-workforce-fights-for-its-life/on 21.06./18]
- Editor of Bite Magazine [no name] ‘The future of dentistry’ 27.09.17 [accessed at: https://bitemagazine.com.au/the-future-of-dentistry/on 21.06.18]
- Editor of Bite Magazine [no name] ‘HWA report confirms oversupply of dentists’ 15.01.2015 [accessed at: https://bitemagazine.com.au/hwa-report-confirms-oversupply-dentists/on 21.06.18]
- Thaler, R.H. & Sunstein, C.R. (2009) Nudge: Improving Decisions About Health, Wealth and Happiness. Penguin Books, U.S.A. Pp 25, 100-101
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