The value of process friction: The role of justification in reducing medical costs

Abstract

AbstractWe study the role of process friction in increasing efficiency of service provisions. We examine one potential lever for reducing the provision of discretionary services: “justification”—an otherwise non‐value‐added process step that introduces process friction by forcing workers to explain the rationale for requesting an optional service. We exploit the presence—and absence—of a justification step in the ultrasound (US) ordering process at two emergency departments (EDs). We find that patients with abdominal pain are less than half as likely to receive an US when there is a justification step compared to when there is not. Additionally, we find a spillover effect: other diagnostic tests are also ordered less frequently. The decrease in testing reduces the average length of stay of the patients, and reduces testing costs by more than $200,000, with no decrease in quality. We show that two mechanisms underlie these results: (a) justification reduces clinicians' available time, and (b) justification forces clinicians to reflect on a patient's need for service. Our paper contributes to recent theory on friction and reflection as drivers of efficiency in services. We show that justification can serve as an effective lever for reducing medical tests—and costs—without negatively impacting quality.