Sergei Savin

Jong Myeong Lim, Ken Moon, Sergei Savin (2023), Searching for the Best Yardstick: Cost of Quality Improvements in the U.S. Hospital Industry, Management Science, forthcoming.

Abstract: The Hospital Value-Based Purchasing (VBP) Program is Medicare’s implementation of yardstick incentives applied to hospitals in the U.S. Under the VBP Program, 2% of all Medicare payments to hospitals, estimated to be US$1.9B in fiscal year 2021, are withheld and redistributed based on their relative performance in the quality of delivered care. We develop a dynamic mean-field equilibrium model in which hospitals are engaged in a repeated competition under yardstick incentives. Using structural estimation methods, we recover key parameters that govern hospitals’ decisions to invest in quality improvement, including the financial and non-financial costs and uncertain outcomes of investment. By dynamically solving for hospitals’ individually optimal investment policies, we estimate the trajectory of quality improvements for each hospital, including its investment decisions and quality levels throughout the implementation of the VBP Program. Our counterfactual analyses explore the benefits, on the one hand, of modifying the overall size of the yardstick incentives and, on the other hand, of implementing a more focused program tailored to hospital type. We find that increasing the size of the incentives from 2% to 4% would have resulted in an additional quality investment of US$1.2B from 2011 to 2018, leading to a 3.3% reduction in the average rate of central line-associated bloodstream infections (CLABSI). Applying yardstick incentives to the tailored hospital peer groups, even without changing the size of the incentives, can lead to an average reduction of 1.4% in the rate of CLABSI among groups of hospitals associated with the highest costs of quality investment.

Hessam Bavafa, Sergei Savin, Christian Terwiesch (2019), Managing Patient Panels with Non-Physician Providers, Production and Operations Management, 28 (6), pp. 1577-1593.

Nan Liu, Sergei Savin, Matthew Steinberg, Vanitha Virudachalam (Work In Progress), Education as a Coproduced Service: Incentivizing Teachers and Students.

Hessam Bavafa, Lerzan Ormeci, Sergei Savin, Vanitha Virudachalam (Work In Progress), Elective Admission and Patient Discharge Policies in Hospital Environments.

Vanitha Virudachalam, Sergei Savin, Matthew Steinberg (Under Revision), Investing in Performance: Information and Merit-Based Incentives in K-12 Education.

Abstract: The United States educational policy requires that K-12 students participate in annual standardized tests. As a result, school districts that have traditionally utilized ongoing “formative” assessments of student progress, are increasingly relying on additional, costly “interim” assessments. In addition, some districts are experimenting with merit-based incentives that tie teachers’ bonuses to student performance on state tests. We examine the relationship between information on student performance and monetary incentives for teachers using a two-period principal-agent model. In our model, the school district (principal) chooses whether to invest in interim assessments, and, also, how much merit-based compensation to offer to teachers, while the teachers (agents) decide on the level of effort to exert in each period. We use two-state (“proficient” vs. “not proficient”) Markovian dynamics to describe the evolution of student readiness for the tests, and assume the presence of information asymmetry between the teachers and the school district regarding the student readiness level. Our analysis shows that, for schools that are not proficient at the beginning of the year, the return from merit-based incentives is always greater than the return from information derived from interim assessments. For schools that begin the year on track to achieve proficiency, there exist settings where investing in the interim assessment is optimal, such as when the district has a low budget and the formative assessment is reasonably accurate. However, we also establish that there are settings where the provision of additional information about the student mid-year performance has a demotivating effect on teachers.

Jiding Zhang, Sergei Savin, Senthil Veeraraghavan (Under Revision), Revenue Management in Crowdfunding.

Abstract: We develop a model of crowdfunding dynamics that maximizes revenue for a given fundraising campaign by optimizing both the pledge level sought from donors or backers and the duration of the campaign. Our model aligns with the patterns of backer/donor arrival and pledging observed on crowdfunding platforms, such as Kickstarter. Using our model, we calibrate the revenue lost from using pre-specified pledge levels or campaign durations. We show that under the optimal design, the pledge level sought decreases as the goal of a campaign increases, with a more pronounced effect for both very low and very high campaign goals. We further demonstrate how uncertainty in pledge accumulation improves campaign revenue and aids campaign success. In particular, we show that campaigns with high goals benefit from highly uncertain environments more than campaigns with low goals.

Hessam Bavafa, Lerzan Ormeci, Sergei Savin (Under Review), Optimal Mix of Elective Surgical Procedures Under Stochastic Patient Length of Stay.

Linda Green, Sergei Savin, Yina Lu (2013), Primary Care Physician Shortages Could Be Eliminated Through Use of Teams, Non-Physicians, and Electronic Communication, Health Affiars, 32, pp. 11-19.

Houyuan Jiang, Zhan Pang, Sergei Savin (2012), Performance-Based Contracting for Outpatient Medical Services, Manufacturing and Service Operations Management, 14 (4), pp. 654-668.

Adam Powell, Sergei Savin, Nicos Savva (2012), Physician Workload and Hospital Reimbursement: Overworked Servers Generate Less Revenue per Patient, Manufacturing and Service Operations Management, 14 (4), pp. 512-528.