Sunday, March 04, 2012

Teacher rankings - relearning the lessons of adverse selection

William Johnson is one of those teachers we prize, the best of the best, teachers who choose to work with difficult children.

Unsurprisingly, his students don't perform as well as the average class, so he's officially a ‘Bad’ Teacher ( He's a conscientious person, so of course he feels lousy. Other special education teachers simply move to less challenging environments.

It's sad. We've had decades of experience with these things in healthcare. The key concept is "adverse selection". Two simple health are examples show how this works.

Imagine I'm a health care system and I'm paid a flat rate for each patient I care for. In this case, the commercial thing to do is to recruit healthy patients. Instead of investing in phone service, invest in a high class web portal that sick elderly patients will avoid. Instead of investing in a diabetes clinic, offer services for the worried well like acupuncture, homeopathy, massage services and the like. Let the expensive patients go down the road. You'll get great ratings, full payment, and bear low costs.

Now imagine you're a primary care physician. You're being rated on patient satisfaction and on good outcomes for diabetes care. The smart thing to do is get rid of all the difficult patients who don't have phones, perhaps don't have homes, probably have bigger immediate problems than their blood sugar. Instead improve the office parking, setup office hours that fit patients who are employed but not those looking for work, etc. It's not hard to do, and soon your patient panel looks great and feels happy.

We don't know how to manage adverse selection, though there are lots of workarounds and modifiers. The RomneyCare Mandate is a prime example of an adverse selection modifier - and we know how popular that is.

These teacher ratings will produce the same behavior in teachers that they've produced everywhere else. The smart teachers and schools will get rid of the "loser" students, and, after a few years and a lot of waste and sorrow, we'll realize we're repeating history as farce.

Maybe a few blog posts like this will shorten the cycle. I have to hope ...

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