It’s easy to figure out the primary incentive of the hospitals in this case: funding (they’re chronically short of it). If the length of the surgery list has an inverse relationship to funding then their incentive is to cut the length of the list. That is not, of course, the intended objective of the program. The Department of Health wants to speed up surgeries. But they have created a proxy-target (the waiting list). So it’s almost certain that what they’ll get is a change in the proxy, whether or not that brings about the change they seek.
What’s the solution? Actually there isn’t likely to be just one because, in reality, the problem of the length of time it takes to get elective surgery involves many different factors. The length of the ‘queue’ is only an index, not the problem itself. The Department should abandon the ‘length of waiting time’ target and try a number of different experiments that might affect the real incentives of the hospitals and the other actors—patients, surgeons, specialists, hospital administrators—whose behavior can affect overall waiting times. They’re very unlikely to guess all of the private incentives that are expressed by these behaviors. So they’ll have to try different approaches and find out which ones (probably not ‘one’) will work. They might need to try many of them, so it’s a good idea to use small scale experiments—in different hospitals, too—and it’s essential to evaluate the outcomes, abandoning those that don’t work.
For example, the Department could offer patients an incentive to elect surgery in hospitals with the shortest ‘queue’ even if it’s not the most convenient (e.g. nearest) choice. They could offer specialists who refer patients to surgeons an incentive to distribute recommendations around hospitals by hooking them up with different surgical teams. They could try to encourage one hospital to specialize in the most-demanded elective procedure in an attempt to increase the efficiency of that procedure and then re-direct appropriate patients from other hospitals to that team (or have their specialists do so).
What would you recommend?