Tag: social distancing

Leaks and deluges

What connects South Korea, Vietnam, Singapore, Kerala, Karnataka and Andhra Pradesh? All these regions were, at some point of time or the other, hailed for their deft handling of the covid-19 crisis.

Some of them, such as Vietnam and Singapore have continued to do well. New Zealand has also done rather well, and it continues to keep its border closed. However, shit has hit the fan in Karnataka and Andhra Pradesh in terms of number of cases. All the diligence in containment earlier seems to be of no use now, only delaying the inevitable.

So what happened?

Essentially the way you deal with a leak and the way you do with a deluge are vastly different.

When you have a leak, you know that there is a good chance that you can try to stem it. You first put in some temporary measure to slow it down so that the hole doesn’t become bigger, and then you find something – a rubber patch, or some M-seal, or a piece of string, or some plaster (or a combination of these) to plug the leak.

Once the leak has been plugged you are safe. There are no more leaks in the foreseeable future. The damage is likely to have been limited.

When the flow of water from the damaged source is too heavy, though, stemming leaks just doesn’t work. You can try to stem it, but the pressure is so intense that the water finds its way around it. And the more the effort you put in stemming, the more the likelihood that when the water breaks through it is going to damage you.

When you are dealing with a deluge, the optimal strategy is to not try and stop the deluge. That is usually futile. The focus needs to be on mitigation and management – take the deluge as a given, and that some damage is guaranteed, and try to figure out how best you are going to limit the damage to the extent possible.

Some states in India, such as Karnataka or Kerala or Andhra Pradesh, had been blessed with “thin inlet pipes” in terms of the covid-19 virus. The initial case loads in these states was low, so a strategy of a lockdown (which was national anyways) combined with strong contact tracing and testing kept the disease under wraps. The “models” of these states were lauded at one time or another.

And then inter-state borders opened up. As people streamed in from neighbouring states that had not been blessed by thin inlet pipes, the pipes into these hitherto thick states became thick. Not realising this happened, these states continued with their old “trace and test” strategy. It doesn’t seem to be helping.

Cases are exploding in these states. And the same old strategy is being persisted with. Bangalore even did a week-long lockdown that ended on Tuesday, putting many livelihoods at risk.

I have come to firmly believe that there are no “good strategies” in terms of combating the disease unless strict border controls can be maintained. Anything any government does in terms of tracing and testing and locking down will only slow the inevitable – it doesn’t make the place safe from the disease itself.

The only purpose of containment measures, I have come to believe, is to spread out the severe cases over time, so that hospitals are not overwhelmed, and those who can be helped by medical care can get that help.

In fact, if you remember, this was the original meaning of “flattening the curve”. Over time, people have come up with their own definitions of the phrase, looking at the number of new cases, number of cases, number of deaths and what not.

The original purpose of lockdown was to let the infection spread in a controlled manner, not to prevent the spread of the disease altogether (which is near-impossible). We would do well to remember that.

The World After Overbooking

Why do you think you usually have to wait so much to see a doctor, even when you have an appointment? It is because doctors routinely overbook.

You can think of a doctor’s appointment as being a free option. You call up, give your patient number, and are assigned a slot when the doctor sees you. If you choose to see the doctor at that time, you get the doctor’s services, and then pay for the service. If you choose to not turn up, the doctor’s time in that slot is essentially wasted, since there is nobody else to see then. The doctor doesn’t get compensated for this as well.

In order to not waste their time, thus, doctors routinely overbook patients. If the average patient takes fifteen minutes to see, they give appointments once every ten minutes, in the hope of building up a buffer so that their time is not wasted. This way they protect their incomes, and customers pay for this in terms of long waiting hours.

Now, in the aftermath of the covid crisis, this will need to change. People won’t want to spend long hours in a closed waiting room with scores of other sick people. In an ideal world, doctors will want to not let two of their patients even see each other, since that could mean increased disease transmission.

In the inimitable words of Ravishastri, “something’s got to give”.

One way could be for doctors to simply up their fees and give out appointments at intervals that better reflect the time taken per patient. The problem with this is that there are reputation costs to upping fee per patient, and doctors simply aren’t conditioned to unexpected breaks between patients. Moreover, lower number of slots might mean appointments not being available for several days together, and higher cancellations as well, both problems that doctors want to avoid.

As someone with a background in financial derivatives, there is one obvious thing to tackle – the free option being given to patients in terms of the appointment. What if you were to charge people for making appointments?

Now, taking credit card details at the time of booking is not efficient. However, assuming that most patients a doctor sees are “repeat patients”, just keeping track of who didn’t turn up for appointments can be used to charge them extra on the next visit (this needs to have been made clear in advance, at the time of making the appointment).

My take is that even if this appointment booking cost is trivial (say 5% of the session fee), people are bound to take the appointments more seriously. And when people take their appointments more seriously, the amount of buffer built in by doctors in their schedules can be reduced. Which means they can give out appointments at more realistic intervals. Which also means their income overall is protected, while still maintaining social distancing among patients.

I remember modelling this way back when I was working in air cargo pricing. There again, free options abound. I remember building this model that showed that charging a nominal fee for the options could result in a much lower fee for charging the actual cargo. A sort of win-win for customers and airlines alike. Needless to say, I was the only ex-derivatives guy around and it proved to be a really hard sell everywhere.

However, the concept remains. When options that have hitherto been free get monetised, it will lead to a win-win situation and significantly superior experience for all parties involved. The only caveat is that the option pricing should be implemented in a manner with as little friction as possible, else transaction costs can overwhelm the efficiency gains.