Business Incentives

K. Ray Katz
August 7, 2011

A few weeks ago I wrote a Blog about ethics.  Specifically, I put down some hypothetical situations and asked you to rank them according to how ethical each situation was.

The first situation on the list was that of an office that purchased all of its instruments at full single unit price and did not take any quantity discount.  In response, I received an email from one reader saying that I did not provide enough possible answers to the question. (See Blog – Ethics… Black, White, or Gray.)  This reader said that I should have provided the possible answer, “Ethical – but Stupid.”

I confess – I didn’t think of those exact words, but I agree 100% with the sentiment.  I can not think of any professional who would not take their honestly earned quantity discount… can you?

But – for the past ten or more years we have been encouraged by various individuals and entities not to accept, and our suppliers have been asked not to provide, incentives since they “might” influence our professional judgment to the detriment of our client’s well being.

Now… if you agree that good and honest professionals can be unduly influenced by incentives, I ask the following;
Is not a quantity discount an incentive with significant monetary value that is provided by a supplier to its customers – dispensing professionals?  Since all quantity discounts are not created equal, might we not be able to make a case for doing away with these discounts in the name of ethical purity?

At this point you are probably saying “Is this guy crazy?”  No, I’m not crazy.  I’m just an old dispenser who did a pretty decent job for his clients under the old rules.  I firmly believe quantity discounts are a proper means of incentivizing a professional to do business with suppliers of his/her choice.  I also believe that any other incentive a supplier may provide to its customers that are legal (federal an/or state law) are proper methods of doing business.  Within their abilities, 99% of all professionals want to do the best they can for their clients.  I do not believe that placing our entire professional community in an ethical straight jacket is going to do anything to affect how the remaining 1% conducts itself.  Do you?

I also believe that in the vast majority of cases, a professional can properly fit a client with instruments from a number of different suppliers.  In such a scenario, how do instruments from company A (who does provide an incentive to its customers) do more harm to a client than instruments from company B which does not provide an incentive?

There will be those who disagree with me, and that is good, as long as a rational discussion can take place on the merits of a case rather than simply saying that dispensing professionals are weak willed, lacking in character, and need to be protected from themselves.

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