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in designing a rational healthcare system arises from the fact that the most
important components in the system—people—often act irrationally.
view of purveyors of behavioral economics, a field that applies psychological
insights to understand and guide human behavior.
of behavioral economics to positively affect health care is proving to be significant,
said David Asch, MD (pictured at right), executive director of the Penn Medicine Center for Health
behavior is on the final common pathway of every single advance in health
care,” Asch said. “Even an incredibly effective drug or an incredibly effective
vaccine requires a physician to prescribe it and a patient to take it, and
those things aren’t quite as simple as they may seem.
that helps us motivate the clinicians and the patients would tremendously
advance health care and let us take the scientific advances and deliver them to
patients more effectively. What behavioral economics does is it effectively supercharges
Asch noted during a presentation at HFMA’s 2018 Thought Leadership Retreat in
Washington, D.C., public health campaigns and healthcare provider initiatives have
relied on the notion that given the right information, people will make the
right decisions. Examples include nutrition and calorie labeling and informed
issue with that concept, noting that information alone provides a shaky foundation.
Most people already know that smoking can be harmful, for example, so
educational campaigns such as the one being promoted by the Centers for Disease
Control and Prevention may not make an impact.
advanced step, which also may fall short of the mark, is to use standard
economic approaches. The idea is that offering financial incentives will prod
people to act the right way. But human nature does not frequently translate to
actuary-style decision making.
Behavioral economics goes beyond standard economics,
contributing “an understanding of how people actually make decisions, which is
often not so rational,” Asch said. “They make their decisions based on emotion
and framing and things like that, and that’s not what’s taught in medical
The Penn Center for Healthcare Innovation differs from many
provider-based innovation centers, Asch said, in that it goes beyond tech-transfer
or IT initiatives to examine how care delivery processes can be improved.
Behavioral economics is central to this effort. The Center
established what Asch said is the nation’s first “nudge unit” at an academic
health system. The unit’s purpose “is to find gentle but effective ways to
change the behavior of either our clinicians or our patients toward more
optimal clinical outcomes,” he said.
On the clinician side, a nudge could be used to increase referrals
to cardiac rehabilitation for patients who have had a heart attack, which has
been established as a best practice but typically requires various steps on the
part of the referring physician. Conversely, a nudge might be deployed to
dissuade a physician from utilizing unnecessary diagnostic testing.
For patients, nudges can promote adherence to exercise
programs or medication regimens, or visits with a physician.
“There are so many elements of
health care that are dependent on the patient’s behavior, and of course
patients are highly motivated to improve their behavior, but each of those
things is hard,” Asch said. “So rather than just tell people, ‘Go do that,’ we
should recognize that it’s hard. How do we make it a little bit easier to
remember? How do we make it a little bit easier to do? How do we keep people
from falling into the traps that humans naturally fall into?”
At Penn Medicine, one situation that needed addressing, Asch
said, was the tendency of clinicians in the health system to prescribe
brand-name drugs when generic versions—vastly cheaper yet similarly effective—were
available. “All the clinicians knew that they should be prescribing the generic
drugs, and we’d had meetings with clinicians, we did everything possible, yet
the level of prescribing of generic drugs was flat for each of these agents,”
The information systems team then implemented a small but
crucial change in the physician order entry system, making the generic version
of a drug the default choice. Physicians had to opt out to access the
brand-name variety. The difference in prescribing patterns was immediate and substantial,
and indicative of the potential of targeted nudges to effect change.
“It didn’t restrict anybody’s liberty—the physicians could use the
brand if they wanted to,” Asch said. “But remember, these were physicians who wanted
to use generics, they were just in the habit of using brand-name drugs. So we
got them out of their habit, we greased the skids for them to do what they
fundamentally wanted to do, which we thought was also better patient care.
“If you just thought that education or financial incentives
were the way to go, you would never have thought of that particular approach.”
Providing default options is one
example of a nudge that is based in behavioral economics because it recognizes
the status quo bias that is hardwired
into human beings. Others include:
Lottery-based rewards: State lotteries capitalize on the innate regret aversion of the human mind, Asch
noted. Advertising campaigns target people who play the lottery regularly,
imploring them not to let this be the week that they don’t play their number—because
this just might be the week that their number wins. Such campaigns are
effective despite the impossibly low odds of winning the lottery.
Providers can use the same trick
on patients in tandem with pill-bottle technology that allows medication
adherence to be monitored remotely. A lottery can be held each day or each week,
with, say, a $100 prize going to the patient whose number is drawn at random.
But patients are ineligible to win if they did not take their medication. The
fear of getting a message that their number was drawn and they would have won
if they taken their medication is a powerful motivator.
“They don’t have to get the regret
message, they just anticipate it,” Asch said.
Straightforward incentive structures. Asch thinks the concept of
value-based insurance design (VBID) is flawed because of its complexity. He
cited a study
in which almost 6,000 patients who’d had a heart attack were randomized into
one of two groups. The first owed standard copayments for statins and other
preventive medications, while the second had their copayments waived.
Although medication adherence was
four to six percentage points higher in the second group, there was no
difference in time until first major vascular event or revascularization.
The results indicate what Asch
described as the “asymmetric” nature of VBID. Copayment increases can be
effective at discouraging people from taking a medication or seeking a form of
treatment that is considered low-value. But copayment decreases, as seen
through the lens of behavioral economics, may be futile as a value-oriented
“A copayment decrease is meant to
encourage people who aren’t taking a drug to take it,” Asch said. “But if I’m
not taking the drug, I never see a copayment decrease. I don’t even notice
that. I don’t go the drugstore. The whole problem is that I’m not going there,
so the copayment decrease can be invisible to me.
“That helps explain why
value-based insurance design is asymmetric. The effects of increasing costs are
much more potent than the effects of decreasing cost. We should just pay
attention to that as we think about these programs.”
As to whether behavioral economics
is better directed towards patients or toward clinicians, the evidence suggests
that the answer is: both.
Asch led a study
that consisted of four groups, each of which was seeking to achieve LDL
cholesterol reduction in patients: Physician incentives ($1,024 per patient who
achieved his or her cholesterol target after 12 months), patient incentives
($1,024 for achieving the target), shared incentives ($512 each to the
physician and patient for achieving the target), and a control group.
The results showed that patient
incentives or physician incentives alone did not produce significantly greater cholesterol
reduction than the control group. But shared incentives did boost results.
Asch noted that the effectiveness
of pay-for-performance models among physicians had never been examined before
that 2015 study. “It’s just always been assumed to work,” he said.
The results should not have been
surprising. “It was like we accidentally discovered the doctor-patient
relationship,” he said. “It takes two to tango. It takes a physician to
prescribe and a patient to take it, and in a lot of strategies to improve
health care, we target one or the other. We don’t think about using them
together. We’ve all been taught about the clinician-patient relationship and
how important it is. Why aren’t we using this effectively?”
The push to make health care more value-focused generally
hinges on the idea that by altering financial incentives for patients and
providers, policymakers can change behavior.
That approach, Asch said, is too reliant on standard
economics when behavioral economics offers more-targeted methods.
“From experience and frankly from common sense, just
dangling a financial incentive in front of a patient of in front of a hospital
or health system creates some motivation for change. But it doesn’t tell them
how to do it.
“It’s actually very hard to change your behavior if you’re a
patient. ‘I know I shouldn’t eat the potato chips. I didn’t need more
motivation. It’s just, how do I avoid them?’ And a hospital that’s used to
operating a certain way, it’s like turning a battleship—it’s not so easy to turn on a dime.
“These financial incentives that come from approaches to
value-based care are important because you want your incentives aligned, but I
don’t think they’re ever going to take us the full way. So we need to think
about what else we need to apply to be in concert with this. It has to be a
Nick Hut is
managing editor of Leadership.
for this article:
David Asch, MD, MBA, executive director, Penn Medicine for Health Care
This article is based in part on a presentation at HFMA's 2018 Thought Leadership Retreat.
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