- Behavioral economics can be thought of as the science of understanding that humans act irrationally, says one of the field’s leading researchers.
- Healthcare stakeholders can apply the principles of behavioral economics to motivate patients in areas such as condition management and preventive care.
- Behavioral economics also can be used to engage clinicians to implement new and improved modes of care.
Behavioral economics has been a field of study since around the 1960s, but researchers began exploring its relevance to healthcare only within the last couple of decades.
“It has been used extensively in finance, it’s been used in retail,” said Karen Horgan, co-founder and CEO of VAL Health.
The ramifications for healthcare are significant, Horgan said, because behavioral economics recognizes the irrational nature of human beings and finds ways to harness that nature to spur constructive actions such as engaging in preventive care.
Horgan will delve into the application of behavioral economics to healthcare Aug. 14 during her featured general session, “Behavioral Economics to Drive the Last Mile of Health Engagement,” as part of HFMA’s 2020 Digital Annual Conference. In a recent interview, she offered a sampling of the insights she’ll be sharing.
Karen Horgan, VAL Health
Q: What are some of the key lessons of behavioral economics that pertain to people’s behavior and motivations?
A: Behavioral economics is the science of understanding that we as humans are irrational. If we put calorie labeling in a restaurant, people purchase the same number of calories before and after. [But after changing] the order in which items were listed — low-calorie items listed first versus high-calorie items listed first — people purchased 25% fewer calories. That teaches us that we take the easy path. We’re essentially lazy.
Another thing behavioral economics teaches us is that we are social beings. We’re very much influenced by others. You see this on all the social networks, [and] you probably see it with your energy bill, where it tells you how you’re faring compared to your most efficient neighbors.
Another example of what it teaches us is we have a bias to the present. That’s why we’ll eat the chocolate cake, or we’ll have a beer. At night you might set the alarm to go run, and in the morning, you hit the snooze — because your present self is different than your future self.
So there are all these motivations and irrationalities that people have that we now understand, and we can use it to drive engagement and behavior change.
Q: What are the implications of behavioral economics for healthcare?
A: The industry as a whole typically takes the approach of information: “I’m going to tell you how to eat better to manage your diabetes.” “I’m going to tell you why you need to go get a colonoscopy, and you should run out and do it.”
But we know that information alone doesn’t drive behavior change. And as a society, chronic conditions are becoming more prevalent. Think about COVID-19 — we know prevention and general care is just not happening.
And so how can we use behavioral economics to make sure that people are taking care of themselves and that all conditions are being managed? We want to harness these irrationalities to nudge stakeholders to do what they have a hard time doing.
Q: How can behavioral economics improve population health?
A: Behavioral economics can be used to nudge people to enroll in condition management programs. As we’ve been able to reframe the approach to enrolling, we regularly double the rate at which people get into these programs.
It can nudge [patients] to actually show up for their appointments. We worked with one hospital system and got a 5% reduction in no-show rates.
There’s also a fair amount of getting consumers to go in for preventive screenings. We’ve done a lot of personalization and social framing and more than doubled the rate at which women went in for their pap smears. It can really be used to drive people to do prevention as well as to manage conditions.
Q: How can behavioral economics be applied not only to patients, but to providers?
A: We’re working with a diagnostic company to basically drive physician behaviors — now that there are new tools out there to help predict the rate at which patients will have rapid progression to end-stage renal disease, how do you get providers to adopt these tools? They weren’t trained in that.
There’s a lot that can be done [in] behavioral economics [in terms of] incorporating the tools into their journey, using the right words — to nudge the physicians and empower them for what they need to do. It’s not just about consumers. It’s adoption of new care paths across the ecosystem.