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How Can Healthcare Behavioral Economics Be Used—Or Not— To Advance Population Health

David Fairchild, MD, MPH was featured in the February 28th edition of MCOL Thoughtleadersnewsletter. The question asked was:

How Can Healthcare Behavioral Economics Be Used—Or Not— To Advance Population Health and Quality Improvement?


Population Health is based on the notion of a dedicated provider taking care of a defined population with a focus on the whole person. So why is it frequently difficult to get patients to take drugs as specified, or engage in chronic disease self-management? For that matter, why do we physicians not always take our own advice? Perhaps our population health strategies would be more effective if we incorporated more learnings regarding how and why humans make the decisions they do.


Behavioral economics, which relies on psychology as well as traditional economic theory, may prove to be a useful new population health tool by helping us understand why patients do what they do. Behavioral economics argues that people don’t always make decisions about their health rationally based on a careful calculation of risks and benefits. Rather consumer and patient decisions are strongly influenced by emotions and the environment, as well as how healthcare choices are presented. In their 2008 book Nudge: Improving Decisions About Health Wellness and Happiness, Nobel prize winning economist Richard Thaler and co-author Cass Sunstein explain how natural human biases can cause people to make poor decisions, and how these choices negatively impact population health. With knowledge of these biases it may be possible to structure “choice environments” with “peer supports” to better engage patients in their wellness planning, make it more likely people will make healthy choices, and develop “nudges” to improve adherence to medication compliance and wellness programs.


One of the key principles of behavioral economists is “loss aversion” or “present bias”—- our tendency to be more sensitive to the potential impact of an immediate loss than the possibility of a future gain. Employers have recognized this and have assumed a more activist role in benefit plan design introducing both rewards and penalties to “nudge” employees to participate in a variety of wellness activities. In our provider world these kind of behavioral “nudges” may include use of telehealth to improve access of patients to their providers; or new remote technology such as Adhere Tech’s digital “smart pill bottles” reported in the NY Times recently, which can alert patients when it’s time for medication, and send an automatic reminder if they miss a dose in real time. New technologies that enable providers to track behavior and connect with patients, however, “are not in and of themselves going to change behavior in high risk patients”, according to Kevin Volpp, MD, PhD., founding director of the University of Pennsylvania’s Center for Health Incentives and Behavioral Economics: “You have to combine technology with an engagement approach that is really going to provide ongoing active participation.”


Volpp has designed randomized trials to “nudge” physicians to provide evidence-based care, as well as testing how to help consumers choose better health plans depending on how options are provided. And some health plans are trying a variety of behavioral economic concepts to reward physicians for quality, including peer comparisons and bonuses for continuous improvement instead of basing rewards on hitting one absolute target. My own experience in designing population health programs confirms the need to combine peer and social support to change patient behaviors. The discipline of behavioral economics is still young, and will need further testing to see if the concepts are scalable. But it is already stretching our thinking, and may help provide a more complete understanding of patient and physician decision making, and how we can design more sensible strategies for population health.


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