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Healthcare industry should employ behavioral economics to change outcomes, increase financial success

Decisions are affected by emotions, bias, social context; the solution is design, expert says.

Jeff Lagasse, Associate Editor

The healthcare system would be better off financially -- and patients would be better off generally -- if people did things that were good for their health. They don't always, and education isn't the answer, according to David Asch, MD, executive director of the Center for Health Care Innovation. What's needed, he said, are strategies to bypass people's cognition.

Behavioral economics is the name of this particular game, and it's rooted in evidence showing that simple knowledge isn't enough to change people's behavior. Speaking at the Healthcare Financial Management Association's annual ANI conference in Orlando June 27, Asch related the story of Jon Corzine, the former governor of New Jersey, who famously refused to wear a seatbelt and in 2007 almost died in a serious car crash.

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"No one would say that Jon Corzine was stupid," said Asch. "But there he was, not wearing a seatbelt."

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Calling the mind a "high resistance pathway," Asch said behavioral economics "recognizes people are irrational -- in predictable ways. Decisions are affected by emotions, bias, social context. The solution is design. We're all irrational. The key insight in behavioral economics is that we're all irrational in highly predictable ways."

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One strategy for working around people's built-in predilections, he said, is simply to change default options when it comes to things like organ donation or medication adherence. Statistics show that countries in which people choose to become an organ donor -- such as the United States -- have drastically lower rates of survival among those needing transplants, while countries that have an opt-in policy have survival rates often upwards of 98 percent.

Some trials have even tested lottery-based systems for medication adherence. One such lottery system goes something like this: Patient X, who needs to take daily heart medication, has a medicine bottle technologically equipped to tell the provider when he/she has opened the bottle, thus providing a window into how often they take the medication. At the same time, the patient has chosen a two-digit number that is, in effect, their "lottery number." The provider, in Powerball-like fashion, draws a daily number, and if Patient X's number is drawn, they receive a financial reward -- but only if they took their medication the previous day.

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This, said Asch, bypasses a person's cognition and taps into a deeper reflex. And it's simple, a quality he said is severely lacking in healthcare at all levels.

"In designing complex incentives we are giving up some value," said Asch. "Insurance relies too much on actuaries and not enough on simple rules. Don't be so clever with your plans if you want to motivate people because they can't follow it."

Twitter: @JELagasse