- Email: [email protected]
Behavioral economics in spine care
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] (2017) ]]]–]]]
Available online at www.sciencedirect.com
www.elsevier.com/locate/semss
Behavioral economics in spine care Alok Sharan, MD, MHCDSn Albert Einstein College of Medicine, Bronx, NY WESTMED Spine Center, Yonkers, NY
abstra ct
Basic economic theory states that humans act in a rational manner when presented with the proper information. Over the years it has been clear though that similar incentives can result in different behaviors among different individuals. The field of behavioral economics has been created as an attempt to understanding the link between incentives and behaviors. As physician payment reform evolves toward rewarding value and outcomes, understanding some of the basic tenets of behavioral economics can help providers as they attempt to navigate the new payment methodologies. & 2017 Elsevier Inc. All rights reserved.
The US healthcare system is undergoing a massive transformation at this moment. The rising costs of care have led payers and the government to constantly push for a payment mechanism that rewards value over volume. This transition from a fee-for-service payment system to pay-for-value is being accelerated through the passage of the MACRA legislation. There have been numerous attempts to change the behavior of physicians through modifications of the reimbursement programs. Pay-for-performance was an attempt to reward providers for adhering to certain processes.1 While increasing compliance with certain metrics it did not result in any significant bending of the cost curve.2 Traditional economic theory has been based off the notion that given the proper information humans will make a rational decision. Unfortunately, a multitude of experiments have demonstrated that this type of correlation does not always hold true.3 Instead research has demonstrated that sometimes the incentive does not always lead to a proportional response. For example, an incentive framed as a gain would elicit a different response than if the same incentive was framed as a loss.4 A fundamental tenet of economics is that incentives drives behavior. As the payment model for physicians change n
toward an orientation towards the delivery of value, it will be important to understand what incentives are needed to drive behavior change. The field of behavioral economics has grown out of research developed as an attempt to understand what responses are elicited for certain types of incentives. A basic understanding of the various principles of behavioral economics can help physician leaders as they are attempting to transform their payment models.
1.
Inertia
The first principle of behavioral economics is inertia. This principle refers to the fact that many individuals prefer sticking to existing or standard behaviors, rather than doing something different. Sometimes called the status quo bias, inertia is based of the fact that most individuals would like to continue their current state of affairs.5 One area where status quo bias has been found to be useful is in electronic medical record ordering of prescriptions. A recent study has demonstrated that when a generic drug is the default option listed, physicians are more likely to order that drug.6 They are less likely to take the steps necessary to order a non-generic prescription. As healthcare
Corresponding author at: WESTMED Spine Center, 1 Ridge Hill Blvd, 2nd Floor, Yonkers, NY 10710. E-mail address: [email protected]
https://doi.org/10.1053/j.semss.2017.11.009 1040-7383/& 2017 Elsevier Inc. All rights reserved.
2
S
E M I N
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moves toward greater standardization and the creation of rules engines, understanding the role of inertia and status quo bias can be helpful when creating decision trees.
R G
] (2017) ]]]–]]]
may be important to reward these individuals for incremental effort.
6. 2.
Immediacy/hyperbolic discounting
This principle is based on the fact that individuals do not like uncertainty and try to reduce it whenever possible. As a result people tend to overestimate any immediate costs and benefits of an incentive. As most individuals experience difficulties projecting in the future, and therefore undervalue future rewards, they tend to discount delayed benefits. Annual evaluations are common among physician groups. While helpful in terms of feedback they are less likely to elicit a behavior change. Giving physicians more frequent feedback responses is more likely to result in changes in behavior and give them more opportunities to learn from the feedback.7
3.
Loss aversion
It is pretty clear that individuals are more likely to change their behavior when confronted with the possibility of losing something versus gaining something. There has been some research conducted which suggests that losses have about twice the psychological impact as an equivalent gain. The fear of a monetary loss can often produce a greater behavioral response than the chance to gain the same amount of money. In one study conducted on teachers, their performance was improved when they were paid a bonus in advance. If they did not meet their goals they were told to return the money. This group improved greater than those individuals who were given a year-end bonus.8
4.
Relative social ranking
It is pretty clear that individuals are always comparing themselves to others in similar situations. Physicians, and spine surgeons in particular, are very competitive individuals. When shown their particular outcome score in the context of other individuals, it is pretty clear that surgeons will be selfmotivated to improve. Understanding the proper use of social ranking for physicians can tap into the intrinsic motivation of individuals to maintain a high relative social ranking.9
5.
Threshold effects
When planning out a particular incentive it is important to remember that as individuals come closer to achieving their goals they are going to try harder. Alternatively for individuals who are far away from their goal they may be less likely to attempt to reach that goal. For these individuals it
Choice overload
Behavioral economic research has been able to demonstrate that when an individual is faced with too many choices, the default is to not choose at all.10 The numerous amount of process metrics and outcome measures can be overwhelming for physicians. Given too many choices the default is to not make a choice. In this period of outcome measurement it is important to limit the number of choices a physician has to not overwhelm them.
7.
Limits of willpower
Physicians are humans, like everyone else. There has been an increasing awareness of the role of physician burnout and the quality of care. In the transition toward a fee-for-value system it is important to remember that humans can become tired when exerting willpower. As a result people are less likely to expend any effort as they reach the limits of their willpower.11 In these situations creating the path of least resistance to do the right thing is more likely to elicit a favorable response.
8.
Conclusion
The move to a value based healthcare system will result in a change in the basic incentive and payment plan for physicians. Whereas in the past physicians were rewarded for providing services, there is currently a tremendous push to reward physicians for performance. For physicians preparing for this type of incentive plan will require a change in behavior, a change in the normal workflows in taking care of patients. Understanding some of the principles of behavioral economics can help providers in constructing new payment models.
re fe r en ces
1. Rosenthal MB, Frank RG, Li Z, Epstein AM. Early experience with pay-for performance: from concept to practice. J Am Med Assoc. 2005;294(14):1788–1793. 2. Rosenthal MB. Beyond pay for performance—emerging models of provider-payment reform. N Engl J Med. 2008;359(12): 1197–1200. 3. Thaler RH, Sunstein CR. Nudge: Improving Decisions about Health, Wealth, and Happiness. New Haven: Yale University Press; 2008. 4. Elbel B, Kersh R, Brescoll VL, Dixon LB. Calorie labeling and food choices: a first look at the effects on low-income people in New York City. Health Aff (Millwood). 2009;28(6): w1110–w1121.
SE
M I N
SP
I N E
S
U R G
5. Samuelson W, Zeckhauser R. Status quo bias in decision making. J Risk Uncertain. 1988;1(1):7–59. 6. Patel MS, Day S, Small DS, et al. Using default options within the electronic health record to increase the prescribing of generic equivalent medications: a quasi-experimental study. Ann Intern Med. 2014;161(10 Suppl):S44–S52. 7. Lussier JP, Heil SH, Mongeon JA, Badger GJ, Higgins ST. A meta-analysis of voucher-based reinforcement therapy for substance use disorders. Addiction. 2006;101(2):192–203. 8. Fryer RJ, Levitt SD, List JA, Sadoff S. Enhancing the Efficacy of Teacher Incentives through Loss Aversion: A Field Experiment.
] (2017) ]]]–]]]
3
NBER Working Paper No. 18237. Cambridge, MA: National Bureau of Economic Research; 2012. 9. Kolstad J. Information and quality when motivation is intrinsic: evidence from surgeon report cards. Am Econ Rev. 2013; 103(7):2875–2910. 10. Iyengar SS, Lepper MR. When choice is demotivating: can one desire too much of a good thing? J Pers Soc Psychol. 2000; 79(6):995–1006. 11. Baumeister RF, Bratslavsky E, Muraven M, Tice DM. Ego depletion: is the active self a limited resource? J Pers Soc Psychol. 1998;74(5):1252–1265.
M I N
SP
I N E
SU
R G
] (2017) ]]]–]]]
Available online at www.sciencedirect.com
www.elsevier.com/locate/semss
Behavioral economics in spine care Alok Sharan, MD, MHCDSn Albert Einstein College of Medicine, Bronx, NY WESTMED Spine Center, Yonkers, NY
abstra ct
Basic economic theory states that humans act in a rational manner when presented with the proper information. Over the years it has been clear though that similar incentives can result in different behaviors among different individuals. The field of behavioral economics has been created as an attempt to understanding the link between incentives and behaviors. As physician payment reform evolves toward rewarding value and outcomes, understanding some of the basic tenets of behavioral economics can help providers as they attempt to navigate the new payment methodologies. & 2017 Elsevier Inc. All rights reserved.
The US healthcare system is undergoing a massive transformation at this moment. The rising costs of care have led payers and the government to constantly push for a payment mechanism that rewards value over volume. This transition from a fee-for-service payment system to pay-for-value is being accelerated through the passage of the MACRA legislation. There have been numerous attempts to change the behavior of physicians through modifications of the reimbursement programs. Pay-for-performance was an attempt to reward providers for adhering to certain processes.1 While increasing compliance with certain metrics it did not result in any significant bending of the cost curve.2 Traditional economic theory has been based off the notion that given the proper information humans will make a rational decision. Unfortunately, a multitude of experiments have demonstrated that this type of correlation does not always hold true.3 Instead research has demonstrated that sometimes the incentive does not always lead to a proportional response. For example, an incentive framed as a gain would elicit a different response than if the same incentive was framed as a loss.4 A fundamental tenet of economics is that incentives drives behavior. As the payment model for physicians change n
toward an orientation towards the delivery of value, it will be important to understand what incentives are needed to drive behavior change. The field of behavioral economics has grown out of research developed as an attempt to understand what responses are elicited for certain types of incentives. A basic understanding of the various principles of behavioral economics can help physician leaders as they are attempting to transform their payment models.
1.
Inertia
The first principle of behavioral economics is inertia. This principle refers to the fact that many individuals prefer sticking to existing or standard behaviors, rather than doing something different. Sometimes called the status quo bias, inertia is based of the fact that most individuals would like to continue their current state of affairs.5 One area where status quo bias has been found to be useful is in electronic medical record ordering of prescriptions. A recent study has demonstrated that when a generic drug is the default option listed, physicians are more likely to order that drug.6 They are less likely to take the steps necessary to order a non-generic prescription. As healthcare
Corresponding author at: WESTMED Spine Center, 1 Ridge Hill Blvd, 2nd Floor, Yonkers, NY 10710. E-mail address: [email protected]
https://doi.org/10.1053/j.semss.2017.11.009 1040-7383/& 2017 Elsevier Inc. All rights reserved.
2
S
E M I N
SP
I N E
SU
moves toward greater standardization and the creation of rules engines, understanding the role of inertia and status quo bias can be helpful when creating decision trees.
R G
] (2017) ]]]–]]]
may be important to reward these individuals for incremental effort.
6. 2.
Immediacy/hyperbolic discounting
This principle is based on the fact that individuals do not like uncertainty and try to reduce it whenever possible. As a result people tend to overestimate any immediate costs and benefits of an incentive. As most individuals experience difficulties projecting in the future, and therefore undervalue future rewards, they tend to discount delayed benefits. Annual evaluations are common among physician groups. While helpful in terms of feedback they are less likely to elicit a behavior change. Giving physicians more frequent feedback responses is more likely to result in changes in behavior and give them more opportunities to learn from the feedback.7
3.
Loss aversion
It is pretty clear that individuals are more likely to change their behavior when confronted with the possibility of losing something versus gaining something. There has been some research conducted which suggests that losses have about twice the psychological impact as an equivalent gain. The fear of a monetary loss can often produce a greater behavioral response than the chance to gain the same amount of money. In one study conducted on teachers, their performance was improved when they were paid a bonus in advance. If they did not meet their goals they were told to return the money. This group improved greater than those individuals who were given a year-end bonus.8
4.
Relative social ranking
It is pretty clear that individuals are always comparing themselves to others in similar situations. Physicians, and spine surgeons in particular, are very competitive individuals. When shown their particular outcome score in the context of other individuals, it is pretty clear that surgeons will be selfmotivated to improve. Understanding the proper use of social ranking for physicians can tap into the intrinsic motivation of individuals to maintain a high relative social ranking.9
5.
Threshold effects
When planning out a particular incentive it is important to remember that as individuals come closer to achieving their goals they are going to try harder. Alternatively for individuals who are far away from their goal they may be less likely to attempt to reach that goal. For these individuals it
Choice overload
Behavioral economic research has been able to demonstrate that when an individual is faced with too many choices, the default is to not choose at all.10 The numerous amount of process metrics and outcome measures can be overwhelming for physicians. Given too many choices the default is to not make a choice. In this period of outcome measurement it is important to limit the number of choices a physician has to not overwhelm them.
7.
Limits of willpower
Physicians are humans, like everyone else. There has been an increasing awareness of the role of physician burnout and the quality of care. In the transition toward a fee-for-value system it is important to remember that humans can become tired when exerting willpower. As a result people are less likely to expend any effort as they reach the limits of their willpower.11 In these situations creating the path of least resistance to do the right thing is more likely to elicit a favorable response.
8.
Conclusion
The move to a value based healthcare system will result in a change in the basic incentive and payment plan for physicians. Whereas in the past physicians were rewarded for providing services, there is currently a tremendous push to reward physicians for performance. For physicians preparing for this type of incentive plan will require a change in behavior, a change in the normal workflows in taking care of patients. Understanding some of the principles of behavioral economics can help providers in constructing new payment models.
re fe r en ces
1. Rosenthal MB, Frank RG, Li Z, Epstein AM. Early experience with pay-for performance: from concept to practice. J Am Med Assoc. 2005;294(14):1788–1793. 2. Rosenthal MB. Beyond pay for performance—emerging models of provider-payment reform. N Engl J Med. 2008;359(12): 1197–1200. 3. Thaler RH, Sunstein CR. Nudge: Improving Decisions about Health, Wealth, and Happiness. New Haven: Yale University Press; 2008. 4. Elbel B, Kersh R, Brescoll VL, Dixon LB. Calorie labeling and food choices: a first look at the effects on low-income people in New York City. Health Aff (Millwood). 2009;28(6): w1110–w1121.
SE
M I N
SP
I N E
S
U R G
5. Samuelson W, Zeckhauser R. Status quo bias in decision making. J Risk Uncertain. 1988;1(1):7–59. 6. Patel MS, Day S, Small DS, et al. Using default options within the electronic health record to increase the prescribing of generic equivalent medications: a quasi-experimental study. Ann Intern Med. 2014;161(10 Suppl):S44–S52. 7. Lussier JP, Heil SH, Mongeon JA, Badger GJ, Higgins ST. A meta-analysis of voucher-based reinforcement therapy for substance use disorders. Addiction. 2006;101(2):192–203. 8. Fryer RJ, Levitt SD, List JA, Sadoff S. Enhancing the Efficacy of Teacher Incentives through Loss Aversion: A Field Experiment.
] (2017) ]]]–]]]
3
NBER Working Paper No. 18237. Cambridge, MA: National Bureau of Economic Research; 2012. 9. Kolstad J. Information and quality when motivation is intrinsic: evidence from surgeon report cards. Am Econ Rev. 2013; 103(7):2875–2910. 10. Iyengar SS, Lepper MR. When choice is demotivating: can one desire too much of a good thing? J Pers Soc Psychol. 2000; 79(6):995–1006. 11. Baumeister RF, Bratslavsky E, Muraven M, Tice DM. Ego depletion: is the active self a limited resource? J Pers Soc Psychol. 1998;74(5):1252–1265.