Healthcare – From volume to value – NEJM

stethoscope on open book on a white background

Behavioral economics and physician compensation…

… is the title of an article published last week in the New England Journal of Medicine.

Switching from fee-for-service to value-based payment or pay-for-performance will change the behavior of doctors in prescribing tests, procedures and drugs. As mentioned in the article, “fee-for-service reimbursement tends to promote well-compensated procedures.” Value-based payment will focus on patient outcomes and will drive a change in decision-making. Incentives will be different and drive the behavior of doctors, but incentives are strongly needed to help transition from one system to the other.

Behavioral economics views incentives as fundamental determinants of behavior, but it can help elucidate how the timing, frequency, and amount of payment influences behavior; how to address unintended consequences of incentives; and how to create environments supporting better decision-making.”

Deviations from rational decisions are often triggered by context and benchmarks. Several measures can be implemented to go over these deviations, the article highlights some of them:

– the power of default. By default, when prescribing a drug, the information system shows the generic instead of the brand;

– the loss aversion. Giving payments in advance of mandatory behavior (hand hygiene, electronic prescribing,…) pushes doctors to adhere to guidelines in order not to lose the money won;

– the incentives series. Giving payments in small and fragmented quantities is more efficacious than in larger amounts because immediate feedback is needed to influence behavior;

– the positive self-image. “Pairing performance incentives with appeals to self-image and professional identity provides an additional lever for meeting quality and efficiency goals. Making public some component of physicians’performance, at least within organizations, may enhance the effect of monetary incentives.”

The conclusion speaks for itself: “Not all clinical decisions will or should be amenable to interventions based on behavioral economics insights, but for some transformations in health care delivery and payment, such insights may be a powerful force for change. One challenge is identifying the clinicians, patients, and system inefficiencies for which incentive payments can be most helpful.”


Additional resources

Should the U.S. Move Away From Fee-for-Service Medicine? – 2015 – Wall Street Journal

The Behavioral Economics Guide – 2014 – A. Samson


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