Using behavioral economics to design physician incentives that deliver high-value care

• Emanuel E.J.
• Ubel P.A.
• Kessler J.B.
• Meyer G.
• Muller R.W.
• Navathe А.S.
• Patel Р.
• Pearl R.
• Rosenthal M.B.
• Sacks L.
• Sen A.P.
• Sherman Р.
• Volpp K.G.

Abstract

Behavioral economics provides insights about the development of effective in­centives for physicians to deliver high-value care. It suggests that the structure and delivery of incentives can shape behavior, as can thoughtful design of the decision-making environment. This article discusses several principles of behav­ioral economics, including inertia, loss aversion, choice overload, and relative so­cial ranking. Whereas these principles have been applied to motivate personal health decisions, retirement planning, and savings behavior, they have been largely ignored in the design of physician incentive programs. Applying these principles to physician incentives can improve their effectiveness through better alignment with performance goals. Anecdotal examples of successful incentive programs that apply behavioral economics principles are provided, even as the authors recognize that its application to the design of physician incentives is largely untested, and many outstanding questions exist. Application and rigorous evaluation of infrastructure changes and incentives are needed to design pay­ment systems that incentivize high-quality, cost-conscious care.