The Pulse spoke with Karen Horgan, co-founder and president of VAL Health, the leading health behavioral economics firm. Karen will moderate one of our conference panels, “The Other 50% of Health: Bending the Health Care Cost Curve via Wellness & Behavioral Economics.” Karen discussed behavioral economic principles such as framing, choice architecture, and financial incentives, all of which health care players are increasingly using to drive engagement and increase quality measures.

Pulse: Which type of health care players should be thinking about behavioral economics? Are these principles more relevant to some players than others?

KH: Behavioral economics is the science of understanding that we as humans behave irrationally. For example, people still smoke even though “smoking kills” is plastered on cigarette packages. We’ve found that solutions work best when they address multiple stakeholders (such as patients, caregivers, and providers), rather than one stakeholder in isolation.

We worked with a health system that wanted to increase video visits to cut down on costs, but they were facing reluctance from both providers and patients. We crafted a multipronged solution that leveraged behavioral economic principles, including social norms and framing. We coached providers to tell patients that other patients appreciate the convenience of a video visit. We also instituted leaderboards to let providers know how they compared to their peers in terms of encouraging patients to choose video visits. Within 90 days, we achieved a 40% increase in specialty care telemedicine visits. We also saw that people try harder the closer they get to a goal, so focusing on interim steps rather than a lofty goal can be highly effective.

Pulse: How can behavioral economics help drive engagement in health care (e.g., increased use of health and wellness programs)?

KH: Behavioral economic principles can be effective across the engagement continuum, from care to cure. Patients are receiving more and more information, which increases the burden of managing multiple chronic conditions. We want to help people succeed with self-management, which can mean activating one-time behaviors or staying engaged with ongoing activities. For example, these principles can help people select the right health plan during open enrollment. They can also increase the use of preventative services or management of chronic conditions. We use three main tools to drive engagement: choice architecture, framing language, and financial incentives.

Pulse: What are the key elements of choice architecture that health care players should be aware of?

KH: Choice architecture has to do with strategically using defaults to nudge people in the right direction. This is the number one thing to make a difference in health care. Choice ordering is extremely important, because people tend to pick from the first few options, so don’t sort your list alphabetically or chronologically! We need to make the right path the easy path to play on the fact that we as humans are lazy and will take the easiest path.

We worked with a client that wanted to increase its Health Rate Assessment (HRA) completion rate from single digits to 80%. The client was fully prepared to provide financial incentives, but instead that we recommended that they integrate the 10-question HRA into the enrollment process, where people wouldn’t notice a few extra questions. This change allowed the client to acheive 95.8% completion rates.

Pulse: How can framing and other aspects of messaging affect health behaviors?

KH: The words we choose are more important than what we say. For example, we like other people to observe what we do, and we like to observe what others do – we’re social beings. Effective framing plays on this reality by using social norms.

Most of our projects wind up being content writing. We worked with a client that wanted to increase the rate at which patients use an online portal to schedule appointments. After sending a carefully worded email to a large group of patients, we observed a 5x lift in the rate of online scheduling as compared to the control group. We did some A/B testing to identify the best messaging for the email, which wound up playing on exclusivity, status, and social proof. Using multiple behavioral economic principles maximizes our impact. In general, framing can impact people on an ongoing basis, and its power is underappreciated.

Pulse: What are the implications of your work for health care quality measures?

KH: People often think about behavioral economics as wellness, but it also encompasses self-management, care to cure, which ultimately improves health and keeps costs down. Q4 rolls around, and many organizations see that they’re not on track to meet their goals, so they might pay people to engage in their health. However, sequencing communications and content that can be spread throughout the year can have a much bigger impact.

We developed communications content for a managed Medicaid. We saw a 10-basis point increase in mammography screening and a 50% increase in diabetics who had their A1C levels under control. It’s fun because we’re driving health change and can measure these results.

Pulse: How have you helped clients implement effective financial incentive programs? Is there evidence that target behaviors persist after incentive programs end?

KH: There’s a time and place for financial incentives, and it’s usually simply when organizations want to spend on them. We built a financial incentives platform called VAL Health Rewards, based on the concept that the design of the incentive is more important than its size. On a weekly basis, participants are automatically entered into a contest. If their name is drawn and they had completed the target activity, they win a prize. If their name is drawn and they hadn’t completed the target activity, they learn that they missed out on reward. This anticipation of regret is very powerful; 19-40% of people change their behavior. It’s important to nudge the unengaged rather than just rewarding those who were already doing the target behavior. We’ve observed a 2.5x increase in digital portal engagement as a result of these incentives.

We also lower incentive costs by 45% on average. Our incentives are typically about $13 per person, which is a fraction of what organizations would spend on traditional incentives. This adds up to millions of dollars of savings on financial incentives.

Pulse: Where do you expect to see new opportunities for behavioral economic applications in health care?

KH: We’re just getting started using behavioral economics in health care. The retail and financial sectors have used these concepts for years, often to take advantage of people, but we move a little slower in health care.

I see potential particularly around engagement with digital tools, population health management, and developing effective value-based payment models. It’s not just about consumer behavior change but also provider behavior change. We need engagement strategies to close gaps in care. For every strategic change we want to accomplish, we need tools to accomplish that change. For example, if we want to get providers to focus on managing diabetics as part of population health, we could use a leaderboard to communicate defined metrics and progress.