Redesigning Provider Incentives to Influence Practice Patterns and Performance

Principles of behavioral economics, including inertia, loss aversion, choice overload, and relative social ranking, have been applied to motivate personal health decisions, retirement planning, and savings behavior. However, they have more recently been studied in healthcare, specifically regarding the design of physician incentive programs to reward performance, engage physicians, and boost their success in value-based payment models, while leading to better care for patients. Systematic incorporation of the principles of behavioral economics in the design of physician incentives holds promise to incentivize high-quality, cost-conscious care. This presentation will prepare health systems and payers to redesign physician incentives to be more effective in physician engagement and practice change. The presenters will deliver a ‘State of the Science’ from business and scientific literature on behavioral economics applied to physicians and discuss the results of real-world applications of behavioral economics to the physician incentive model.