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September 30, 2020: For all the technologies that the healthcare industry is rolling out, behavioral economics is at the forefront. What are the behaviors you need someone to be doing? What are the top mistakes health systems make? Karen Horgan, CEO of VAL Health outlines the essential tools required to successfully apply change. How do you make the right path? The easy path? Is the behavioral pattern around awareness? Is it around obstacles? What about framing? We know that words matter. How do you use common language and personalization to make a much bigger impact? How can we bring in the social proof and nudges to get patients going for the greater good of the healthcare community?

Key Points:

  • Humans are irrational and biased [00:03:05
  • To encourage people to take the COVID-19 vaccine you need to have local presence and campaign [00:09:15
  • Provider behavior change and patient behavior change [00:13:56
  • How does social media drive behavior? [00:16:31
  • Automated hovering [00:17:50
  • If people pay money for tools, e.g. FitBit, are they more prone to use them? [00:19:00
  • AB testing [00:20:45

This transcription is provided by artificial intelligence. We believe in technology but understand that even the most intelligent robots can sometimes get speech recognition wrong.

 Behavioral economics, you're gonna love that term once we get done with this episode. It was a fascinating topic for me to explore and it really is, I, I think, at the forefront of, uh, the foundation for all the technologies that we're rolling out. It's at the forefront of changing behaviors in the community and population health.

Uh, and I think you'll agree with that. One of the things I wanted to make you aware of, and one of the things I'm really enjoying is I've started a conversation on LinkedIn and what I do is every morning I get up around five 30. I, I, uh, collect a couple stories. I decide which one I'm gonna talk about. I put a story out there and I write what up to the limit of the number of characters that you can do.

And, uh, we've had some great conversations going back and forth, so if you're not following me, uh, please do that. That is one way that you can get, can engage in the conversation. And, uh, and, and again, the back and forth has been . Fantastic, and I want to invite everyone to be a part of that. Also, you can follow the show, uh, over on LinkedIn.

That's another area where we are, uh, investing significantly to upgrade. And if you haven't checked out the YouTube channel lately, we have really updated the YouTube channel categorized everything. And, uh, this is the benefit of having sponsors. Uh, I have a team of people that is working really diligently to make this stuff accessible to you.

Uh, and to your, uh, and to your teams. So, uh, thanks and I hope you enjoy this episode.

Welcome to this Week in Health, it where we amplify great thinking to Propel Healthcare Forward. My name is Bill Russell Healthcare, CIO, coach and Creative of this week in health. It. A set of podcast videos and collaboration events dedicated to developing the next generation of health leaders. This episode and every episode since we started the C Ovid 19 series has been sponsored by Sirius Healthcare.

Now we're exiting that series, and Sirius has stepped out to be a weekly sponsor of the show through the end of the year. Special thanks to Sirius for supporting the show's efforts during the crisis and beyond. All right. Today we are going to explore a topic that is really interesting to me. This is actually, I'm gonna say upfront, this is not a paid episode.

'cause sometimes people are like, oh, you're, you're bringing on a, a consulting firm. Is this a paid episode? It's not. I, this is such a fascinating area for me, and I think it is, uh, going to be for our listeners as well, which is why I, I have Karen Horgan, the, uh, co-founder and CEO of Val Health on the line.

And Val Health is a behavioral economics consulting firm. Uh, good morning, Karen. Welcome to the show. Good morning. Thanks for having me. This is, uh, one of those topics I've always wanted to talk about, and as we were talking about earlier, until you can get me to stop going to McDonald's, I'm going to be a a, a health risk, right?

And that's what behavioral health and behavioral economics is really about. Changing behaviors. Give us an idea of what behavioral economics is and what your firm does. I will tackle that and afterwards we can have a longer conversation about McDonald's and how to drive your specific behaviors and we, we cannot create a whole plan for you anyway.

Thank you again for having me. Behavioral economics is a science of understanding that humans are irrational. We have biases to the present, which is why we eat the chocolate cake when it comes around on a dessert tray. We have a version to loss and regret. We, that's why we hold onto houses or stocks that we should be selling off.

We overweight probabilities and spend over $70 billion a year on lottery. So behavioral economics is that science that we now understand how humans are gonna behave, and rather than trying to get people to not behave that way, what we can do in healthcare is acknowledge those irrationality and decision biases and incorporate them to drive specific behavior changes.

So are you saying we're we're predictable in our irrational behavior? Is that what you're saying? That is I I'm saying that, yes. And so we know that we have certain tools in our arsenal that if you make the right path, the easy path, because we're lazy, we're going to stick with the default. How many times do you watch a binge on Netflix because they just give you six seconds to roll Right into the next episode.

We know that we're social beings, especially during Covid. We've all seen this. We like to do what others are doing and we like to see what other them to see what we're doing and we model our behavior after them. So let's use that to our advantage in good. Let's not be like the gambling company. Let's not be like McDonald's to try and get people to eat.

Supersize your french fries and try and use it for our good. So, so let's, let's, uh, you're gonna talk to us about how health systems can apply this to, to, to the good and how, uh, digital startups can apply this to the good, which I assume are the types of clients that you work with. But let's talk about the bad, because there's a lot of people trying to get us addicted to, um, you know, checking our phone often.

Apps try to get us addicted to things and food tries to get us addicted to things and gambling tries to get us, uh, not tries to, but has the. Unintended consequence of, of getting us addicted to things is, is this science used on both sides of the equation to pull me in one direction and then we need to, we need to start to strengthen the, the muscle on the other side to pull us in the other direction.

The, the short answer is yes. The longer answer, which won't be too long, is that behavioral economics has been a fine, that's been around 40, 50 years and it has been used in finance, it's been used in retail, it's been used in gambling. It's been used in so many ways. Get people to do certain things to buy three for a dollar.

So you're gonna buy three when really you could just buy one for 33 cents. Or the, the gambling machines that the slot machines, they know exactly how long you're going to be playing until you're about to give up, and they give you a little bit of a win, which gives you a little optimism there. And so healthcare has been very slow to.

To bring in behavioral economics because in healthcare, the industry as a whole, I'll call it stubborn, has always thought, well, we're just gonna give people information and that is gonna drive change. We're gonna tell them how many calories there are in, in a Big Mac and data shows, people purchased the same number of calories before and after.

But if our team went into a subway sandwich shop. And change the order in which items were listed. So part of the day, low calorie items listed first. The other part of the day, high calorie items listed first. People purchase 25% fewer calories when low items were listed first. And so healthcare has just not played on the fact that we're lazy and we do all of that and we need to start doing it.

Uh, I mean, that's interesting. So you're saying. We do lean pretty heavily on the education side. We think if we educate people that they're, they're all of a sudden gonna start making the right decisions. Like if people knew that a 2000 calorie diet was, you know, for, for somebody of, of, I've looked at this way too many times for me, but a 2000 calorie diet is what I should have and I should exercise this much.

And I mean, I don't need any more information, but still I struggle in those areas. But still healthcare keeps trying to educate me. On the things. Yeah, think, I think I already know. Think about mammograms and colonoscopies With the Affordable Care Act colonoscopies, were free. People are running out, including their colonoscopies.

Like even once you remove the cost or mammograms are only about 57% of targets, the right women are going to get their mammograms, even though you're gonna give facts that it can save lives, but that information doesn't just drive behavior and percent of our chronic conditions. S are brought on by lifestyle because we literally want to eat our cake and be healthy too.

Alright, so we, we have a significant challenge that's gonna be facing us here shortly, which is vaccine, right? So there's gonna be a vaccine that comes out soon. And so is that the kind of thing that somebody would come to your company and say, look, um, we need to get somewhere in the, in the neighborhood of 65%.

We have this many that distrust this many. I mean, we have the statistics, we know what it is, and people, I, I know some people who are in public health and whatnot are scratching their head today going, I don't know how we're gonna get to this. 65, 70%. Is that the kind of thing your, your organization does that that would be spot on.

So my co-founders are Kevin Bolt and David Ash. They are academics at Wharton School. Kevin, Dr. Vol runs the NIH funded Center for Health and Behavioral Economics, and Dr. Ash is heavily involved in Penn Medicines Nudge Unit, and so they have the raw science that's been published in peer review journals.

New New England Journal, jama and we, Val Health, bring this out into the real world. And I recently read an, uh, an op-ed from a, a great economist saying that the government should pay every American a thousand dollars to go get their vaccines. And I, I wanted to pull my hair out because I think that is the worst idea we could possibly could do as a country for a couple reasons.

One, what's the statistic? 30, 40, 50% of people say they're gonna go get a vaccine anyway, so you're paying them for what they would've done. So that's gonna cost us $150 billion. The other half are now gonna think do some decision tree in their head of the government is trying to pay me because they think this isn't a good vaccine and there's gonna be all kinds of side effects and they're trying to bribe me with a thousand dollars.

And that's completely irrational. And so what we know we need to do on the vaccine side is you need local presence.

Uh, the mayor or or governor here doing a campaign and they air it in Texas, it's gonna make no sense. So you need to find local communities, and the vaccine needs to come down to the local level of you're doing it for the safety of your community. You're doing it for the reopening of your community.

It's not about the broader country and it's not about the broader globe. People are gonna respond more to personalization. We know that. So, so it's community organizations. It's, uh, uh, places of worship. It's, uh, grocery stores. It's uh, uh, local drug store. I mean, it's those kind of things. It could be the quarter, it could be the quarterback and the football team.

Like if you're, if NFL, like if you're in Green Bay and, you know, the Packers are on the wine picking on the Packers, but they're, they're, you know, everyone loves the Packers. Have the team talk about it, and that you find something that's central to the community. And personalization and you're doing it for others, and that's gonna drive people to do the right, which I think is the right thing.

So what do people, what are the, um, the question I'm really gonna dive into here is what are the tools in your tool belt? Um, you know, is story one of those things? Is it, is it pictures? Do if, if you have the picture, I mean, I'm picturing an ad of the Green Bay Packers with a full stadium and with an empty stadium.

Essentially painting this picture of we want you back in the seats and in order to get back in the seats, we need everyone to step up and, you know, go get the vaccine. Yep. So the tools, the tools in our toolkit, and I love that. I think I should call the Packers. I hadn't thought about this until right now, and I'm not a Packer fan, so not sure where that came from.

Um, so if you think about the main tools we have in our toolkit, one is choice architecture, which is how do you make the right path, the easy path. And we know that if you change defaults, people are gonna stick with that. I already mentioned Netflix, and we've seen this work in healthcare to get people to complete health risk assessments, to get people to schedule appointments, all of that.

The second tool in our, our arsenal is around framing. We know words matter. Losses are more powerful than gain. We, we know that if you use common language, it makes a lot more, you get a much bigger impact. Mentioned we, social being, so social elements, we've used social proof, for example, with, uh, in New York, percent point reduction in rates.

By making, by explaining to people that the norm was people show up for their appointments. And then the third tool in our arsenal is financial incentive. And financial doesn't just mean I'm gonna pay you X to earn Y. A lot of the financial component could be framing around if, if there's no cost share or what the benefits are.

And how do you frame that? Because we know if you anchor people. It makes a big difference. If you're gonna buy a car and they tell you for $30,000 you can get this car that has the winter package and all the bells and whistles, or for $29,000, you lose the winter bells and whistles. People are gonna stick with the 30 because they're anchored there.

But if you start at 29,000 and you have to spend an extra thousand to get the bells and whistles, they're not gonna do that. And so if we know, if you anchor people, if you have quick wins around the financial component, that makes a. All right, let's, let's talk about engagements. So I, I wanna head in two different directions.

Um, one being a digital startup, the second being a health system. And it sounds like you've partnered with Mount Sinai and, and some of the work that you've done. And, uh, so let's go down that path first. Uh, where do they typically engage you? Do they, do they come to you with a problem, with a hypothesis?

Like, uh, or, or do they come to you with a problem like. We need to get the vaccine out and you go, okay, let's, let's start to design some programs. The first projects we tend to do in an organization is more of the latter of, we had a specific problem if we need people to, we work with Sutter Health. Their problem challenge was, we want our patients to use our portal more, and they're threw that at us.

So we looked at what are the, the components and the features that people can do. And we ultimately honed in on, we're gonna drive people to schedule appointments online. 'cause it's a patient satisfier, like, I can do this at any hour. And it saves costs because each time the patient calls in, there's a cost of someone handling that.

And so we focused on using, uh, we don't using email communications to drive people to schedule appointments online. And they had 4.9 times as many people using the portal and scheduling appointments. And so there was a specific problem that they had and then we advanced. The next one was, we want more women to go on their pap smear.

And we more than doubled the rate at which women did that. And so it's almost easier for a health system to think about specific problems that is a behavior change. It could be a provider behavior change or a patient behavior change. And then how do I, let's bring behavioral economics to do that because the organization has probably tried for years just telling people or doing the same thing over and over.

Yeah. You know, one of the things is we're talking to technologists and one of the mistakes we've made, uh, over the decades is essentially if, if you build it, they will come. Right. So we're gonna build a portal. We're gonna build this really cool technology. Yeah. Uh, we're gonna roll out this program that's for the good of the health of our community.

Uh, not, maybe not a technology thing, but a, with the health system, how we think. Um, but the reality is we should really wrap almost any kind of thing that we're looking at changing behaviors, either internally, how people use an EHR externally, how people engage our system. We should wrap that with, with some aspects of behavioral economics.

That that is so well said. So we, we look at it as you can retrofit or you can make behavioral economics in from the start. So if we think of digital health companies, some of them we work when they're really early stage and behavioral economics is just core to their strategy. They're always thinking as they're designing it.

How do you make the right path, the easy path? How do you eliminate steps in enrollment? How do I use the buttons in the right way to frame it? So people wanna take action, but usually what happens more often than not is they come to us later on and they're like, well, we built it and no one's coming. And then we're, we call that the retrofit and wrapping behavioral economics around it.

And a lot of it's in the communications and then it sometimes it is enhancing the journey as well. Do you, do you work with digital startups? So I, I, I, I was a chief in information officer, but I also do the digital side and we had a couple of startups and it, it would seem to me that you would want to bake a lot of this into the user experience.

Does this get caught in the sort of user-centered design, or does it really have to be broken out and thought about how are we gonna get people to engage with this tool? Oh, the right way should be part of user, user centered design. But usually what is happening now is, I mean this in all respects, that people have an idea for a startup and the founders are entrepreneurial and creative, and they build it to their best of their ability.

And it's kind of new. It's interesting. But then ultimately it's not getting the engagement that they, and.

I get it, because if you're an entrepreneur like I am and you think you know what you're doing, you're not gonna bring in an expert from the beginning. That being said, there are a couple startups that are just in concept phase that we are working with now, and it's more fun for us because if you can get behavioral economics done right from the beginning, it's gonna be that much more powerful than putting it as a bandaid.

Why? Uh, so talk to me about social media tools. So's in the news right now being bought by Oracle A, an acquisition I do not understand and cannot explain. That's the, you, you have your, you have TikTok, you have Facebook, you have. LinkedIn and, and it's kind of funny 'cause every week my phone sort of shows me, Hey, this is how much time you've engaged with your phone.

And it just cracks me up. 'cause I think I'm cutting back, I'm cutting back and every week it goes up a little bit. Um, and, and so there's sort of this, they have, they've sort of locked into this. They know how to get me hooked into scrolling through the entire feed or watching these videos even though it's a waste of time.

And you touched on Netflix a little bit there. Um. Can we do that same thing in health? Can we ever get to that point where it becomes sort of a, a, a habit forming thing where I am exercising and I'm dieting and, and all those things. So I'm gonna take maybe a controversial statement on that. I actually think we wanna get to the point where you don't have to be thinking about your health, but you're, you're actively doing that.

So let's take exercise off the table for this part of the conversation. But if we want people to be tracking their blood sugar or checking their, uh, their blood pressure. And all of the things that go into managing chronic conditions. There's a concept that Dr. David Ash and my co-founders coined, called automated hovering.

How can we use technology to take away steps that we're asking people to do? Like, can you wear one of these kind of trackers that I found on my wrist that will tell me if my blood pressure gets too high? Or are there ways that you can track my blood sugar if I'm diabetic, without me having to think about it, and you only alert me to what I need to know so that way I can live my life with my chronic condition.

And you're using technology in a way to proactively tell me. And then there's the designing for exercise. There's also things such as. If, if you've got diabetes and you want eat the pizza, go eat the pizza. And they're gonna tell you, well, if you eat that pizza, go for a 15 minute walk after to counter it.

And you might be willing to do that because you're like, okay, I really wanna eat that pizza. I can go for a 15 minute walk. And so it's breaking it down into bite-sized pieces that can help nudge and create new habits. Um, this, the, this is one of those. Bill Russell just asking a question 'cause I'm curious.

Wait. I've seen health systems who like hand out tools. They like give them away. Yeah. Is there something about investing in the tools that when people actually have paid money for a Fitbit or whatever, that they're more prone to to, to use them? The, the short answer, I don't have data behind this. I like to qualify 'cause I'm a very data driven person.

You're more likely to start using it, but it doesn't mean you're gonna engaged so.

Exhibited the fact that I'm interested in using it because I've gone and purchased it and it shows up. Great. Uh, you're hitting on an interesting point that if my health plan just sends me something, I never asked for it. I might not even open the box. I'm not, uh, intrinsically motivated and so I might not use it.

The longer term implications are very, could end up being the same, but if you actually spend the money, you're more likely to start using it. And we actually work with a lot of, uh, health plans who do send these remote monitoring devices to people. Or even in Covid trying to get people to do, uh, close gaps at home and send the kids back.

How do you actually get people to follow through when they never ask for it? So is this research going on all the time? Are you asked to do some research as a result of these projects? Uh, so we, as a consulting company, I, I would not call it a research organization. That being said, when we work with our clients, if they can.

That is fantastic for us because it's a real world test. Like with Sutter Health, we were able to ab tests with hundreds of hundreds of thousands of patients. And when we worked with Blue Cross Blue Shield, Louisiana, there was tens of thousands of members. And so we, it, it, we can then take those learnings and bring them out to healthcare in a greater sense because then we know how people are acting in the real world.

So just to clarify AB testing, just give us an idea of what that is. Yep. Great. So some of our clients are, for example, already sending their standard letters out to the members. And then they'll send their letters. And then a second group of members will get the letters that we've crafted with behavioral economics.

And so version A is theirs, and version B is ours. Absolute world test. And we've been doing that in marketing for years. Right? So we, we, it's just a, it's a way of testing two different methods against each other. Um, you know, it's, it's. This is such a fascinating topic. I mean, we can go in so many different directions.

What are some of the mistakes that health systems just make? Well, I mean, let's package 'em up real, real quick of, you know, what, what's the, the, the top five, uh, mistakes that we make as we, as we, we go out there and try to change the behavior of, of people for the good, of the community, for health, right?

But what are the mistakes we make? I, I think it's a great question because people don't knowingly make mistakes, and I actually think you said it well, that they think they're doing the right thing. We'll look at it and say, well, that's a mistake. So for example, um, health systems will offer 17 options to people you can like to manage your conditions.

Or here's, here's all the different things you can be doing. Well, that's a concept called choice overload. And we just shut down and we make no decision. And so what they really should be doing is to giving you three options and then literally if they wanna have the restroom, have you literally double click or ask for more, so you're not taking away choice.

But we're more likely to take action if there's limited. The other thing they do is they make, they use technology that actually makes things more complicated. I was speaking to someone the other day and he said what very interesting. He's like, you know, in healthcare all we do is add technology to on top of technology, on top of technology, and we never break it down and just start over.

And so it ends up being so clergy and that is something we do. We don't stop back, step back and say, well, how is this from the member experience? Like in healthcare, using technology is the opposite of using Amazon or my phone or any of that. Yesterday, I. Email from my health plan saying You have a new summary.

I don't even know what a summary would be of, so they're not using common language. I click on it because I'm curious because of Karen, and then I need to know my username and password, which I've forgotten, and then I try and reset it and they tell me have to call a phone number. It's just we're we're making, we're hiding behind HIPAA and, and trying to.

They don't use common language, they use language that maybe the doctors understand, but the patients and the consumers don't understand and so we're less likely to take action. The the study that was done, not by our team, but that's interesting, is if smokers go in for a lung capacity reading and they're given the results in a numerical format, that means something to the physician.

They, 6% of them quit smoking a year later. If instead, they're given a lung age of your 28 year old male, the lungs of a 42 year old, 13% quit smoking a year later. So double the number. Quit smoking when they get it. And so using the common language, figuring out the user experience is something that health systems can really improve on.

You know, it's, it's interesting. Well, I mean, we're, we're caring for my father-in-Law here. He lives with us and, you know, we will get these bills and he'll go, oh, I got a bill today. I'm like, no, no, that's not a bill. It's an explanation of benefits. But to him it's like, it's a bill. It should, you know, and I, and, and I sort of sat back and I thought, okay, it doesn't explain anything.

It doesn't really add any benefit whatsoever. It's not, it's an explanation of nothing. It's like, it's, it's, it's a, it's added confusion and so health systems are like, I don't know why my AR is so high. Well. Nobody understands what we're supposed to pay. You've made it so complex. I don't, I don't know.

What am I supposed to send money in now? How about now? How about now? When am I supposed to send you the money? It's so, it's so crazy. And then they factor, they, they, they tell you amount, bill, $5,000, our price, $2,000. You owe 74, this and that. Like none of it makes any sense. Like why is there different numbers?

They're just, they're just numbers. And, and to my father, actually, I'm in the industry and I've, I've only really run across maybe two health systems that have really attacked this problem and done it well where they said, we are gonna make these very understandable. And they ran into so many challenges.

Along the way in terms of regulatory and, uh, compliance and other things. Um, but, but they, but they plowed through in order to make it better for the, for the community. But so few have done it. It's hard work. We've worked with, yeah, we've worked with a couple hospitals, uh, on their bills because they want to reduce their bad debt, and it was how do you communicate to people sometimes bad debt?

They found out people just didn't know they actually were supposed to pay because they get all these other things that they're not supposed to pay. And so we worked with them on how to simplify the statement to communicate specifically what they owe and why. And also using common language and what they're getting billed for as opposed to like the I CD 10 codes.

Something that people understand of like MRI of your knee, and they're rolling it out. Now they don't have the results, but it's quite interesting to see how hospitals recognize that they can reduce bad debt that way. We've talked a little bit about language, and this is probably my last question. Let's talk about language a little bit because we, we, we use a lot of, um, inside the door kinda language, inside the hospital door language, but then we, we set up these call centers and they're interacting with patients and they're still using that language.

Do you end up working with organizations around, uh, around their language and how they, how they approach their consumers? Yes. That a great question. So we regularly work on. For call centers to use, either around specific behaviors or just in general. So we worked with one Blue plan on the West coast and they wanted their members to select the PCP and to have a, you know, attributed pcp.

And when their members were calling in, they were encouraging people to do that and they weren't getting the results. We came in and we did, we changed, like I think it. We doubled the rate where they went from 16% to 32% of people selecting the PCP on that phone call by changing those seven words. And I bring that up partly.

'cause they looked at us in the end and they said, we paid you for seven words. And my answer is, well, we literally doubled what you, your impact. And you didn't have to change your processes or anything. It was just changing a soundbite that was in there. And we changed it to a default concept of, oh, I see you don't have APCP.

Which of these three do you want? And people selected one of them. Oh, that's, that's so Behavioral economics is so powerful it sounds like, because you, you know why I'm making the decisions I make and you know, if we get you involved earlier in the process, you can help us to maybe get to be a lot more efficient, quicker.

That's right because the way we approach this is we, we focus in on what are the behaviors you need someone to be doing? What are the hurdles to doing that behavior? It could be awareness, it could be the obstacles that I need to my member id. I need to know how to download an app. Then what are the touch points we have to reach you?

And then how do we intervene? Can we change to make the right path? A easy path change for default. How do we bring in the words, how do we bring in social proof and nudges and get you going? And again, we use it for good, not for bad. So, uh, thanks for coming on the show, Karen. I really appreciate it. How can people get more information about this or follow you or what, how can they, how can they get it?

More information? You can follow me online. I.

Sign up. We do monthly insights at Bell Health, where we send out behavioral economics insights. So you can go to and sign up for the monthly insight and keep learning. And I encourage you all to try and bring this into your day-to-Day Life. Or ask yourself, what can I do today to make the right path, easy path for my customers or my stakeholders, or.

Yeah, that, that, that's fantastic. I, I really appreciate it. Thanks again, Karen. And uh, yeah, I look forward to following you and staying up to date on what you guys are doing in behavioral economics. Thank you for your time. Thanks for having me. That's all for this week. Don't forget to sign up for our clip notes.

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