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Got Carrots? Ian Ayres Does

April 19, 2012
by Mark Hagland
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How one expert’s insights around behavioral economics offer potential insights for healthcare IT leaders

I’ve been enjoying reading Carrots and Sticks: Unlock the Power of Incentives to Get Things Done, a 2010 book by Ian Ayres, an economist and lawyer who is a professor of both law and management at Yale University as well as a columnist for Forbes, and a regular contributor to the New York Times “Freakonomics” blog.

Ayres is fascinated by the discipline of behavioral economics, which he describes as “the science of rewards and punishments.” Indeed, Carrots and Sticks is filled with accounts of the findings of research studies of various kinds, involving all sorts of people (California commuters, coffee shop denizens, and even Philippine bank account holders and Tel Aviv dog owners). Some of the experiments  he describes are quite complex, such as the experiment that Tony Hsieh, the CEO of Zappos, engaged in to enhance his employees’ corporate commitment.

But one of his anecdotes struck me for its relative conceptual simplicity. “Which is better, Spanish or Bulgarian wine?” Ayres asks. “Your answer could turn on all kinds of things—for example, the particular vineyard or whether you are offered a Bordeaux or a cabernet. But which wine you prefer in the future is also likely to turn on which you initially have.”

As Ayres reports, “Two Dutch economists at random gave college students at Leiden University either a bottle of Spanish Torre del Arco or a bottle of Bulgarian cabernet sauvignon, and then asked them whether they would like to switch. Since most of the students who initially received Bulgarian wine were chosen by chance, on average they should have had the same preference for the Bulgarian wine as the students who initially received the Spanish wine. But people were very reluctant to give up what they already had.”

Indeed, Ayres notes, “Students who were given the Bulgarian wine were twice as likely to say that they preferred Bulgarian wine as those who were given the Spanish wine.” And the reverse was equally true for those initially given the Spanish wine. Ayres’s conclusion? “People hate giving up something they already own.”

I think this Dutch experiment speaks to some historical truths about the challenges the innovators in healthcare have long faced. As I’ve found in more than 22 years of reporting on healthcare, entrenched patterns of behavior and incentives can be extremely difficult to change. Indeed, CIOs, CMIOs, CMOs, and other healthcare leaders I’ve spoken with over the years have consistently told me that motivating behavioral change and sustaining process change are among the biggest challenges they have to face.

In particular, as anyone knows who’s ever led an EHR implementation, getting clinicians to change long-entrenched behavioral and workflow patterns is always one of the most difficult obstacles to overcome, even though their old paper-based processes were never optimal to begin with.As this month’s cover story on the patient-centered medical home model reports, the technology to support that emerging model now exists. The most difficult challenge, everyone interviewed for that story agrees, is aligning all the incentives and optimizing all the people processes in order to create the care quality and cost-effectiveness gains that are possible in a PCMH.

How will patient care organizations overcome ingrained patterns of habit and custom in this area? As in every other area, healthcare leaders are going to have to break through via strong leadership—and, yes, with the offering of certain incentives. It will be fascinating to see how patient care organizations make this exciting model work. Perhaps their leaders should consider some of the lessons of behavioral economics as they move forward into the future.

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