Patient Engagement

When — and How — Can Incentives Actually Work?

Interview · May 14, 2017

David Asch of the Perelman School of Medicine and the Wharton School, University of Pennsylvania says a lot of incentives programs don’t work, but they can if they’re designed just a little bit better. He and NEJM Catalyst’s Tom Lee sat down to discuss how financial incentives really can work to engage people in healthy behavior, and Asch discusses how things have changed since publishing several key articles in The New England Journal of Medicine



Tom Lee: This is Tom Lee for NEJM Catalyst, and I’m speaking today with David Asch of the Perelman School of Medicine and the Wharton School, University of Pennsylvania. David, I think you and your colleagues at Penn have done really the best work out there on the use of incentives for patients, incentives for clinicians on the tough and important issues related to prevention like smoking cessation and weight loss.

Now I’ll be honest — a lot of my colleagues throw up their hands and they don’t really think that anything works. Can you give me the best examples you know of when you and your colleagues and others have gotten it right and used incentives that actually seemed to work?

David Asch: Yeah. It’s a funny question, right? Because my own experience is that some of the same people who question the use of incentives to promote healthy behaviors, they don’t even blink about pay-for-performance programs for physician quality improvements or executive compensation. And so you are asking, what are the things that really work? And I think the truth is that all of these programs need pretty good evaluation, and a lot of them, I think, to be honest, don’t work. But what I think is promising is that they can work if they’re designed just a little bit better.

So you ask for some examples. One was a study led by Kevin Volpp and it was really a first of its kind study. He showed that in a workplace setting, in this case it was General Electric, you could triple smoking cessation rates if you added a financial incentive. So that’s something that works, and actually in a later study done, published just last year by Scott Halpern, he showed something very similar in an even larger study — in this case with CVS employees — that rewarding employees for quitting smoking helps more of those employees quit.

So that’s clear evidence that in some cases, really straight up financial incentives can get people to engage in healthy behavior. There are lots of other complicated lessons that I can go into also, but those are two clear wins.

Lee: If you had $100 to spend on incentives to try to help people stop smoking or lose weight, how much would you spend on incentives for patients and how much would you spend on incentives for clinicians?

Asch: That’s such an interesting question because there are so many more complicated lessons about how to design incentives. For example, a few months ago we published a study that aimed to reduce the LDL cholesterol of patients who were at high cardiovascular risk. And what we did was we randomized primary care physicians and their patients to one of four groups.

One group, the physicians, could receive over $1,000 for each patient that got to their LDL goal. There was another group where the patients got really the same amount of incentives. In a third group, the patients and the physicians could share equally in those incentives, and in a fourth group, there were no financial incentives.

It was interesting because people thought we were crazy to offer incentives that large. They thought, gee, are you going to give physicians $1,000 for each patient you get to an LDL goal — that’s way too much. And one of the things that we thought about was well, if physician incentives that large don’t work, they’re never going to work.

Well, it turned out in this study the physician incentives that large didn’t work. They did succeed at increasing the prescription and dose intensification of statins, but that wasn’t enough to get patients to their LDL goal, or at least it didn’t get them further to their goal than the control did.

Patient incentives got patient adherence up, but also not enough to improve LDL compared to control. And the really interesting finding was that the combination of patient and physician incentives did achieve a reduction in LDL more than control, and honestly, it makes sense because, of course, it takes both physicians and patients to make this work. The physician has to prescribe the medication and the patient has to take it.

Lee: That is so interesting. You mean it’s actually a doctor-patient relationship. Can you give me some examples of incentives that just seem wrong-handed to you that are likely the ineffective, irritating, waste of resources?

Asch: I think a lot of people are interested in using financial incentives in settings like this, and a lot of people think that they’re engaging in behavioral economics because they’re using economics to change behavior. But that isn’t really behavioral economics, that’s traditional economics. And I think that the prevalent mistake comes from assuming that $100 in financial incentives will have the same effect no matter how that $100  is received, and I don’t think that’s true. I think the design of an incentive is just as important as its size.

And here’s how this comes into play. Most employers who are using financial incentives, they’re deploying those incentives through usual paycheck channels. So if you quit smoking or you lose weight, you get a discount on your contribution to your health insurance or something like that, and it’s totally understandable why employers do that, right? After all, paychecks are the typical way that employers move money around and give bonuses and such to employees.

But if you step back and think about it, there are a lot of reasons why that wouldn’t work, why the transfer of money through a paycheck wouldn’t work. For example, it’s probably not a good way to motivate people to lose weight, so the rewards are typically provided way too far in the future. If you lose weight this month, you might not receive any reward until next year, and next year is a long way away, particularly if there’s a very appealing and highly caloric snack right in front of you.

I don’t know if you remember the comedian Steven Wright? He had all of these great one liners, and one of his really fits this perfectly. He said, “Hard work pays off in the future, but laziness pays off right now.” And I think that a lot of the employee/employer exchanges that occur through paychecks fail because they are too far in the future.

They’re also highly diluted, right? You can imagine a premium discount of about $500. That can sound pretty motivating, but that’s only about $20 per paycheck if you’re paid every two weeks, and that $20 is deposited directly into your bank probably, where you may never review it carefully and even if you did, it’s sort of buried next to larger sums of money. And so that’s an incentive that’s delayed into the future, it’s cut into pay period size pieces, it may be directly deposited among other larger items, so it’s not really likely to overcome the tremendous counter pressures that have always made losing weight or stopping smoking or whatever very hard to do.

Lee: Now what I want to do with our last few questions is — you’ve written a number of really important articles in a number of really important journals, but I want to focus on three really important ones you wrote a few years ago in The New England Journal of Medicine, my favorite journal, and ask what’s your take now? And where were you right, where were you wrong, what’s changed?

The first is, you wrote a terrific and really interesting perspective piece in 2013 on how some U.S. employers were not hiring smokers. I just wanted to check in. Has this practice been spreading and what’s your current perspective on it?

Asch: It wasn’t just that we wrote about it, we actually did it. So Penn Medicine, where I work, was one of the employers that decided not to hire tobacco users, and that was a big deal. We weren’t the first. I think Cleveland Clinic may have been the first. They certainly did it five years earlier, and I think Baylor has done that.

I’d say that was a really big move for us and I was conflicted about it then — I’m still conflicted about it — but still okay with it. A lot of my longtime friends, when they learned that I was part of the thinking that led to Penn deciding not to hire smokers, wondered what had happened to me because I’m a dyed-in-the-wool liberal democrat. And although I’m not really sure that this falls along those party lines, but in general I’m still in favor of the idea. Other institutions have picked it up, but not a huge number, in part because it’s controversial.

I think there are lots of reasons to do something like this. First of all, smoking’s the leading cause of preventable illness, and a place like Penn Medicine can take a stand against tobacco by creating such a policy. We can be a beacon in our community. It sends a kind of message of hypocrisy if you’re a health care institution and your employees smell like smoke, or if they’re seen crowded around the edges of the hospital smoking. That doesn’t sound like a good message for a health care institution.

So there are lots of reasons to do this, but at the same time, it was pretty controversial and [there were] lots of concerns. Some people thought we were doing this just to save money. The truth is, it probably does save money because estimates are that each smoker can cost maybe $3 to 5 thousand more per employer per year. There are also liberty concerns. What right does an employer have to dictate what employees do on their own time? There was a concern that we would start with smoking but that was just a slippery slope, then we’d stop hiring people who were overweight or people who drank or whatever. They were concerned that eventually the hospital would be staffed entirely by people who run 12 miles a day and all they eat is kale and quinoa or something like that.

And then of course there were very legitimate concerns that smoking is concentrated among lower socioeconomic groups, and in setting up this policy, we might be limiting job prospects for people who most need jobs, which is something particularly important since hospitals and health systems are really engines for employment within their region.

So in the end we did this. It’s really too hard to tell the community effects on tobacco, but certainly some others in the region have followed. I think this has been taking hold. Again, I don’t think we can take credit or the blame, either, for being the first movers here, but we saw this as an important issue. It hasn’t at all changed the sociodemographic profile of the people we’ve hired, and no one is talking about extending this beyond tobacco, despite those concerns.

So is it spreading? I think there are definitely more and more organizations that are doing this. It’s not like it’s becoming the norm, but that also makes sense because it’s really something that you can be conflicted about, and I think it’s a naturally inherently controversial topic.

Lee: So turning to another article. In 2012 you wrote a prospective piece in The New England Journal [of Medicine] on what you called automated hovering, and I have to say, it made me nervous when I read it. Can you remind our listeners what you were writing about and whether this is becoming more prevalent?

Asch: Yes. Actually, I would have thought the tobacco thing would have made you more nervous. Automated hovering, it’s like benign and well-meaning robots — like who could be against that? So the general idea is that much of what really determines people’s health outcomes really happens outside of office visits. So even if you’re a patient with a chronic illness, you might spend only a few hours a year in front of a doctor, but you’ll spend, if you do the math, about 5 thousand waking hours a year doing everything else. And I think a lot of us recognize that it’s during those 5 thousand hours when so much of your health is determined. It’s what you eat, whether you exercise, whether you take your medications. Those are things that happen out of you, and doctors don’t know what their patients are doing during those 5 thousand hours. Even if they did, they wouldn’t really have great ways to intervene.

But now we have all sorts of ways to connect with people. Nearly everyone has a cell phone with them, and increasingly that cell phone is a smartphone, and there are Fitbits and other wearable devices. And although they haven’t diffused very broadly in the population, they are diffusing broadly in the population. So we have these new ways to hover over our patients, and a lot of our patients really might benefit from some of that hovering. It used to be that if you wanted to check up on patients, you had to have a lot of personnel making calls or making house visits or something like that. That’s very expensive, so it really isn’t scalable.

But now we have more opportunity to hover automatically. Maybe that creeps some people out. I don’t think that most of the patients who’ve been automatically hovered over feel creeped out. I actually think that many of them have felt reassured, maybe in a way that would surprise you or others.

We also know a lot more about how to motivate behavior. So it’s not just observing what people do, but because the field of behavioral economics has really taken off, I think we know a lot more about how to intervene so we can pair our monitoring, our automated hovering of patients, with messages or instructions or other forms of encouragement. And of course, new payment models that put hospitals or health systems at financial risk for the outcomes of their patients create a kind of financial imperative or a motivation to invest in these activities.

So those are I think a lot of the reasons why this is taking hold, and I think it is taking hold. Definitely more prevalent, but it’s still pretty early. I think a lot of organizations are still thinking in a way that may be a little early or premature. They’re based on the idea that all you have to do is to connect some live data stream from patients directly to providers with some automated feed, or maybe it goes directly in the Electronic Health Record. And, of course, that’s really absurd. The real task here is knowing what information you should be hovering over, the kinds of things that are important to look at, and where you can intervene in a way that might improve health.

And I think all the thinking and testing has to be directed in figuring out exactly what we should be hovering over. In parts of it it’s useful, and so that it doesn’t seem creepy at all.

Lee: Well, tying that together with what clinicians actually do, that’s sort of captured in the last of my question, which is in 2012 you and Kevin Volpp wrote another perspective piece that I know still gets passed around a lot by young trainees and others who are going into medicine, What Business Are We In? That was the title, and you talked about the emergence of health as the real business, as opposed to the production of health care.

It was a forward-looking piece and four years later I’d like to ask, what’s your take? Are we making progress toward that change? Are we still inching along or is it accelerating? What’s your progress report in 2016?

Asch: Sure. Well, this wasn’t really, of course, our concept, right? There have been people like Mike McGinnis at the IOM or David Kindig at the University of Wisconsin who’ve really for years been developing the idea of health as the most important goal. But I totally buy into it and I think that we’re moving in the right direction, so I’m really optimistic about this. Hospitals and health systems for years have seen themselves as being in the business of health care. They get paid for surgery and imaging and writing prescriptions, but in the end, patients really want health. And that is a classic rule of marketing, that if you’re a company, you’re much better off defining yourself by what your customers want than by what it is that you produce. So that’s a distinction that’s led to the ruin of some companies that completely miss that distinction.

So Kodak thought it was in the camera and film business, but what its customers wanted were images, and digital imaging provided a much better way for them to get that. And now we have no more Kodak, or at least Kodak doesn’t exist in the form that it used to exist.

There’s a revered former professor of Harvard Business School named Theodore Levitt, who I think also edited Harvard Business Review, and he said, “People don’t want to buy a quarter-inch drill, they want a quarter-inch hole.” I think the same thing is true in health care, and I also think we’re getting there. So increasingly we see evidence of a consumerist view of health care. The health insurance exchanges are part of that, so is the Patient-Centered Outcomes Research Institute. Actually, Yelp reviews of clinicians and hospitals are part of that kind of consumerism.

And what I think is really great is that for years, public health advocates and sociologists and other academics have been talking about the importance of the social determinants of health, the kinds of things that happen outside the health care system. In a way, they’ve positioned themselves a little bit oppositional to health care, but I think that’s changing. The health care industry is this incredible machine. It’s got a huge army of practitioners, it’s got $3 trillion behind it in the U.S., and it’s really exciting to think about what we might accomplish if we could direct a little bit of that enormous enterprise toward health outcomes. And I think we’re seeing that. We’re seeing that in the way CMS is thinking about the paying institutions, and I think we’re seeing that in the way other organizations are valuing outcomes. So I’m pretty bullish on this.


This interview originally appeared in NEJM Catalyst on March 7, 2016.

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