Behavioral economics stems from the work of Nobel Prize-winning economist Richard Thaler. It combines insights from psychology, decision making, and economics to generate a more accurate understanding of human behavior.1 Behavioral economics looks to create predictable changes in human behavior by selectively introducing information and modifying the presentation of options— known as “choice architecture”—to guide or default individuals to higher-value choices.
Given the premium placed on efficiency and workflow, it quickly becomes apparent that we can deploy behavioral economics principles to improve ophthalmic practice management.
Here we will discuss two fundamental principles of behavioral economics that we can apply to ophthalmic practice management.
Nudging choice architecture
In behavioral economics, “nudges” refer to designing incentives into practice and institutional choice architecture.
In clinics, surgery centers, and practices, simply limiting choices—for instance, minimizing redundant equipment—mitigates the cognitive burden required for decision-making, ideally resulting in a decrease in medical errors.2 Limiting particular equipment types or safeguarding costly options acts to nudge practitioners and employees towards the optimal choice available.
These nudges have the positive effect of limiting inventory costs and restricting prohibitively expensive options but also serve the best practices and standard operating procedures of particular practices, whether they be retina, pediatric, or comprehensive.
It must be noted that conflict can arise when choice architecture—especially when done solely for cost containment—clashes with physician or employee opinion on the standard of care, physician autonomy, and patient choice.
Consequently, it is imperative to have stakeholders discuss, communicate, and jointly corroborate essential aspects of choice architecture.
Surgical inventory management
Operating rooms must stock many pieces of equipment necessary for surgical cases.
Choice architecture and cost awareness can mitigate operating room inventory costs.
For example, ophthalmic forceps can be of several types (platform-gripping, end-gripping, disposable versus non-disposable, etc.) with varying prices. The surgery center can implement a choice architecture option that provides a common forceps type to be used by all surgeons.
In this example, inventory costs are reduced by having a lean number of forceps options available. Moreover, prohibitively-expensive options can be eliminated as options to avoid additional unwarranted costs. If there is conflict regarding forceps options, “backup” or “option” forceps can be acquired on case-by-case ordering to avoid unnecessary inventory accumulation.
Know your cost
Operating room costs significantly impact ophthalmic and vitreoretinal surgery because most surgical cases are performed in ambulatory surgical centers that are cost-sensitive.2 To emphasize cost pressures, institutions like the University of Texas MD Anderson Cancer Center use the Know Your Cost (KYC) program to facilitate regular cost audits.
Cost audits allow surgeons to compare themselves to peers, and when routinely done, surgeon choice will trend towards a predictable mean, based on surgeon consensus.
Along similar lines, large operating theater costs relate to human resource inputs, including nurses, anesthesiologists, circulators, patient aides, and others. These human resource inputs are significant determinants of overall surgeon case cost.
KYC programs further disseminate surgeon case times (usually denoted as surgical procedure time in minutes) to all surgeons belonging to a surgery center to “encourage” slower surgeons to move towards the mean and median times. Although faster is not always better, this method can impact large outliers.
Without a comparator program, like KYC, surgeons are not able to uniformly and consistently assess their surgical costs concerning peers in the same geographical setting.
Metrics of interest
Disseminating performance metrics (e.g., number of unique patient encounters, productivity per encounter, overhead, billing/coding errors, etc.) can facilitate communication to physicians and health care team members.
By providing assessments utilizing relevant and reliable metrics, employees can review their performance and deliverables relative to peers, whether physicians or patient aides.
Typically, there will be resistance and potential for conflict with common complaints related to “not capturing all relevant indicators.” Once again, the use of deliberate metrics, collected with systematic and transparent methods, will serve best to mitigate these potential conflicts.
These evaluations allow employees to compare themselves to peers and, when routinely done, employee aptitude will trend towards a predictable desirable mean.
Behavioral economics is not simple for companies to apply. Principles like choice architecture, incentives (nudges), and cost audits can be used incorrectly with counterproductive effects. Nonetheless, adopting behavioral economics may lead to effective and positive changes for the better of patients and the practice by acknowledging that human behavior is full of anomalies.
- Gino F. The rise of behavioral economics and its influence on organizations. Harvard Business Review. 10 October 2017.
- Kadakia KT, Perrier ND, AC Offodile II. How to get surgeons to make cost-effective decisions without jeopardizing care. Harvard Business Review. 18 July 2021.