<img height="1" width="1" alt="" style="display:none;" src="//www.bizographics.com/collect/?pid=5286&amp;fmt=gif">

Virtually Speaking

Behavioural Economics in Practice: The New Health Frontier

Posted by Philip Graves on Oct 1, 2013 12:52:24 PM


Allow me to be frank, if you will, with two observations on the U.S. health care industry.

  1. If the pharmaceutical companies developed drugs the way they have traditionally developed the marketing of them, we would all be dead.
  2. The probability of any individual patient getting the gold standard of treatment at the right price is as close to zero as makes no difference.

The crux of my first point is that drug marketing is developed using what are, in essence, decision-making placebos. For all the great work that has been done to create robust experimental designs to evaluate whether a new compound elicits health benefits, the route to understanding how to convey that product to the people who might benefit from it is littered with bogus market research pseudo-science.  Over the last twenty or so years, advances in our understanding of how humans think and make decisions make it abundantly clear that asking people questions as a route to understand their behaviour is no more useful than asking them if they think C9H8O4 will make their head hurt less!   Nevertheless, routinely, the marketing of drugs is developed, shaped and ‘validated’ by asking questions of people who have no access to the unconscious mental processes that actually drive their behaviour, and in a context that exerts a wide array of biasing influences that will never be present in reality.

At the heart of my second observation is the fact that most patients aren’t in a position to make well-informed decisions about their health care.  Talk of ‘patient choice’ in a health care ‘market’ is naïve, not least because the people concerned are often elderly and, to state the obvious, unwell!  Being ‘cared for’ and making decisions are, in psychological terms, all but incompatible.

The reality is that most patients are intrinsically biased towards believing that they can trust the information they receive: they do so because they want to be able to trust it and because the alternative is psychologically overwhelming.  Without the capacity, energy or opportunity to explore, effectively, what different options might exist – they can’t become their own test and control conditions – they are all but obliged to make decisions that are based largely on belief, not evidence.  Whether that is a belief in the doctor treating them, the website they find convincing or the objectivity of the drug trial they find online, at some point there is a requirement for faith.

If someone had asked me before it happened, whether a relative of mine would be able to handle reading a handful of booklets and drug information leaflets after having a heart attack, I would have bet my house on him handling it with ease.  He is, after all, a retired English teacher, completes a cryptic crossword every day and is a voracious reader of novels.

I would have lost my house. 

Faced with the quantity of unfamiliar material, no existing associations to connect it with and with the anxiety of the situation, he floundered hopelessly. He became wholly reliant on other family members to review the information whenever an issue arose.

What’s more, despite what I regarded as an unacceptable wait to be treated, he was adamant that he should remain at the hospital he had first visited.  My suggestion that he review the success rates for the procedure across different hospitals was treated with much the same reaction as if I’d suggested carrying out the angioplasty himself.

Health providers who have their patients’ best interests at heart need to recognise that there is a big gap in the market for helping patients deal with all the aspects of their chronic health conditions; for example, identifying when they have a need for medical care, should switch to a different drug or could safely move on from a phase of treatment.  However, crucially, bridging this gap requires better, deeper, timelier insights than have, traditionally, been available to them: in short they need to understand how their patients actually behave and what they can do to help them make changes.

A misplaced faith in market research has resulted in many large organisations evolving in a way that gives them little capacity for the live trials that behavioural economics shows can provide such reliable and valid insights to support decision-making.  Of course, a number of technology companies grew up learning the vast majority of what they know from seeing what really worked and what didn’t:  I’m reliably informed that every third time you visit Google you’re part of an experiment.  For these businesses, live testing is the foundation on which their decisions are built.

The good news for the health sector is that the next generation of technology has arrived with the capacity to help them be much more patient focused: it can integrate existing business processes into one user-friendly interface and provide a connection with users that is perfectly suited to the application of behavioural economics.

Intelligent Virtual Assistants (IVAs) that use a natural language platform and multimode interface don’t just provide an infinitely scalable presence on a smart phone – a device that is not just widely owned but also virtually physically attached to most of those people, making it an ideal tool to keep in touch with people who have chronic health conditions.  They can also capture real-world data, reflecting needs that healthcare companies and patients may not even know exist.

Perhaps of most significance to behavioural economists is the fact that they also make randomly controlled trials easy to implement: put another way, they deliver an infinite opportunity to learn what and, just as importantly, how people really think in real-time.

Whilst no one would suggest that such a device could replace the skill and capability of a human health care professional (HCP), the potential of such technological support goes beyond handling the day-to-day administration of patient care.  Dr Carolyn MacGregor found that, by using technology to constantly track the data from equipment monitoring premature babies, she could identify a health issue 24 hours before the healthcare teams who were recording the information on paper charts at intervals.

An IVA has considerable potential to record measures that might, through analysis over time, enable the identification of warning signs that could alert health care practitioners to intervene before a more serious situation develops:

  • Tracking how frequently and reliably medication has been taken.
  • Collecting physiological data collected in-home, such as for blood sugar, temperature, physical activity levels, blood pressure or heart rate.
  • Evaluating qualitative data to gauge how the patient is feeling: because people are able to speak naturally to their IVA, aspects such as tonality might be monitored for signs of fatigue or depression.

That the technology exists for a smartphone to be a coach, confidant, expert health resource, memory aide and personal assistant are all good reasons for healthcare companies to want to offer them to their customers.  However, it is the capability IVAs deliver for experimentation that means that, commercially speaking, companies are missing the single biggest opportunity to gain a competitive edge if they don’t develop them.

Given their potential, I’m convinced that IVAs will become as common as prescriptions in healthcare within the next decade.  With Accountable Care Organizations becoming established, the profitability of companies involved in the delivery of healthcare will be increasingly related to the effectiveness of their ability to deliver the best possible outcomes.

However, beyond making care accountable, clinicians should be excited about the capability this technology provides to capture, record and analyse rich new sources of patient data.  This readily attainable but unprecedented data can be analysed over time to anticipate patient needs and proactively deliver the appropriate intervention before the health care provider or patient would be aware it’s needed.

Understanding how and what your customers think has never been more important, but behavioural economics shows us that what people say and what they do are rarely aligned.  Companies who understand this sufficiently to make the right choices about what data they collect, reference and analyse will be the ones that prosper in the changing healthcare landscape.


Topics: Healthcare, Intelligent Virtual Assistants (IVA)