Using Behavioral Economics to Design Physician Incentives That Deliver High-Value Care

Behavioral economics provides insights about the development of effective incentives for physicians to deliver high-value care. It suggests that the structure and delivery of incentives can shape behavior, as can thoughtful design of the decision-making envi-ronment. This article discusses several principles of behavioral economics, including inertia, loss aversion, choice overload, and relative social ranking. Whereas these principles have been ap-plied to motivate personal health decisions, retirement planning, and savings behavior, they have been largely ignored in the de-sign of physician incentive programs. Applying these principles to physician incentives can improve their effectiveness through better alignment with performance goals. Anecdotal examples of successful incentive programs that apply behavioral econom-ics principles are provided, even as the authors recognize that its application to the design of physician incentives is largely un-tested, and many outstanding questions exist. Application and rigorous evaluation of infrastructure changes and incentives are needed to design payment systems that incentivize high-quality, cost-conscious care