Why Are Patients Terrible Consumers of Sick Care?

Patients are terrible consumers of sick care services. Most attribute it to the lack of price and quality of care transparency and the incentives to make rational purchases. Behavioral economists have a more complex answer.

Most attribute it to the lack of price and quality of care transparency and the incentives to make rational purchases. However, as behavioral economists have learned, consumers are not rational but, instead, are driven by strong psychological and emotional factors that explain patterns of consumption. What's more, understanding personal spending versus spending for the common good gets even more complicated and difficult to understand.

Here are some basics of behavioral economics that might help frame the conversation:

1. Frames of reference matter a lot.

2. Each person's spending depends in part on what others spend.

3. The costs of failure to keep pace with community spending norms go well beyond mere hurt feelings.

4. Positional concerns spawn wasteful spending, even when everyone is well informed and rational.

5. Private wasteful spending exceeds public wasteful spending.

6. Life is graded on a curve.

7. There is no Moore's Law in sick care.

8. Cognitive ease and cognitive strain determine decision outcomes.

9. People would rather do things the easy way instead of the hard way.

10. Success in life depends on exercising delayed gratification. Most patients and doctors eat the one marshmallow instead of putting it off so they can get two later.

We also need to rethink the Internet of Things and “smart” environments.

Depending on informed, rational patients to bend the cost curve will fail without understanding the other, more subtle motivations that drive consumers. We all consume emotionally and justify rationally.