Bodies Without Organs

Introducing Libertarian Paternalism

The original academic paper by Sunstein, “Libertarian Paternalism is Not an Oxymoron”, can be found at this link. It is a bit of a lengthy read, and like most law academic papers, it contains a billion footnotes that commoners like me deem rather unnecessary. Enjoy.

Decision-Making: Fallacies, Biases, Heuristics

Wikipedia provides a good summary of potential biases and fallacies that the human mind can impose upon the supposedly “rational” decision-making process (adapted from the book “Nudge” by Thaler & Sunstein):

Two systems of thought

The book describes two systems that characterize human thought. Sunstein and Thaler refer to these as the “Reflective System” and the “Automatic System”.^[7] The Automatic System is “rapid and is or feels instinctive, and it does not involve what we usually associate with the word thinking”.^[8] Instances of the Automatic System at work include smiling upon seeing a puppy, getting nervous while experiencing air turbulence, and ducking when a ball is thrown at you.

The other system of thought is the Reflective System. This system is deliberate and self-conscious. It is the one at work when people decide which college to attend, where to go on trips, and (under most circumstances) whether or not to get married.^[9]

Fallacies and biases

Because of these differences and conflicts between these systems, people are often subject to making mistakes that are the result of widely occurring biases, heuristics, and fallacies.

These include:

Anchoring: a cognitive bias wherein one relies too heavily on one trait or piece of information. An example would be a resident of Chicago who is asked to guess the population of Milwaukee. Knowing that Milwaukee is a major city, but certainly not as large as Chicago, the person would take the population of Chicago (roughly 3 million) and divide it by, say, three (arriving at one million). A resident of Green Bay (which has a population of around 100,000) might know that Milwaukee is larger than Green Bay, and triple the population of their home city to arrive at a guess (of 300,000). The difference in guesses of people because of their geographical location is an instance of anchoring. The real population of Milwaukee is about 580,000.

Availability heuristic: when people predict the frequency of an event based on how easily an example can be brought to mind. The authors state that this could help explain why people think that homicides occur more than suicides, as examples of homicides are more readily available. The availability heuristic can have negative effects in business and politics, because people will overstate risks, resulting in people purchasing unnecessary insurance, or governments pursuing social goals at the expense of other more fruitful ones.^[10]

Representativeness heuristic: where people judge the probability or frequency of a hypothesis by considering how much the hypothesis resembles available data. An example would be perceiving meaningful patterns in information that is in fact random. These include false accounts of “cancer clusters” and the common belief in basketball that players can get “hot”. Due to the number of shots taken, players are bound to have times when they score many shots in a row, but basketball fans wrongly believe that a player that has just made a series of shots is more likely to make their next shot.^[11]

Status quo bias: this is when people are very likely to continue a course of action since it has been traditionally the one pursued, even though this course of action may clearly not be in their best interest. An example of the status-quo bias at work would be when magazine companies offer trials of their magazines for free, but then, after the trial has ended, continue to send magazines and charge the customer until he or she actively ends the subscription. This leads to many people receiving and paying for magazines they do not read.^[12]

Herd mentality: people are heavily influenced by the actions of others. Sunstein and Thaler cite a famous study by Solomon Asch where people, due to peer pressure, answer certain questions in a way that was clearly false (such as saying that two lines are the same length, when they clearly are not).

Because human beings are subject to these various errors and flawed thinking patterns, and human beings in government bureaucracy are not, Sunstein and Thaler endorse libertarian paternalism.

Some Examples of Libertarian Paternalism As Applied to Public Health

(Can you think up some of your own?)

(a) Arranging healthy foods to be presented before unhealthy ones in the cafeteria line: irrational individuals are more likely to choose the ones they see first (healthy), but this does not deprive rational individuals from getting the unhealthy foods.

(b) Keeping cigarettes behind the sales counter on a shelf: irrational individuals are more likely to be deterred by the extra effort of asking the sales person for cigarettes, but this does not deprive rational individuals from purchasing them should they so desire.

(c )Having water as the default drink in combination meals at fast food restaurants: irrational individuals are more likely to be deterred by the extra effort involved in exchanging this water for soda, whereas rational individuals will still be able to decide and pick alternative options.

(d) Having gym membership included as a part of employee benefit plan: the employees must pay a reduced annual membership fee that is automatically deducted from their salary—irrational individuals are more likely to go ahead and use these services since they already pay for them (wouldn’t have to go out and purchase their own gym memberships), while rational individuals still have the option of opting out and getting their money back.

(e) Automatically scheduling the next dental check-up with a patient at the end of the current visit: irrational patients would pursue the default option and have the next visit set up for them, while rational individuals would still have the option to proactively unscheduled the future visit.

(Reuters) - Towers Watson & Co , a New York-headquartered professional services company, said on Sunday it would buy Extend Health Inc, operator of the largest private Medicare exchange in the United States, to boost its health benefits offering for employers.

Health insurance exchanges are in the spotlight as the Supreme Court reviews Barack Obama’s signature healthcare law, whose provisions include the operation of subsidized, state-regulated health insurance markets in 2014.

By running a private Medicare exchange since 2006, through which consumers compare plans from different carriers side by side, Extend Health claims to have already helped over 130 companies, including Ford Motor Co , General Motors Co and Caterpillar Inc , save as much as $400 million annually in retiree health insurance costs.

“FierceHealthcare: Why did MetroHealth decide to move primary and specialty care services out to the suburbs? What were the main factors in the outpatient planning process?

William Lewis: First of all, we believe this is the way healthcare is going to be delivered in the future. We need to deliver healthcare in the community because that’s where patients are demanding healthcare be delivered. So while not everything can be delivered there—we’re not going to do cardiac bypass surgery, for example—we want to provide those things that can be done in the community in the community. It’s mostly because we are being patient-centric. Patients want care there, and that’s what we’re going to do.

Second, we believe this is an efficient way to provide healthcare. In a large hospital system, in a main campus-type hospital system, it’s difficult to provide high-quality care efficiently. So the goal is to try to do that in the community.

The third thing that’s really important about this is that MetroHealth has a narrow network healthcare plan (MetroHealth Select) that we have been offering to county employees, municipal employees and a variety of other entities. That plan involves the delivery of healthcare to its insured in Cuyahoga County, and we need to be convenient for individuals to whom were delivering the program. If we’re going to offer companies a healthcare program like that, we’re going to have to be present in the communities were their employees live. So we need to be in all parts of Cuyahoga County. So this building is really one of several that were looking to put in the county.”

The federal government paid New York State $700 million more in 2009 than the state needed to care for residents with developmental disabilities who lived in its institutions, according to the inspector general of the Department of Health and Human Services in Washington.

The finding suggested that billions of dollars earmarked for institutional care in New York had been used for other purposes over the last several years. No penalty is recommended, however, because the payments were approved by federal regulators.

….

Most of the people with developmental disabilities in residential care in New York are not in institutional settings, but rather in group homes spread across communities throughout the state. State officials have said that extra Medicaid dollars earmarked for institutions have been redirected to other parts of its system of care, including group homes. But the inspector general’s office is considering a further review of how the excess money was spent.

Despite the caution, the analysts expect a lot of healthcare M&A activity involving private equity firms, healthcare IT companies and telemedicine, HealthcareFinanceNews reported.

“Opportunities for mergers and acquisitions are ripe as the healthcare industry changes to react to price pressure, payment reform and the need for new capabilities,” J.P. Morgan Managing Director Ravi Sachdev told the audience. “Considering these factors, the growth in hospital M&A is not surprising, given the need for facilities to be more efficient in the face of anticipated reimbursement cuts and, of course, reform.”

The analysts also cited innovation and creativity as ways to overcome challenging market conditions to hospital mergers and acquisitions.

——————————-

Comments:

Okay LOL. “Innovation and creativity”. Fantastic recommendation. I wonder how long it took them to come up with that.

Also, FTC has been blocking a lot more M&As than before. Curiously enough this does not apply to M&A efforts to build ACO’s though. The gov’t has made very lenient provisions to try to ensure ACO’s success.

In the article, Dr Denham and colleagues highlight some key similarities between healthcare and aviation: “[H]igh risk and complexity, dependency on human performance factors, and the potential to generate highly reliable performance ONLY IF basic safety principles are provided by invisible support systems.”

In aviation, cooperative efforts between government agencies and industry have led to remarkable improvements in safety. Since the introduction of the Commercial Aviation Safety Team in 1998, the fatality rate of commercial air travel in the United States has decreased by more than 80 percent.

Those unprecedented gains have led some observers to suggest that a similar approach could help to address the ongoing crisis in healthcare—including high rates of medical errors leading to patient harm and chronic waste of healthcare resources. Expressed in aviation terms, the losses are equivalent to 20 Boeing 757 airliners crashing each week, with $10 million in each cargo hold.

THE idea that an infusion of hope can make a big difference to the lives of wretchedly poor people sounds like something dreamed up by a well-meaning activist or a tub-thumping politician. Yet this was the central thrust of a lecture at Harvard University on May 3rd by Esther Duflo, an economist at the Massachusetts Institute of Technology known for her data-driven analysis of poverty. Ms Duflo argued that the effects of some anti-poverty programmes go beyond the direct impact of the resources they provide. These programmes also make it possible for the very poor to hope for more than mere survival.

(Source: funnyaccord)

1. Pick team members with complementing strengths, not similar personalities

2. Unofficially elect a “coordinator”, as opposed to having one person take charge as “leader” aka “boss”. Coordinator keeps everyone’s progress in check and sets up guidelines for completion of tasks. Also serve as a resource person and helps ppl get started/provide readings and brainstorm ideas.

3. Depending on type of situation (amount of time left to complete project), adopt one of 7 leadership styles (HBR)

4. Develop a framework/structure for the project and assign portions to each member, check to see everyone’s okay with the parts they got

5. Develop a timeline for completing the project, identify priority tasks and assign specific sub-deadlines for these tasks. Make group members aware of the order of task completion and its impact on the rest of the project’s progress. If possible, avoid having everyone doing their parts simultaneously — instead make it more like a factory assembly line: one person finishes his/her part, passes project onto the next person, etc.

6. Keep checking up on group members and add pressure where necessary.

7. Google doc is your best friend.

8. If possible, meet with each member individually and leverage on their strengths to get things done.

(Source: funnyaccord)

Ha ha ha ha this article is just absurd in every way. I haven’t had such a good laugh since Patrick Rudnick wrote that caustically humorous article about French women’s opinions on Americans.

Castlight Health announced today it raised $100 million in a Series D round, bringing the total amount raised to $181 million since its inception in 2008. New investors include T. Rowe Price, Redmile Group, two of the country’s biggest mutual funds (unnamed), as well as previous investors. “This is a vehicle to something bigger,” says Giovanni Colella, co-founder and chief executive, who expects an IPO next. He declined to disclose revenues, or profitability, but says capital was raised at a “huge upward valuation.”

……

Pushing consumers to shop around for prices is the rise in high-deductible plans. According to Mercer, the percentage of employees enrolled in those plans has increased from 3% in 2006 to 13% last year. A recent New York Times article suggested a permanent change in consumer behavior toward health care consumption, and although economists are still unsure about the causes which include the recession, high-deductible plans could be one reason. “The reality is, when you put people on a high-deductible plan, they’re going to think twice before going to the doctor,” says Colella. “Tools like ours will be needed more and more.”

….

Peter Isaacson, Castlight’s chief marketing officer, says that overall, 70% of employees use Castlight’s price comparison tool, and 61% attribute a change in how they spend their health care dollars to Castlight.

Bodies Without Organs

Two systems of thought

Fallacies and biases

Intermission: Learn More About Behavioral Economics

[NYT] Towers Watson & Co to buy largest private Medicare exchange →

[Fierce Healthcare] Cleveland Clinic, healthcare employers to hire more outpatient staff in 2012 Read more: Cleveland Clinic, healthcare employers to hire more outpatient staff in 2012 →

[NYT] Report Details Medicaid Overpayments to New York State →

[Fierce Healthcare] M&As: Reform uncertainty means proceed with caution →

Patient Safety Leaders Propose ‘NTSB for Healthcare’ →

[The Economist] Hope springs a trap- An absence of optimism plays a large role in keeping people trapped in poverty →

What I learned about effective teamwork processes throughout this semester →

[NYT] The Purpose of Spectacular Wealth, According to a Spectacularly Wealthy Guy →

[Forbes] Castlight Health Raises Record Amount For A Health IT Start-Up →