Behavioral Economics for Anesthesiology Workforce Management

Kahneman and Tversky’s prospect theory has three principles that are particularly relevant: first, people are loss averse and perceive losses with more pain than gains; second, people have diminishing sensitivity to gains and losses; and third, people make decisions based on framing from a reference point.

For instance, if one were to incentivize a behavior like physician punctuality for procedure starts, designing a policy that has a discrete financial penalty for late OR start times would be perceived as more painful than failing to receive a bonus for on-time starts. Kahneman and Tversky proposed a loss aversion ratio of 2.25 – in other words, people find a loss 2.25 times more painful than a gain and will go to great lengths to avoid losses. However, if one were to experience several gains or losses in succession, the emotional impact of each gain or loss diminishes. The individual who is penalized by one late operating start may be less bothered by a second, and so on. Individuals may encounter marginal utility with numerous gains in sequence, and they will lose their impact. If one were attempting to maximize gains, it may be beneficial to space them out so that the emotional uplift of each gain is felt more impactfully.

Individuals are also sensitive to the “status quo,” or the reference point. The perspectives of a situation or outcome are heavily influenced by prior experience. This is particularly relevant in staffing models in anesthesia. Unexpected changes in relief or staffing resulting in individuals having to unexpectedly stay later than expected may be especially disappointing. Changes in the practice that can result in deviations from expectation must be carefully addressed because it can negatively impact morale.

In 2008, Richard Thaler and Cass Sunstein introduced nudge theory under the broader concept of behavioral economics in their book “Nudge: Improving Decisions About Health, Wealth, and Happiness.” Nudge theory works in synchrony with Kahneman’s two systems for processing information, popularized in his book “Thinking, Fast and Slow (Thinking, Fast and Slow. 2011).” System one is fast, reactionary, and highly susceptible to environmental influences, whereas system two is slow, reflective, and more intentional. Nudges work on either system one or system two processing by subtly altering choice architecture to direct individuals’ behavior without limiting their choices.

Physicians suffer from daily decision fatigue and are susceptible to nudges due to workflow and production pressures. As a result, they may often opt for default selection or the choice that requires the least number of clicks. Nudges have been effectively incorporated into the electronic medical record to increase quality metrics compliance. Some institutions use nudges in order sets to encourage more cost-effective choices by physicians. Additionally, having a more efficient scheduling system with reminders and prompts can streamline call and moonlighting sign-up.

It is important to note that while nudges are widely popularized for driving decision-making, they should be used thoughtfully and intentionally. Nudges may have unpredictable and variable impact depending on the wants and needs of the organization. An example of the inconsistent impact of nudges can be found in organ donation policies. Many countries have made the switch from default opt-in to opt-out policies for organ donation registration. After its implementation, Austria and France saw a strong rise in organ transplantation, but in nearby Denmark and the Netherlands, the numbers were more conservative. Some of this difference in effect was thought to be cultural. In Austria and France, organs are thought to be a social good that should be used for the benefit of society. That was a view less widely embraced by Denmark and the Netherlands. When Brazil introduced this law, the opt-out policy faced outright hostility and was perceived as deceptive. Ultimately, nudges are not designed to change peoples’ minds, but to facilitate people into doing tasks they want to do. Understanding your workforce is key to designing nudges that serve the organization.

Incentives as a motivator of behavior is central to economic theory. While financial incentives are likely the most studied and implemented, it’s important to consider the wide role of both extrinsic and intrinsic motivation. Intrinsic motivators reflect behavior that is rewarding for oneself, such as professional satisfaction, personal enjoyment, or intellectual enrichment. Extrinsic factors, on the other hand, reflect a financial reward, work promotion, or public recognition.

When intrinsic motivation becomes extrinsically incentivized, there may be unpredictable outcomes. In “Freakonomics,” Stephen Dubner and Steven Levitt discuss a case study at a daycare center in Haifa, Israel (Freakonomics. 2005). The childcare facility introduced a $3 late penalty to the monthly bill for late pickups. Shortly after its implementation, late pickups skyrocketed. Switching from the intrinsic motivator of social responsibility to an extrinsic financial penalty made people feel less guilty for picking up their children late. The extrinsic financial penalty, arguably, was underpriced for the market value of childcare.

Likewise, physicians who are highly educated and self-motivated have strong internal drivers for behavior. If an organization is seeking to influence that behavior, it needs to consider its mission and think strategically about its workforce. Financial incentives need to be impactful and valued appropriately, or they may risk unpredictable results.

Physicians are both prime targets for behavioral economic interventions and poor recipients. David Lubarsky, in his paper “Why Money Alone Can’t (Always) ‘Nudge’ Physicians,” suggested educated individuals with a strong sense of self and shared common purpose are not solely driven by extrinsic motivators (Anesthesiology 2019;130:154-170). Cognitive workers like anesthesiologists may have stronger bias for intrinsic incentives, which are challenging to externally influence.

Anesthesiology departments have seen inconsistent results with financial incentive structures, and there have been no controlled trials demonstrating sustainable maximal increases in work volume. One widely reviewed report by Reich et al., “A Mission-Based Productivity Compensation Model for an Academic Anesthesiology Department,” suggested a scheme that resulted in a 31% increase in productivity (Anesth Analg 2008;107:1981-8). Their complex arrangement has not proven popular or directly reproducible, with unknown satisfaction, and reflects the fact that local culture affects motivation architecture and intellectual enrichment opportunities.

However, behavioral economics provides one conceptual framework to address service needs for this or similar reports to your work. If you are suddenly short-staffed, how would you responsibly support off-practice physicians volunteering and aligning an extrinsic financial bonus with intrinsic support? What is the “right price” for these external incentives: autonomy of choosing cases, a hearty professional “thank you” for supporting the team, or a protected day off at a future date? If you have a challenging out-of-OR location that may be difficult to staff, how might you approach this beyond a financial bonus that may be complex to administer?

While there may be no clear answer on how to use behavioral economics to improve productivity, understanding applicable theories can be beneficial in helping a department function optimally. Behavioral economics has a role in managing anesthesiology quality compliance and workforce morale. Financial incentives, while sometimes difficult to implement predictably, may be only one aspect of a strategy that benefits our patients.