How Simple Behavioral Changes Can Save $163 Billion a Year in Health Care Costs

Although the health care bill sparked long, heated debate over the role of government, new research shows that, when it comes to reducing waste in our system, the most important reforms begin at home.
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By Steve Miller, MD, Chief Medical Officer, and Bob Nease, Ph.D, Chief Scientist of Express Scripts, Inc.

Although the health care bill sparked long, heated, and continuing debate over the role of government, new research shows that, when it comes to reducing waste in our system and improving our health outcomes, the most important reforms begin in the home.

The first study to quantify the hidden pharmaceutical costs of traits like forgetfulness, procrastination and how we take our medications, estimates the annual tab for these very human behaviors at $163 billion. With conservative estimates for inflation, this waste would total more than $2 trillion when projected over 10 years.

We've all become numb to numbers during this long debate, so let's pause to consider that staggering sum. You may recall that a tipping point in the healthcare debate was reached when the non-partisan Congressional Budget Office completed its scoring of the final bill and concluded that it would reduce the federal deficit by $143 billion over 10 years.

The deficit-reduction number, although significant, is just one 14th of the amount of waste we can eliminate by optimizing behaviors related to prescription drugs. Put another way, we can offset the entire 10-year, $940 billion cost of the legislation in just five years if we all take action and make better choices in the pharmacy area alone.

Three simple behaviors can achieve these savings. Adhering to the prescribed drug therapy (thereby avoiding the medical expenses associated with non-adherence) can save $106 billion a year. Choosing the more cost-effective drug, including lower-cost brand and generic alternatives, when appropriate for the therapy, can save $51 billion a year. Finally, identifying the most appropriate channel for delivery of the drug to the patient (mail order, for example) can save $6 billion a year.

Through the lens of behavior, the new research even breaks down extra costs by therapy class. For example, more than one-third of our annual spending on medication for high cholesterol comes from wasteful behavior.

We are optimistic about achieving these potential savings because these are behaviors we know we can change. It is far simpler to alter behavior related to prescription drugs than to influence other behaviors that add unnecessary costs to our health care system, such as overeating, using tobacco, or shunning exercise.

The new research, part of the 2009 Drug Trend Report produced by Express Scripts, identifies five behavioral profiles that contribute to wasteful spending in health care:

The Active Decliner: the patient who says she feels fine most of the time and questions whether taking her medication is really necessary.

The Refill Procrastinator: the patient who gets distracted, runs out of time and fails to refill his prescription before the medicine runs out.

The Sporadic Forgetter: the patient who remembers to take her medications during the week, but gets off schedule on the weekends and simply forgets.

The Loyalist: the patient who uses brand-name medications because that's what the doctor first prescribed. He is slow to ask his doctor about changing to a lower-cost generic drug.

The Traditionalist: the patient who routinely goes to the store for other items and enjoys the personal contact, but has never made a deliberate decision about whether to switch to Home Delivery (i.e., mail order) for her medications.

Programs that apply advanced behavioral science to health care are helping guide such people to smarter, more responsible choices in painless, voluntary and often imperceptible ways.

For example, people often put off making a decision and initiating action even when they know that the action would bring benefits. However, if we use "choice architecture" to require that patients simply choose between two options, they are far more likely to make the smarter choice.

One program presents the A-or-B option when the patient presents a prescription for a maintenance medicine. When we ask the patient to choose between filling it through mail order or filling it at a local retail pharmacy, about half of the patients currently getting their medications in retail choose the more cost-effective mail delivery option. Without requiring a choice, most stay at retail despite the higher cost, lower dispensing accuracy and lower therapy adherence associated with that option.

We've also found that the words we use in communications have surprisingly large effects, and that these reflect well understood principles. For example, "loss aversion" tells us that people work harder to avoid losses than to pursue gains. Thus, messages that urge patients to "stop wasting money" tend to be more effective than those that encourage them to "start saving money."

The common thread in these approaches is that they preserve individual choice as they trigger significant improvements in behavior. For the first time, we have solutions that are fully voluntary at the patient level, yet drive decisions that are more cost-effective.

In these times, $163 billion is far too much to waste on health care. It is in our national interest, as well as the interests of employers and other plan sponsors, to take advantage of proven steps to eliminate this burden. And we'll feel better for it.

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