There used to be a longstanding belief – especially in the healthcare industry – that individuals made rational decisions based on logic and evidence. However, in recent years, we have begun to understand that they are strongly influenced by their own experiences, cultures and biases. This concept, often referred to as behavioral economics, is causing healthcare leaders to rethink how they communicate more effectively with their patients. 

Behavioral Economics Defined

Behavioral economics explains why individuals may make irrational choices by demonstrating how their decision-making is influenced by biases, heightened emotions, faulty problem-solving, mental fatigue, loss aversion, choice overload, perceived social norms, situational framing and context. 

University of Chicago scholar and Nobel laureate Richard Thaler spent his lifetime studying behavioral economics, finances and psychology. His groundbreaking research and Nudge theory have been the cornerstone of behavioral economics for decades.

As Thaler explained, “People will need nudges for decisions that are difficult and rare, for which they do not get prompt feedback and when they have trouble translating aspects of the situation into terms that they can easily understand.” 

Applying Behavioral Economics for Population Healthcare Improvements

Increasing patient engagement while leveraging behavioral economics is essential for improved healthcare outcomes. In a previous blog, we detailed how patient engagement leads to improved results. Using data from this blog and additional studies, we can see the following trends: 

Some providers are using a new strategy for patient engagement by incorporating ideas from the field of behavioral economics. A recent study from JMIR Human Factors found that “nudges, a behavioral economics-based approach to providing health maintenance reminders, increased the number of appointments scheduled through the patient portal.” The authors’ findings also showed that “simple approach-framing and modifying language in an electronic message can have a significant and long-term impact on patient engagement and access to care.”

Behavior definition highlighted in dictionary

Applying behavioral economics insights and principles can potentially increase and improve patient engagement for healthcare providers of all sizes. Our infographic gives a high-level overview of five behavioral economics concepts and interventions. In the following section, we’re outlining each concept and delving into specific ways providers can help their patients make healthy decisions.

Behavioral Economics Problem #1: Loss Aversion


Loss aversion refers to the tendency to prefer avoiding a loss instead of acquiring the equivalent gains. It’s been used to articulate the endowment effect, an emotional bias to value an owned object higher, often anomalously more than market value. It’s also been said to contribute to the status quo bias or a patient’s preference for maintaining an unaltered version of their current or previous state of affairs.

A financial incentive provided to a patient to increase physical activity would be more effective when loss-framed. For instance, a provider could say to their patient, “For every month that you lose at least five pounds while using the plan discussed, our partner gym will discount your membership by ten percent.”


People often fear missing out on a potential reward more than they enjoy receiving it. Therefore, framing the potential for loss if a patient fails to implement a recommended activity may be a more vital driver than a potential gain.


Providertech’s HIPAA-compliant two-way communication tool in the CareCommunity suite can be utilized to deliver timely health information and reminders between visits. For example, when patients receive education and navigation tips, they can be prompted to follow up with their care provider in the same app. This step continues the conversation, ensures adherence to the provider’s instructions and can increase the likelihood of adopting behavior changes. 

Behavioral Economics Problem #2: Decision Fatigue


According to the American Medical Association, decision fatigue is a state of mental overload that can impede a patient’s ability to continue making decisions. Basically, if a patient makes a series of decisions at once, their ability to choose wisely becomes impeded by mental exhaustion. The chance of poor decision-making increases as the patient’s rational cerebral resources deplete.

By the time an average patient heads to bed, they’ve already made an average of 35,000 decisions. Each of those decisions consumes time and energy and can drain our stamina. With the addition of COVID-19 interrupting almost every decision for the past two years, it’s easy to understand why nurses are burnt out, physicians are depressed and workforce shortages have resulted in long-lasting effects.


When it’s time to seek care, use simple reminders to help break the cycle of decision fatigue. By removing items from someone’s to-do list, providers can reduce the mental overload that people are battling daily.


Send timed emails or text messages to help jog the memory. Automate text messaging and voice with Providertech’s patient appointment reminder solution, found within CareCommunity, to: 

  • Reach patients where they are
  • Differentiate between landline and mobile phone numbers
  • Easily customize content to offer individual communication preferences

Behavioral Economics Problem #3: Bounded Rationality and Hyperbolic Discounting


Bounded rationality is the idea that when patients are presented with a choice, they tend to opt for one that is satisfactory but not necessarily optimal. Hyperbolic discounting is the tendency to value immediate, smaller rewards with a greater significance than larger but longer-term rewards. In practice, it means that patients would instead opt for short-term gain that includes long-term loss. There are limits to humans’ rationality in decision-making based on thinking capacity, available information and time; this is true regardless of intelligence or education.

The combined notions of bounded rationality and hyperbolic discounting can be seen in numerous healthcare situations. One example is management protocols not being followed by patients with chronic care conditions. They’re choosing an available option for short-term enjoyment while trading in long-term healthcare benefits. 


Nudges provide subtle but consistent guidance, which empowers patients to choose while leading them toward better long-term choices. 


Use positive, personalized behavior feedback to send regular text messages, including relevant education and navigation support. With built-in HIPAA compliance, Providertech’s two-way text messaging solution increases operational efficiency and optimizes patient care.

Behavioral Economics Problem #4: Choice Overload


Choice overload accounts for mental fatigue when a person is faced with multiple decision points, usually resulting in defaulting to previously-known behavior. Oftentimes, we think that more options are better, but research has shown that with more choices come negative unintended consequences.

As patients move through their day, the easier it is to make a decision, the more likely they will. By providers scaling back the number of available options, patients can confidently move in the intended direction without overloading from too many possibilities.


Provide a decision structure that eliminates too many choices and offers a few options from which to choose.


Instead of a patient walking through a lengthy self-schedule workflow, offer the next three available time slots. CareCommunity helps providers increase revenue, enable contactless check-in and reduce the headache of managing patient no-shows with modernized text, voice and email solutions.

Behavioral Economics Problem #5: Information Avoidance


Information avoidance refers to situations where a person may avoid obtaining information or knowledge that is readily available. In a comparative study by the Journal of Acquired Immune Deficiency Syndromes (JAIDS), the authors sought to document human immunodeficiency virus (HIV) prevention through counseling and testing. They found that in a group of high-risk patients who were tested for HIV, 18 percent failed to return to obtain their results. Of those, 23 percent said they were afraid to get the results. 

Patients can sometimes choose to ignore vital test results and their provider’s recommendations for usual standards of care. This often is due to patients’ fear of receiving bad news or feeling overwhelmed with too many recommended changes at once.


Make relevant information easily accessible, and deliver it in small segments so as not tot overwhelm.


Improve clinical outcomes for complex patient populations with CareCommunity, which provides targeted health campaigns for helping patients make healthy decisions. Proactively send information with accessible and easy-to-understand education. Help patients interpret the data by addressing, “What does this mean for me?” and continue the conversation with clear-following steps, answering, “What do I do now?”

Advancing Population Health Efforts with Behavioral Economics

This approach can support efforts by providers to help patients make health decisions. By leveraging solutions for loss aversion, decision fatigue, bounded rationality, hyperbolic discounting, choice overload and information avoidance, they can help increase population health patient engagement.

Talk with our solutions team to understand how to enhance your patient engagement with real-time, secure text messaging, population health outreach management, appointment management, and eTest results delivery – all part of the CareCommunity platform solution.