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Thursday, January 16, 2025

Behavioral finance: A guide for physicians and dentists as business owners

As healthcare professionals and business owners, physicians and dentists face numerous financial decisions that can significantly impact their practices and personal wealth. While medical and dental expertise is crucial for patient care, understanding behavioral finance principles is equally important for making sound business decisions. Explore how cognitive biases can influence your decision-making process and review the strategies to overcome them.

Behavioral finance combines psychology and economics to explain why individuals often make irrational financial decisions. For healthcare professionals running their own practices, recognizing these biases is crucial for avoiding costly mistakes and optimizing business outcomes.

1. Overconfidence bias: The danger of excessive self-assurance

Overconfidence bias occurs when individuals overestimate their knowledge, abilities, or chances of success. In the healthcare business context, this can lead to risky decisions and missed opportunities.

Christine Hoge, DDS, a successful endodontist in New Jersey, decided to expand her practice by constructing a larger office building. Despite market research suggesting a potential oversupply of dental services in the area, she proceeded with the expansion, confident that her reputation would attract enough patients to fill the new space. Her overconfidence led to significant financial strain when patient numbers failed to meet expectations.

To mitigate overconfidence bias:

- Seek objective data and expert opinions before making major decisions

- Conduct thorough market research and financial projections

- Consider worst-case scenarios and develop contingency plans

2. Confirmation bias: Seeking information that supports preexisting beliefs

Confirmation bias involves the tendency to search for, interpret, and recall information in a way that confirms one's preexisting beliefs or hypotheses. This bias can lead healthcare professionals to overlook critical information that contradicts their initial judgments.

Along the Gulf Coast, dermatologist Mike Johnson wanted to begin a gradual transition into retirement. He was adamant about not selling to the nearby hospital systems and decided to bring on a partner to share the workload and expand the practice. Johnson was introduced to a candidate who had recently graduated from his alma mater and immediately liked their personality and approach. Despite the warnings from his practice consultant about the personality and stylistic differences, Mike focused on information that supported his initial positive impression, overlooking red flags about the candidate's financial history and work ethic.

To combat confirmation bias:

- Actively seek out diverse perspectives and opposing viewpoints

- Implement a structured decision-making process that considers all available information

- Encourage team members to play devil's advocate and challenge assumptions

3. Proximity bias: Favoring what's familiar and close

Proximity bias leads individuals to prefer things, people, or ideas that are familiar or physically close. In a business context, this can result in missed opportunities or suboptimal decisions based on comfort rather than objective analysis.

This behavioral tendency shows up often when selecting a location to open a new practice. Sheila Garcia, DDS, a newly trained oral surgeon, decided to open a practice in her hometown despite market research showing better demographics in a neighboring city. Her familiarity with the area and desire to be close to family overshadowed the potential for greater success elsewhere.

To address proximity bias:

- Conduct thorough market research across multiple locations

- Use objective criteria to evaluate business opportunities

- Consider the long-term implications of location decisions on practice growth and profitability

4. Framing: How information presentation affects decisions

Framing refers to how information is presented and how it influences decision-making. The way options are framed can significantly impact the choices business owners make for their practices.

Vikram Patel, MD, a cardiologist in North Carolina, manages his own 401(k) account, which had an impressive 25% gain last year, with his December statement showing a balance of $400,000. However, recent market fluctuations caused the current balance to drop to $380,000. When Patel compared his current balance to the all-time high, he felt disappointed and anxious about the investments. This scenario demonstrates two common framing effects:Anchoring to peak values: Patel fixated on the highest balance his account has ever reached rather than considering the overall growth trend or his long-term investment goals.
Short-term focus: By concentrating on recent performance, Patel framed his investment in a narrow, short-term context, overlooking the inherent volatility of markets and the long-term nature of retirement savings.

As a result of this framing, Patel made reactionary changes to his investment allocation, moving a significant portion of the portfolio into more conservative options. While this decision provided temporary emotional relief, it ultimately proved ill-advised for her long-term financial goals. To mitigate the negative impacts of framing in this situation, Patel could:

Reframe the information by looking at her account's performance over longer periods, such as five or 10 years.
Focus on her overall financial plan and investment strategy rather than short-term market movements.
Consult with a financial advisor to gain an objective perspective on her investment decisions.

Conclusion: Embracing behavioral finance for better business decisions

Remember that recognizing these biases is the first step towards overcoming them. By implementing the strategies outlined in this blog and continuously educating yourself on behavioral finance principles, you can enhance your decision-making skills and achieve greater success in your healthcare business endeavors.

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Wednesday, January 15, 2025

Comparing primary care communication interventions to improve patient engagement

A cluster randomized trial evaluating interventions to improve patient-clinician communication found no evidence that the considered interventions had varying effects on patient engagement, despite strong implementation efforts. The study, published in the Journal of the American Medical Association (JAMA) Health Forum examined three intervention arms—a high-touch, high-tech and shared decision-making approach—across 21 primary care clinics in three U.S. health systems. Some secondary outcomes suggested a positive effect of in-person coaching, but ultimately the study’s findings indicate the need for implementation fidelity and alternative outcome measures for patient engagement.

“Our multiple study found no evidence of intervention effects on the primary outcome,” the authors of the study wrote. “Implementing successful pilot interventions into diverse clinical practices is challenging, particularly when minimizing disruptions to workflows…To better align outcome measures with interventions, alternative patient engagement metrics should be considered.”

According to the study, clinicians are often unfamiliar with patients’ reason for visits prior to meeting face to face. It’s also said that patients can struggle to recall the details of decisions made during their visits. The study is intended to enhance patient-clinician communication by building on a prior pilot study with the same goal. The pilot study created two interventions aimed at enhancing patient-clinician communication that was highly accessible to users.

“We chose the primary care setting for three reasons: it is essential for health care, most shared decision-making research is in specialty care and the pilot study in primary care showed potential utility,” the authors explained. “This study aimed to replicate and expand those findings in diverse settings.”

The intervention arms assessed in the study are multilevel, targeting patients, care teams and health systems:

AskShareKnow (ASK): Posters placed in examination rooms encouraging shared decision-making.
High-tech: Mobile application-based coaching promoting shared decision-making.
High-touch: In-person coaching of clinicians with standardized training to promote shared decision-making.

The primary outcome was patient engagement as measured by CollaboRATE, a validated survey assessing shared decision-making. CollaboRATE asks patients to rate, on a scale of zero to nine, how much of an effort was made to:

Help you understand your health issues.
Listen to the things that matter most to you about your health issues.
Include what matters most to you in choosing what to do next.

Secondary outcomes included the Net Promoter Score (NPS), which gauges likelihood of recommending the clinician, and patient confidence in managing their health. Statistical adjustments were made for demographic and contextual factors, including clinician characteristics, type of visit (telehealth or in-person) and health system variability.

The current trial was conducted in three health systems, UC San Diego Health, Reliant Medical Group and Sutter Health. Researchers conducted the randomized controlled trial with 4,852 patients (median age of 54 years) and 114 primary care clinicians. Clinic visits occurred between August 2019 and December 2021. Prior to intervention implementation, baseline surveys collected patient-reported experiences from January to July 2019. Patients were randomly assigned to one of the three arms—ASK, high-touch or high-tech—and were surveyed post-visit and again three months later.

Survey results

Among the 4,852 enrolled patients, participation rates were modest, with just 7% agreeing to take part in the study. Survey completion rates were stronger, with 73% of participants returning surveys within seven days post-visit. The study’s intervention arms had similar demographic characteristics across patients and clinicians.

Regarding CollaboRATE, the study’s primary outcome, there were no statistically significant differences between the intervention arms. At baseline, 63.9% of patients in the ASK group, 70.2% in high-tech and 67.9% in high-touch reported top CollaboRATE scores for shared decision-making. Postintervention, these rates remained consistent across the groups, with ASK achieving 68.2%, high-tech 67.4% and high-touch 67.0%. Adjusted analyses identified several significant covariates: older patients, those with higher confidence in managing their own health and those attending in-person visits were more likely to give top scores, while telehealth visits and certain system-level factors were associated with lower scores.

NPS results demonstrated higher proportions of “promoters” in the high-touch (86.8%) and ASK (87.0%) arms compared to high-tech (83.0%), although the differences were not statistically robust. Patients’ confidence in managing their health declined slightly across all groups three months post-intervention, with no meaningful differences between the arms.

Despite the absence of measurable effects in the primary outcome, the study highlights lessons that are critical for the implementation of communication interventions in real-world clinical settings. Researchers noted that the transition from a physical booklet to an electronic format may have diluted cognitive engagement with the intervention.

Secondary findings suggest that the more intensive high-touch intervention might offer advantages for the enhancement of NPS and patient confidence, although these findings lacked statistical significance. Researchers also emphasized the importance of adjusting for confounding variables, including patient demographics, the type of visit and differences in local health systems. Telehealth visits, for example, consistently returned lower engagement scores, suggesting challenges unique to virtual care environments.

Although the interventions failed to demonstrate significant effects on shared decision-making, the process of prompting patients to articulate their priorities remains valuable and continues to be used at one of the health systems studied. Researchers recommend integrating these interventions as quality improvement initiatives rather than research trials, waiving informed consent to boost participation and employing metrics like NPS to monitor impact. By refining engagement metrics and targeting implementation efforts, health systems may achieve better outcomes in the future.

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Tuesday, January 14, 2025

Using the laws of physics to enhance your medical practice

The following concerns a question in a physics degree exam for students at the University of Copenhagen:

"Describe how to determine the height of a skyscraper using a barometer." One student replied,

"You tie a long piece of string to the neck of the barometer, then lower the barometer from the skyscraper's roof to the ground. The length of the string plus the length of the barometer will equal the height of the building."

This highly original answer so incensed the instructor that the student was failed. The student appealed because his answer was indisputably correct, and the university appointed an independent arbiter to decide the case. The arbiter judged that the answer was correct but did not display knowledge of physics. The judge decided to call the student in and allow him six minutes to provide a verbal answer, which showed at least a minimal familiarity with the principles of physics.

For five minutes, the student sat in silence, his forehead creased in thought. The arbiter reminded him that time was running out, to which the student replied that he had several extremely relevant answers but couldn't decide which to use.

On being advised to hurry up, the student replied as follows,

"Firstly, you could take the barometer up to the skyscraper's roof, drop it over the edge, and measure the time it takes to reach the ground. The height of the building can then be worked out from the formula H = 0.5g x t squared. But bad luck on the barometer."

"Or if the sun is shining, you could measure the height of the barometer, then set it on end and measure the length of its shadow. Then, you measure the length of the skyscraper's shadow. After that, it is a simple matter of proportional arithmetic to work out the skyscraper's height."

"But if you wanted to be highly scientific about it, you could tie a short string to the barometer and swing it like a pendulum, first at ground level and then on the skyscraper's roof. The height is worked out by the difference in the restoring force T = 2 pi sq. root (l /g)."

"Or if the skyscraper has an outside emergency staircase, it would be easier to walk up it and mark off the height of the skyscraper in barometer lengths, then add them up."

"If you merely wanted to be boring and orthodox about it, of course, you could use the barometer to measure the air pressure on the roof of the skyscraper and on the ground and convert the difference in millibars into meters to give the height of the building."

"But since we are constantly being exhorted to exercise independence of mind and apply scientific methods, undoubtedly the best way would be to knock on the janitor's door and say to him, 'If you would like a nice new barometer, I will give you this one if you tell me the height of this skyscraper!'"

That last student was Niels Bohr, the only person from Denmark to win the Nobel Prize for Physics. Niels Bohr's lesson for modern healthcare is that there are more ways than one to find solutions to healthcare problems.

Another scientist, Sir Isaac Newton, made advances before Einstein and Niels Bohr, who also changed the world. Sir Isaac Newton (1642-1727), mathematician and physicist, was the most remarkable scientific intellect of his time. When Newton was only 23, he changed the world with his insights into mathematics, mechanics, astronomy, gravity, and optics.

He searched for and found the universal principles explaining why things act as they do. Some of his most famous work was Newton's Three Laws of Motion. These laws describe the movement of bodies and can be instructive to us all. This blog will discuss how the three laws of motion apply to our medical practices.

Newton's First Law

A body at rest will remain at rest unless acted upon by an unbalanced force.

In physics, the "force" is an outside push or pull. In our medical practices, the assumption is that the physician or office manager may provide this force. That physician-office manager leader provides the motivating force necessary to overcome the inertia of many of our fellow physicians, patients, and employees.

We can translate Newton's first law for managing our practices by implying that employees tend to keep doing what they do unless a new force acts upon them. For example, suppose a doctor is repeatedly 30 or more minutes late each morning for seeing patients in the office. In that case, the schedule is delayed from the beginning of the day. As a result, the doctor and the staff may have to work through lunch; the staff may have to work overtime at the end of the day, and ultimately staff morale decreases. The outside force may be the office manager or the practice's managing partner. She might meet with the doctor and help him be on time for the office patients to avoid the problems that delay causes when she is not ready to see patients at their designated times.

The take-home message of the first law is that anybody who is at rest will remain at rest unless acted upon by a good physician manager. Any bad situation will remain bad unless acted upon by a forceful physician manager, and things need to be pushed along if they are to change.

Newton's Second Law

Force = mass x acceleration.

In physics, this means that the amount of energy needed to move an object is proportional to the object's size or mass times the object's speed.

In our practices, the amount of mental energy needed to create change is equal to the size of the goal multiplied by how quickly you want to reach it.

For example, if your practice wants to implant new technology such as AI, which has met resistance from physicians and their staff, you will have to dedicate a tremendous amount of energy if you plan to accomplish the implementation quickly.

The take-home message on the second law of motion states that if you want to achieve big goals quickly, you must apply large amounts of energy and willpower, especially if you're going to achieve change quickly. However, if you wish to achieve big goals but are willing to take your time, lower energy levels persistently applied for more extended periods will be adequate.

Newton's Third Law

For every action, there is an equal and opposite reaction.

In physics, this means that the direction of the force on the first object is opposite to the direction of the force on the second object. When a bullet is fired from a gun with a particular force (action), an equal and opposite force is exerted on the gun in the backward direction (reaction).

Newton's Third Law might restate that you must initiate the correct actions if you want a specific effect. Don't expect to have a successful practice without effort. You must pay the price to be the first in your community in your particular area of interest and expertise. The law can also be described as stating that if you do not want a certain reaction, don't repeat the behavior. If you don't like the result, stop repeating the same events that cause unwanted outcomes.

I like to think of the third law as the rule that if what you are doing is not acceptable or you are not receiving the result that you wanted, repeating the same behavior and hoping to get a different outcome will not work. The same action will get the same equal and opposite reaction.

For example, if you are trying to improve compliance with patients and their medications and giving them samples is not motivating them to fill their prescriptions, then a new packaging of the samples is not likely to improve compliance. However, if you have a discussion with the patient about the benefits of taking the medication, the risks associated with not taking the medication, and how their disease state will improve after using the medication, then providing them with a FAQ sheet on the use of the medication and finally sending the patient to the pharmacy with a voucher card for a few free samples, this is likely to improve compliance. Agree; this may take a few additional minutes when you are with the patient. However, this will likely improve compliance rather than merely offering sample medications.

The Bottom Line

Medicine has laws and rules that apply to the clinical aspects of patient care, and some laws and principles apply to the business and management facets of healthcare. We can use Niels Bohr's example to show that we need to think outside the box and identify more than one solution to find the best solution to problems in the practice. Finally, we can apply Newton's first three laws of motion to our practices.

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Neil Baum, MD, a Professor of Clinical Urology at Tulane University in New Orleans, LA. Dr. Baum is the author of several books, including the best-selling book, Marketing Your Medical Practice-Ethically, Effectively, and Economically, which has sold over 225,000 copies and has been translated into Spanish.

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