This article accompanies Game Change.
How do you get employees to take greater ownership for managing their healthcare costs? Try "behavioral economics," says Doug Ghertner, president of Brentwood, Tenn.-based Change Healthcare.
Ghertner's firm recently helped Memphis-based bank-holding company First Horizon encourage its employees to be more conscientious about saving money on healthcare via a tool called Transparency Messenger, which sends out regular alerts -- customized to each employee -- about ways they can save on medical, dental and pharmacy care.
"We're looking at services that members are already using," he says. "For example, we see you're using this physical therapist. Each time, you're paying $120. We'll look at claims data and see what others are charging and say, 'You could save $360 over the course of a year.' "
To maximize the impact of the alerts, Change Healthcare uses behavioral economics to influence behavior, Ghertner says. For example, based on social norming, or the bandwagon effect, an alert might say, "Your peers are paying $500 less than you are."
Also, because people would rather avoid losing something than gain something new, messages emphasize that "you're losing out on $250" with this therapy, rather than "you can gain $250 by switching."
Finally, because people become "paralyzed" with too many choices, only the top five choices in a category are initially displayed in an alert, says Ghertner.
One year after the tool was deployed, the number of First Horizon employees engaged in using it is at 50 percent of the population, says Manager of Total Compensation Administration Kim Anderson.