Patients are terrible consumers of sick care services. Most attribute it to the lack of price and quality of care transparency and the incentives to make rational purchases. However, as behavioral economists have learned, consumers are not rational but, instead, are driven by strong psychological and emotional factors that explains patterns of consumption. What’s more, understanding personal spending v spending on the common good gets even more complicated and difficult to understand.

What’s more, a recent study shows that between 60 and 80 percent of patients aren’t forthcoming or even lie to their physicians. Consequently, they might be contributing to an incorrect diagnosis or treatment recommendations.

Some would argue that as value becomes more transparent to patient customers, we won’t need all the brokers, middlemen and intermediaries to do it for them. However, don’t be so optimistic. The trend is to make the cost of sick care services more transparent. Publicizing hospital prices didn’t help in New Hampshire.

Here are some basics of behavioral economics that might help frame the conversation:

1. Frames of reference matters a lot

2. Each person’s spending depends in part on what others spend

3. The costs of failure to keep pace with community spending norms go well beyond mere hurt feelings

4. Positional concerns spawn wasteful spending, even when everyone is well informed and rational

5. Private wasteful spending exceeds public wasteful spending

6. Life is graded on a curve

7. There is no Moore’s Law in sickcare

8. Cognitive ease and cognitive strain determines decision outcomes

9. People would rather do things the easy way instead of the hard way

10. Success in life depends on exercising delayed gratification. Most patients and doctors eat the one marshmellow instead of putting it off so they can get two later.

11. Like everyone else, patients buy emotionally and justify rationally

12. Patients are interested in paying less for more, regardless of the price.

Another consideration is that value factors differ from patient to patient. Some want convenience, others want “the best” and still others will take “good enough” as long as they don’t have to pay out of pocket for services.

We also need to rethink the IoT and “smart” environments.

Depending on informed, rational patients to bend the cost curve will fail without understanding the other, more subtle motivations that drive consumers. We all consume emotionally and justify rationally.

 and the Life Science Innovation Roadmap