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UPHS Center for Innovations in Health Care Financing

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November 1, 2011, Volume 58, No. 10

Volpp Mahoney

The University of Pennsylvania Health System (UPHS) is partnering with the Leonard Davis Institute Center for Health Incentives and Behavioral Economics of the University of Pennsylvania on a new initiative to be called the UPHS Center for Innovations in Health Care Financing.

The new Center will combine the expertise of faculty members at Penn’s Perelman School of Medicine and the Wharton School. It will test how insights from behavioral economics and health economics can improve patient health and reduce the rate of growth in health care costs. Among the issues to be studied are: incentives to patients and health care providers for improving chronic disease management; the ways health-related decisions are influenced by how choices are presented; incentives for health care providers to reduce preventable readmissions; and defaults in improving the efficiency of health care delivery, e.g., requiring patients to “opt out” of certain pre-determined choices.

The Center will be co-led by Kevin Volpp, director of the Leonard Davis Institute Center for Health Incentives and Behavioral Economics and a professor of medicine at the Perelman School of Medicine and of health care management at the Wharton School, and Kevin B. Mahoney, senior vice president and chief administrative officer of the Health System and vice dean of Integrative Services at the Perelman School of Medicine.

Dr. Volpp said, “The United States spends about $2.5 trillion per year on health care. With costs growing at several percentage points faster than the growth of the economy, the country is on an unsustainable fiscal path. There is widespread agreement among experts that misaligned incentives are one of the major causes of these increasing costs. Research in this area has major implications for improving the value of health care spending in improving health.”

Wellness incentive programs are gaining popularity among employers and the government. Medicare and insurance companies are also moving to modify payment models in ways that increase the emphasis on positive patient results while reducing health expenditures. However, proven models for doing so are rare. It is this gap that the new UPHS Center seeks to fill.

“We are excited to launch this program and look forward to helping improve the efficiency of health care through innovations in financing and incentives,” said Mr. Mahoney. “We have outstanding national leaders in this area at Penn Medicine and the Wharton School. By combining the forces, we’ll be even more effective.”

Dr. Volpp’s research focuses on the effect of financial and organizational incentives on patient behavior and health. His work has been published in the New England Journal of Medicine and the Journal of the American Medical Association and covered by the New York Times, the Wall Street Journal, the Economist, Good Morning America, the BBC, National Public Radio, Time, US News and World Report, and USA Today.

Since its inception in 2008, the LDI Center for Health Incentives and Behavioral Economics has garnered more than $25 million in peer-reviewed grant funding on topics such as employer payments to reduce employee smoking.


Almanac - November 1, 2011, Volume 58, No. 10