News Release

PHILADELPHIA — 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, MD, PhD, 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.

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 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 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."

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 Leonard Davis Institute 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.


Penn Medicine is one of the world's leading academic medical centers, dedicated to the related missions of medical education, biomedical research, and excellence in patient care. Penn Medicine consists of the Raymond and Ruth Perelman School of Medicine at the University of Pennsylvania (founded in 1765 as the nation's first medical school) and the University of Pennsylvania Health System, which together form a $5.3 billion enterprise.

The Perelman School of Medicine has been ranked among the top five medical schools in the United States for the past 18 years, according to U.S. News & World Report's survey of research-oriented medical schools. The School is consistently among the nation's top recipients of funding from the National Institutes of Health, with $373 million awarded in the 2015 fiscal year.

The University of Pennsylvania Health System's patient care facilities include: The Hospital of the University of Pennsylvania and Penn Presbyterian Medical Center -- which are recognized as one of the nation's top "Honor Roll" hospitals by U.S. News & World Report -- Chester County Hospital; Lancaster General Health; Penn Wissahickon Hospice; and Pennsylvania Hospital -- the nation's first hospital, founded in 1751. Additional affiliated inpatient care facilities and services throughout the Philadelphia region include Chestnut Hill Hospital and Good Shepherd Penn Partners, a partnership between Good Shepherd Rehabilitation Network and Penn Medicine.

Penn Medicine is committed to improving lives and health through a variety of community-based programs and activities. In fiscal year 2015, Penn Medicine provided $253.3 million to benefit our community.

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