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I recently listened to the first podcast that’s now, I think, more than a decade old from the Freakonomics series. For those of you who aren’t familiar with the Freakonomics book and then the podcast series, some economists, particularly behavioral economists.

This first episode is called “Something to the effect of shark attacks, American football, and NASCAR, and effectively what those things have in common?” They talk about people being afraid of shark attacks or spiders, which is tremendous fear. The basic premise is that people don’t understand risk. We are fearful of very low-risk things. 

Speaking of spiders

Being afraid of spiders is a pretty absurd fear, from a rational standpoint, in the sense that it’s virtually impossible to die of a spider attack. It is so infinitesimally rare that somebody is bitten by a spider that kills them. You were thousands of times more likely to be struck by lightning. I mean, it’s something ridiculous.

That’s one of the basic premises of this podcast: People don’t understand risk, and we’re afraid of things that are essentially very low-risk. That made me think, “What do we fear in revenue cycle management?” Taking a step back even further, considering what’s being discussed in that podcast, is it fear? Is it a risk? Or is it a lack of data? This takes us into the “Is it about not knowing or not understanding?” In other words, do people not know what the risk of being bitten by a spider or being bitten by a poisonous spider is? How low is that percentage? Or is it that we don’t understand it?

What causes fear?

We hear about a child kidnapped in Omaha while living in Chicago, New York, or somewhere else. We get scared that our child is going to get seized. We’re much more scared now than we were decades ago, not because of any increased incidence of kidnapping. Things like terrorist bombings have gone down in the United States over decades. They’re dramatically lower than they were in something like the 1960s and 1970s. But we hear about terrorist attacks more. Therefore, we’re more scared.

We don’t have good data, I think. We get anecdotal information about terrorist attacks, and we get scared because the news (it is not a political statement) who profits from fear selling these stories wants to propagate this information to sell people listening, or reading, or watching their programs. Again, not a political statement, just purely factual. That’s how they make money.

The more we receive that information, the more scared we are.

But actually, we don’t have data on that because they don’t present data. They present an event. They submit information about what’s happening. They don’t say, “Here’s what the current run rate on terrorist attacks is on a percentage basis, or per year, or annualized compared to past decades.” You don’t hear about that kind of stuff. So we don’t have good data. That makes us scared because we hear about things and don’t understand. Essentially, all we need is data.

Pay attention to the data

I think people ignore data. In my organization, when I ran a medical billing company, I saw people, very long-tenured, educated, good billing people, billing managers, say things about what was happening in the business, in billing, in revenue cycle management, in what was happening with our clients. They were talking about big problems. We’d sort of review what’s going on with clients and across the whole business. 

Somebody talked about a big problem, or that a payer didn’t allow something, or there was some rule going on, or you couldn’t do this, or you had to do this, or to get paid, you must include this information, you can only do this. Billers or managers were making declarative and emphatic statements about what is. But they frequently didn’t bother to look at the data to see if it supported what they were saying.

Show me the data

I recall a meeting where I said, “Show me!” This is a persistent thing you heard from me, and many people learn that they’d better not say something without having some data to support it. For a long time and even frequently after that, I would say something like, “Show me!” and they had nothing to show me. They hadn’t looked at the data. Not only did they not have the data to present at their fingertips when making that statement to me, but they hadn’t even looked at it. 

They just came to a conclusion based on some anecdotal information like, “Oh, I heard about a shark attack. Therefore, shark attacks are a big problem.” Are they? How many shark attacks are there? Are there more or fewer shark attacks now than there were last year or the year before? If we carry this over, we need to be looking at the data, and the data is available. So it wasn’t that there was no data. It’s that we weren’t looking at the data. We’re just coming to conclusions without doing that. Frequently, when we dug in to see, “Oh, are shark attacks a problem?” The answer was, “No, they’re not a big problem.”

Jumping to conclusions

Our brains are wired to jump to conclusions. This helps us from an evolutionary standpoint, but it hurts us from a business standpoint where data is readily available.The net is, we need to change how we think. We need to change how we practice business. It’s hard. I’m a total data junkie, and I find it hard even for myself to do this. Sometimes, I catch myself. Sometimes, other people notice me. 

Sometimes, nobody sees it, and we do it and then realize sometimes later like, “Oh, whoops! We didn’t even bother to look at the data. We jumped to a conclusion.” But making it a part of your culture, making it a part of even financial incentives in your organization to pull data and make sure that data support conclusions or, if you don’t have the data to change a business process, to capture data to figure out “Is this a problem?” rather than make a gut feel and go with it will make extraordinary differences in a business.

Final thought

If you’re wondering about shark attacks or spiders, spiders are not a significant risk. Car crashes are a considerable risk. Heart attacks are a significant risk. Let’s look at the data and focus on what matters and drives the business.