By Lisa Suennen
First Posted at Venture Valkyrie on 4/2/2014
I was finally getting to my giant pile of reading this week when I saw an article in Health Care Information Week that included the following sentence:
As consumer satisfaction begins to have a bigger impact on the bottom line, more hospitals are hiring a chief patient experience officer (CXO) to treat patients like valued customers.
Maybe it’s me, as a born and bred marketing person, but that seems like the weirdest concept in the world. In layman’s terms it basically means this: Hospitals are waking up to the fact that patients are actually their customers (go figure) and failure to notice this fact will reduce their revenue. Another fact: it wasn’t until CMS decided to penalize hospitals for poor patient satisfaction by docking their reimbursement by up to 2 percent that hospitals started to get religion on this topic.
Can you imagine the board of directors at Coca Cola or Revlon or Nordstrom saying, “You know, we just realized that the people who pay for our products are actually our customers and we should think about being nice to them now that we have been in business for dozens of years”? It’s absolutely bizarre that healthcare purveyors have to be taught to think about their patients as customers, particularly in competitive markets with lots of hospitals.
But healthcare is a funny place and, in truth, the line between patient and payment has been anything but straight up to this point. For the most part, hospitals have viewed the insurance plans (including CMS) as their primary customers because that’s where the money actually arrives from. Now we are in an age where 1) patients are paying a bucket-load of out-of-pocket expenses and more selectively thinking about where to spend their high deductibles; and, 2) financial penalties are being levied for failure to deliver on patient satisfaction. As a result, hospitals are finding a much straighter line between the payment stream and the actual end-user of their services: Joe and Jane Six-pack. Or Joe and Jane Chardonnay, if you are in a fancy pants zip code. Or Joe and Jane Woodford Reserve if you’re at my house.
And so it is written that a new C-suite position is born: Chief Patient Experience Officer, shortened to CXO. There are, according to the article, about 100 of these in the country. Oh, by the way, there are 6000 hospitals, so hopefully the others are thinking about or actually covering this in some other way. Actually a survey by Catalyst Research suggests that about 22 percent of hospitals have a specific job focused on patient experience, albeit mostly more junior positions. The same research survey says that most hospitals manage patient experience by committee. God help them.
This issue of customer satisfaction is particularly poignant now that hospitals are getting docked for low HCAHPS scores. HCAHPS (which is short for Hospital Consumer Assessment of Healthcare Providers and Systems) are surveys that CMS relies upon to determine whether hospitals have satisfactorily serviced their customers, aka American citizens on Medicare. The standardized surveys ask 27 questions about the patient’s hospital experience to determine how responsive doctors and nurses were, whether they communicated effectively generally and about medications, whether pain was well-managed or at least perceived to be so and whether the place seemed clean. There is also a question about whether the patient would “recommend” the hospital to friends. The last one is kind of funny, since recommending that a friend go to a particular hospital is a little like recommending they go play in traffic, but you get the idea.
If hospitals fail to maintain high enough HCAHPS scores, CMS can reduce their payments by 2 percent. This may not sound like much, but, according to the American Hospital Association, one-quarter of hospitals lose money on operations and the average operating margin is 5.5 percent. Thus losing 2 percent on a large number of admissions can be a death knell; most hospitals have a lot of Medicare patients and these patients sometimes even represent a majority of inpatient admissions.
In a study done by Truven Health Analytics, not-for-profit hospitals averaged 4.9 percent profit margins while for-profit hospitals averaged 11.2 percent and government-owned hospitals 2.8 percent. In the period studied, the not-for-profit and government hospitals had markedly higher HCAHPS scores than for-profit hospitals, with not-for-profit church affiliated hospitals at the top. I find it very interesting that for-profits failed so badly here, as you would think they would be savvy about customer satisfaction like other for-profit businesses. But apparently a typical for-profit hospital is not a typical for-profit business.
On the other hand, the same study says that for-profit hospitals have the lowest number of risk-adjusted patient complications, which really should play a very high role in patient satisfaction. In fact, it is my view that positive clinical outcomes for an individual should be a much higher consideration in a hospital than how nice people are, how clean the place is, and their feeling of comfort overall. It is always amazing to me that people do not link their own treatment outcomes more closely to their satisfaction with the medical system. I don’t know if it’s because they assume medicine is an art not a science (“eh, he tried, oh well, A for effort!”) or if they let feelings of liking their doctor override feelings about hating that they had a massive complication; either way this has never seemed obvious to me. And yet it is what happens in these satisfaction surveys.
And so the Chief Patient Experience Officer will likely spend far more time worrying about the interpersonal skills of the nurses and greeters, whether the rooms feel like the Ritz Carlton and not Motel 6, and whether the food is good than whether the doctors are delivering on clinical quality measures. Hopefully there is someone else worrying about that and hopefully, as patients become more engaged consumers, one of the things they will learn is that clinical quality and better outcome matter far more than hospital cafeteria choices and a pleasantly appointed room. Until then, I am sure that the Disney Institute customer service training program for healthcare workers will be doing a booming business. I am not making this up. See HERE for proof. Let’s hope this is not where the surgeons are doing their CME’s (CME stands for Continuing Medical Education, not Cue Mickey’s Entrance).
On the other hand, people are people and said people like comfort and cleanliness (well, everyone except teenagers perhaps) and when other people are nice to them, so maybe that is good enough. When people are happy, they tend to feel better, so maybe this is just a big circular argument that will ultimately prove that clean hospital rooms and doctors who treat you like a human not a “case” lead to better clinical outcomes. Maybe feeling like you are in the Ritz Carlton (fyi: Ritz Carlton also does hospital training) when you have your hip replaced makes you think it came out better than if you feel like you are in a medical institution reminiscent of the old Soviet Union.
This all raises another question for me. No one would argue that consumer marketing companies spend a great deal of money to attract customers. Advertising, decorating, hiring smiley people and gourmet chefs—it costs beaucoup bucks. In healthcare this is a new expense. Does this mean that the quest to satisfy customers will actually cancel out healthcare savings we might achieve elsewhere? Will the quest for comfy Ritz Carlton-like rooms end up causing greater expense per admission than will be saved through better discharge planning? If patient experience is managed by committee, you can bet that is a likely outcome, as committees, by and large, are not the straight path to optimization. And nice fluffy pillows with mints on them don’t come cheap.
While you’re at it, take a look at this NY Times article about hospitals’ quest to feel more like hotels and take the quiz at the bottom. Enlightening to say the least.