The Importance of Patient Experience for Hospitals: Why it Pays to Excel

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Rarely has healthcare led other industries in customer service, says Paul Spiegelman, founder and CEO of patient experience company Beryl. For years, healthcare facilities have operated on the assumption that, "If you build it, they will come" — that the mere existence of a hospital in a community would drive case volume and revenue. "Excelling at customer service was not necessary, and therefore, it wasn't done," Mr. Spiegelman says. Over the last several years, an increase in transparency and high-deductible health plans has forced consumers to look more closely at the care they receive, in terms of quality outcomes, cost and customer service. In the next five years, Mr. Spiegelman predicts customer service will be the number one issue in hospital executive board rooms, and the budgets attached to it — historically very limited — will balloon.

Why now?: Factors driving customer service in the healthcare industry
Several trends are driving the C-suite's increased focus on customer service, Mr. Spiegelman says. The healthcare industry is entering an age of consumer awareness: Over the last few years, more and more hospitals have started publicizing data around cost and quality, enabling patients to make informed choices about how and where they receive their care. As data on quality and cost becomes more prevalent, however, most hospitals are likely to exhibit scores in the 90th percentile range — meaning the differentiating factor between facilities must lie elsewhere. "The only remaining differentiator is customer service," Mr. Spiegelman says. "That's one reason why customer service has come to the forefront."

As patient satisfaction scores come under greater scrutiny, Mr. Spiegelman says hospital executives are realizing the widening scope of the patient experience. "The patient experience is more than what just happens within the four walls of the hospital," he says. "[It] is every touch or interaction with the hospital, from the point of the patient determining the need for care to long after discharge." He says this means hospitals must think about the interactions that occur before the patient arrives and after he or she leaves. "For example, someone could go into the hospital and have a great clinical result, and then a few weeks later, get a call from the collections arm of the hospital that [negatively] colors the whole experience," he says.

While the improvement of customer service is clearly an important issue in itself, Mr. Spiegelman says the trend is driven by economics. As CMS regulatory action around reimbursement for readmission rates increases, hospital administration has "financial skin in the game" for the first time, he says. And hospitals that achieve great customer service results are seeing returns. "People are seeing that improvements in service drive better financial results," he says.

The effect on financial performance

To understand the effect of customer service on financial performance, Mr. Spiegelman suggests hospital executives look outside the healthcare industry. "If you look at the companies that have the best reputation for customer service, those are the same companies that have the highest level of employee engagement and the same companies that have the best financial performance," he says. Companies such as Southwest Airlines and Zappos offer products at a similar price to their competitors' and are significantly more successful. He says customer service is the compounding variable. "You ordered something [from Zappos] once and they sent it overnight with free shipping, and then they made you a member of their lifelong club," he says. "I've bought two pairs of shoes for a total of $80, and the service experience is so special that you want to do business there again."

He says the healthcare industry has historically ignored customer service because patients come to the hospital out of necessity, not choice — but customers' inherent dislike of hospitals makes customer service even more important. "Nobody wants to do business with us," he says. "Nobody wants to be in the hospital, so the bar has been raised even higher."

Numbers back up Mr. Spiegelman's assertions: In the book Firms of Endearment, Rajendra S. Sisodia, David B. Wolfe and Jagdish N. Sheth assess the financial results of companies that focus on culture and employee engagement, two factors that drive great customer service. Over a 10-year period, companies like Whole Foods, Harley Davidson and The Container Store generated a 1,026 percent return for their investors. In the same 10-year period, the companies profiled in Good to Great by Jim Collins — companies recognized for their unmatched success in their respective industries — generated only 333 percent for their investors. The overall stock market, by comparison, generated 133 percent for investors. "The fact is that culture pays, and hospitals are certainly realizing that they have to look at themselves as businesses," he says. "If you are going to improve customer/patient satisfaction, you have to start with employee satisfaction."

Building a great workplace

Customer service and employee engagement are inextricably linked, Mr. Spiegelman says. Happy employees are more likely to be patient and helpful with customers, and most employees want to be happy in their jobs. "Every employee would love to get up every morning and feel like they really want to go to work that day," he says. "What an organization has to do is create an environment that allows that to happen. Unfortunately, business is generally not run that way. Business is run as a profit-first enterprise, and it needs to be run as a people-first enterprise."

He says building a people-first enterprise can start with something as simple as the hospital's mission, vision and values. "In our industry, every hospital has a big mission, but is it on a plaque in the administrator's [office], or is it a topic of discussion every time they have a town hall?" he says. Employees want to understand the direction of the organization and, more importantly, how their roles assist the organization's process. Hospital executives can help spread mission, vision and values simply by being more present in their hospital halls. Mr. Spiegelman knows a hospital CEO who has built a rare rapport with his staff members since he started at the facility a year ago. He showed up at orientation to explain the purpose of the organization and distributed a special email address that allowed staff members to reach out to him at any time. These may seem like small steps, but they ultimately demonstrate a commitment to employee engagement that many hospital executives lack.

Mr. Spiegelman says vulnerability is the first step in employee engagement. To decide on a "mission, vision and values" that truly reflects the hospital's character, the CEO must sit down with staff from all levels to discuss improvements in culture. "It's not going to happen overnight, and CEOs have to really be vulnerable with their own employees," he says.

Read more about Beryl.

Read more advice on customer service:

-How to Banish Bad Hospital Customer Service

-4 Tips for Hospital Leaders to Improve Employee Engagement

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