High Patient Experience Scores Boost Hospital Net Margins by 50%
Top-notch patient experience scores may be able to double hospital net margins, says new research.
- Hospitals in the US that provided a “superior” patient experience gained net margins that were 50 percent higher, on average, than those that deliver an “average” customer experience, researchers from Accenture observed.
“Patients are increasingly shopping for healthcare services, seeking the best possible overall experience when they need care,” said Jean-Pierre Stephan, managing director of Accenture’s Health customer relationship management offerings. “As a result, leading hospitals are growing profitability not by cutting costs, but by improving the patient experience and satisfaction.”
Researchers examined data on hospital margins with patient experience scores from the Hospital Consumer Assessment of Health Providers and Systems from 2008 to 2013. They discovered that top performing hospitals had margins and revenues that were growing at an above-average rate. For these top performers, the growth of revenue also outpaced operating expenses.
The correlation between superior patient experiences and higher margins was true for all types and sizes of hospitals, Accenture noted. Researchers looked at every type and size of hospital, such as for-profits, nonprofits, urban, rural, academic and non-academic hospitals. They noticed that the margins at urban hospitals were about eight times greater than margins of rural hospitals. This could mean that urban hospitals that provided superior consumer experience achieved almost double the margins of an average-experience hospital.
Researchers also noticed that the correlation between exceptional customer service for patients and improved profit margins occurred over time. “The extent that hospital margins increased with a 10 percent improvement in consumer experience scores grew 70 percent over six years, from 1.04 percent in 2008 to 1.72 percent in 2013,” Accenture stated.
According to researchers, a hospital system with $2 billion in revenue would need to cut 460 jobs (for individuals with an average salary of $100,000) in order to gain the same 2.3 percent margin benefit that superior customer experience provides for revenue growth.
“As health consumers increasingly factor experience into their care selection decisions, the financial benefit associated with patient experience can only be expected to increase,” Stephan said.
Adopting lean management to reduce waste is clearly not the only practice hospitals should implement if they are looking to improve profit margins. Becoming patient centric is a worthwhile endeavor. Quality customer services clearly leads to increased profits from Accenture’s perspective.
When patients receive quality care and excellent customer service, stakeholders also save time. If a patient feels unsatisfied with their business office interaction, they may also have a negative perception of the entire healthcare facility. This can sometimes cause the facility to spend more time and money on customer service.
Aside from excellent soft skills, healthcare professionals responsible for providing customer service also need effective technologies that assist patients.
New technologies, including digital communication tools and mobile apps, have helped patients obtain information much more quickly as long as providers continue to implement patient engagement strategies, a previous report noted.
However, an over-dependence on technology for superior customer experiences is not a cure all. It’s in healthcare professionals’ best interest to provide exceptional customer services while also using user-friendly technologies that will help them do their job effectively so patients will have a positive perception of their healthcare experience.
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