Editor's note: Morton Plant Health System, the Clearwater, Fla.-based parent company of Morton Plant Hospital, and Dunedin, Fla.-based Mease Health Care have proposed a merger, a deal that's currently on hold pending an antitrust challenge from both the U.S. Justice Department and the state of Florida.
What can hospitals do to serve their customers' needs and secure their loyalty while keeping their costs down?
Those questions were posed recently to Frank Murphy, president and chief executive officer of Morton Plant Hospital in Clearwater, Fla., in discussions about customer choice and national healthcare reform. He gave the following anecdote about a tuna sandwich and a patient.
"A patient was terribly upset about our food," Mr. Murphy said. "I visited him in his room. After talking a little while, I understood that what really bothered him wasn't so much the food but his liver cancer.
"We couldn't change his prognosis, but at least we could give him what he wanted for lunch, which was a tuna sandwich. The attention made him feel better and earned us goodwill without costing us extra."
That goodwill becomes especially important in light of provisions of proposed healthcare legislation that would mandate increased employee choice of providers.
The personal touch. In another example of how Morton Plant addressed customer needs and wants while improving financial performance, the hospital was receiving an average of 380 complaints each month from patients about their bills. It appointed a team, which included registration, billing and collection staff, to address the problem.
The solution was to replace the traditional bill with a personal letter, which (paraphrased) said, "Thank you for using Morton Plant. We appreciate it. You received the following services; here is what they cost, here is what your insurance company is paying, and here is what you owe. Please call if you want a detailed statement." The letter also included all the elements that state law requires it to communicate.
As a result of the letter, collections increased and patient complaints dropped by 45% to an average of 208 per month, saving substantial staff time. "In healthcare, we've not been in the habit of measuring the cost of rework," Mr. Murphy said. "But by eliminating rework right up front, we cut our costs substantially."
Satisfaction surveyors. At Morton Plant, 160 similar teams are identifying and tackling cost and customer satisfaction issues. The results are concrete-in fiscal 1993, hospital revenues exceeded the bottom-line goal by $1 million, while total costs per patient rose only 1%; benefit costs increased by less than the 2% goal; and materials management price increases were held to 0.7%.
Results were achieved from a strategy based on quality assessment, Mr. Murphy said. "We shifted from a quality assurance mind-set, where we tried to assure ourselves that we were doing OK, to a mind-set of constantly assessing how to improve, and publicizing improvement goals."
Although quality assessment tools and quality improvement goals aren't new strategies, many hospitals have yet to reap benefits from them because they haven't applied them consistently.
"Inconsistency is the kiss of death," Mr. Murphy said. "You can't just do a survey here and a survey there. You need years' worth of statistically significant data for it to be worthwhile."
For the past two years, Morton Plant has performed quality assessment for each of its key customers-inpatients, physicians, employees and purchasers, a category that includes insurance companies and large employers.
"We define quality as serving the needs of each of those customers, and we describe needs in three basic categories-service, outcomes and costs," Mr. Murphy said.
When assessments identify areas needing improvement, teams are assigned to devise solutions by customer category. "The people who are most successful at responding to customers are those who are closest to them," Mr. Murphy said. "We have a lot of fun `wins,' where the employees get involved and come up with ideas to make things better."
Mr. Murphy said Morton Plant's proposed merger with Mease Health Care is another step designed to help the systems better serve their customers' demand for quality, cost-effective care. "It is incumbent on every institution to cut costs," he said. "One way to do that is to merge facilities in order to reduce overhead costs and needless duplication of services."
Board involvement. The hospital's board also is involved in quality improvement. It has a committee devoted solely to quality issues. The board reviews results of annual surveys of patients, physicians and team members as customers, and it also looks at quarterly summaries of customer service issues and progress toward meeting quality improvement goals.
Board knowledge and backing of quality assessment and improvement not only sends strong signals about their importance internally, but also indicates to managed-care companies, employer groups and the community that the hospital is making a commitment to provide better service at a lower cost.
"Twenty years ago, had we in healthcare focused on cost as well as technology and outcome, then we wouldn't be facing the uncertainties we face now," Mr. Murphy said. "But I think we've learned the lesson to take a balanced approach, to not just focus on cost, but to respond to our various customers according to all their needs."