Intensified competition for patients covered under managed-care plans has shocked some hospitals into taking customer satisfaction more seriously.
Most experts interviewed by MODERN HEALTHCARE don't think hospitals are serious enough about improving customer satisfaction. However, an increasing number are starting to document satisfaction for payers, employers and the public out of fear they will lose patients and revenue.
Industry leaders in customer satisfaction, such as the Marriott Corp., are far ahead of hospitals in developing programs to reward employees for treating their customers well, experts said.
But hospitals are beginning to wake up to the cold, hard fact that patients have choices about where they spend their hospital dollars. And if a hospital doesn't treat a patient well, that patient might not come back. Or, worse, that patient might tell friends or an employer about poor service.
"Patients are making more decisions now than in the past. I hear that from physicians all the time," said Sandra Gill, president of Physician Management Resources, Westmont, Ill.
"Hospitals want to be on that list where employees can choose them," Ms. Gill said. "Employers listen to their employees and make decisions when enrollment periods come around. Hospitals with higher satisfaction, good quality and efficiency stand a better chance with an employer or payer."
Influencing factors.A number of factors have renewed hospitals' interest in customer-satisfaction surveys. They include:
A steady increase in the percentage of patients covered under managed-care plans. As hospitals compete for managed-care contracts, HMOs are looking for providers that already do well in customer service, although price, quality, geography and medical staff strength are still the prime considerations.
About 33% of the population is covered by an HMO or PPO, according to industry research.
Total quality management programs. TQM programs encourage hospitals to evaluate and compare themselves. They typically include the use of surveys to indicate changes necessary to improve customer satisfaction.
An increase in partnerships between hospitals, physicians, insurers and employers. Competition to join preferred integrated delivery networks is leading hospitals toward improving patient satisfaction to become more appealing to potential partners.
The Joint Commission on the Accreditation of Healthcare Organizations. The JCAHO's 1994 accreditation manual requires hospitals to improve performance. One of nine measurements of performance is patient satisfaction.
The National Committee for Quality Assurance. The NCQA's development of the Health Plan Employer Data and Information Set includes patient-satisfaction components in its 60 measurements. HEDIS is designed to help consumers and employers compare the performance of managed-care plans.
Some 21 major HMOs-including Kaiser Permanente, Prudential Health Care System, TakeCare and U.S. Healthcare-plan to use HEDIS to standardize consumer health information on satisfaction (Dec. 20-27, 1993, p. 62). Combined, they have 9.6 million enrollees, or 20% of the nation's total. The NCQA plans to release its HMO comparative report card later this year.
The result is that hospitals seeking to join managed-care networks can help themselves win contracts if they have high patient-satisfaction scores, HMO executives said.
"Customer-satisfaction scores will be a very important piece of the decisionmaking process," said David Epstein, M.D., Prudential's vice president of medical services for its southern group in Atlanta.
Dr. Epstein said customer satisfaction will become even more important in managed-care selection when hospitals competing for contracts standardize their measuring tools. Currently, HMOs find it difficult to compare hospital scores because different survey techniques are used, he said.
"Right now, we wouldn't change a provider unless there were serious questions about customer service," Dr. Epstein said. "But with newly created networks or realigned networks, customer satisfaction could be an important piece of information that differentiates one hospital from another."
The increased interest of states and private marketing firms in publishing lists that rate hospitals and other providers.
For example, Dun & Bradstreet recently published a Consumer Hospital Guide that rates hospitals on mortality, complications and cost in four of Florida's metropolitan areas.
In St. Louis and Atlanta, Health Pages magazine lists fees and background information on physicians, HMOs and hospitals. Health Pages is a St. Louis-based consumer magazine that plans to publish similar "report cards" in other cities (Nov. 29, 1993, p. 56).
Although hospitals have criticized consumer guides for flawed data, some hospital groups are working to develop rating systems for public consumption. The Florida Hospital Association, which objected to the Dun & Bradstreet guide, is working with the state Agency for Health Care Administration on developing a customer-satisfaction report card to enable the public to compare hospitals and health plans.
The FHA also is reviewing different customer-service survey approaches and is expected to recommend an "effective approach to measure patient satisfaction" to its members later this year that will help standardize survey information, said Mark Milner, the association's vice president of professional services.
Mr. Milner said a recent survey of Florida's 220 community hospitals revealed that most facilities conduct patient-satisfaction surveys. "The standards vary, and there is no way to compare one hospital with another right now," he said.
Critics' response. Despite the need for information, critics have charged that patient-satisfaction surveys are sometimes flawed and are not standardized. Response rates for the more traditional written surveys are low, and the accuracy of the results are questionable.
But experts said newer techniques such as telephone and focus-group surveys are more accurate than written surveys. SunHealth Alliance in Charlotte, N.C., surveyed 85 of its hospitals and got an 85% response rate with telephone surveys and a 13% response rate for written surveys.
However, telephone surveys cost an average of 30% to 40% more per respondent than written surveys, according to experts.
Customer-satisfaction surveys at hospitals can take many forms. They primarily include monthly surveys of patient satisfaction, but hospitals also are beginning to coordinate employee, physician and community-awareness surveys into the strategic planning process, experts said (See story, p. 32).
"There is a direct statistical correlation in patient satisfaction and employee morale," said David Jackson, senior vice president at the Gallup Organization, Columbia, Md.
For example, Mr. Jackson said, if a hospital has low patient satisfaction in one unit, there is a good chance that employee morale is low there, too.
Patient-satisfaction scores have been rising over the past five years, Mr. Jackson said. "Hospitals are taking patient satisfaction more seriously now," he said. However, he said, employee-satisfaction scores have recently dropped, most likely because of layoff and downsizing trends, he said.
Patient satisfaction and profits. SunHealth embarked on a multi-stage project last year to help its partner hospitals improve patient satisfaction.
As part of its project, the healthcare alliance plans to develop a database later this year to show correlations between increases in patient satisfaction and revenue, profits and costs, said Linde Howell, SunHealth's manager of assessment services.
SunHealth plans to integrate its cost and productivity databases with its customer-service data, Ms. Howell said. The alliance has more than 200 partner hospitals in its databases.
Ms. Howell said hospitals need to prove value to patients and payers to win their business. Value, she said, equals price, clinical outcomes and satisfaction.
To deliver value, hospitals must recognize the importance of improving patient satisfaction, develop ongoing measures of satisfaction, and create a system to manage satisfaction and encourage patient loyalty, Ms. Howell said.
"We don't want patients to be just satisfied; we want them to be delighted with services and loyal to the organization," Ms. Howell said.
To date, the only known study that compared profitability with customer satisfaction was conducted in 1990 by Mishalanie Layton & Associates, Orlando, Fla. (See chart, p. 34).
The study indicated hospitals with a customer-service component in their strategic plan were slightly more profitable than those hospitals that did not stress customer-service improvement, said Sarah Layton, president of Mishalanie Layton.
Employee morale. Sacred Heart Hospital of Pensacola, Fla., recently was recognized for its dedication to customer service and employee satisfaction when it became a 1994 co-winner of the Sterling Award, the state's highest award for quality (June 20, p. 32).
But the award wasn't due to luck or chance. In November 1992, two months after Sister Irene Kraus became president and chief executive officer of Sacred Heart, she initiated the hospital's first survey of employee satisfaction. In all, 1,600 of nearly 2,000 employees responded to the 135-question survey with four additional essay questions.
Sister Kraus personally held 20 sessions with employees to discuss the results of the survey. "We discussed the good things and the bad things," she said. "I presented to the board an action plan to correct major deficiencies."
While numerous improvements were made as a result of the survey and feedback, employees overwhelmingly felt their pay scale was lower than that of other hospitals, Sister Kraus said.
Sacred Heart reviewed salaries of hospitals in the panhandle region of Florida and decided to increase the salaries of its work force to bring them just "above the middle of the road," Sister Kraus said. The $1.7 million annual increase applied to more than half of Sacred Heart's employees.
"When you do these (employee surveys), you can't downplay the negatives," Sister Kraus said. "You have to be open and honest, and you have to be prepared to make changes or it won't work."
Medical staff surveys. Just two years ago, physicians participated in
strategic planning with hospitals but weren't truly seen as partners, Ms. Gill said. "For the first time, the concept of physicians taken as partners is real," she said.
Because of that shift, patient- and physician-satisfaction survey results are more important, Ms. Gill said.
Once viewed as soft data, satisfaction surveys now are considered equal in importance to such hard data as financial measurements, Ms. Gill said. "Soft data can make a difference in partnership arrangements," she said.
Physician surveys also can take many forms, she said, depending on whether the physician is an employee or independent practitioner. "The intensity of ongoing physician assessment is unparalleled today," she said. Survey questions range from difficulty in scheduling elective surgery to numbers of patients in managed-care plans, she said.
Competitive edge. "In a multihospital market, customer service can be a competitive advantage, and I recommend it as a strategy," said Michael Rindler, president of The Rindler Group, a Beloit, Wis.-based consulting firm.
Sister Kraus said as healthcare reform and increasing competition drive down prices for healthcare services, hospitals that provide superior customer service will stand out.
"If I bring my price down, others will do the same," she said. "The difference will be in the quality of work and the caring of providers. If we don't listen to consumers, they will go to somebody else."