In today's age of consumerism, successful companies in every industry--from hotels and restaurants to banks and retail stores--are striving to achieve high customer satisfaction by providing outstanding service.
Managed-care plans are no exception. Yet they have fallen behind the curve when it comes to customer service, largely because their emphasis has long been on clinical quality and low costs.
Americans, however, expect competent--even exceptional--service from their insurers and feel that it's an important part of good care. For many, a delay in coverage or several hours on the phone straightening out a bill can sour the entire healthcare experience.
Given consumers' high expectations, health plans are putting greater emphasis on service. Many are striving to present a kinder and gentler face to members, from smoother operations to greater responsiveness to their questions--in total, a level of service that helps members feel that they are receiving an extra measure of care.
The trick is to accomplish this without losing sight of costs. Insurers know they can't overspend on customer-service efforts if the investment results in premium increases that drive large-group clients away.
"Health plans have started to take a more assertive role in reshaping their image, from perceived consumer adversary to consumer champion," says Peter Kongstvedt, M.D., managed-care practice leader for Cap Gemini Ernst & Young in Washington. "They're poised to take a significant leap forward in customer service."
Indeed, consumer-satisfaction surveys show there's still plenty of room for improvement.
A recent study by the Kaiser Family Foundation found that 36% of the 2,500 people polled gave their health plan a grade of C, D or F. Just over half of respondents reported having a problem with their plan during the previous year, and of them 55% gave the plan a C, D or F in dealing with the problem (See chart, p. 29).
This consumer unhappiness has manifested in increased legislative efforts to regulate managed care. Doctors, hospitals and consumer advocates are pushing for a patients' bill of rights that would allow HMO members to seek recourse through the courts when treated unfairly or inadequately by their insurers.
"When one out of every two people reports having a problem with their health plan, it suggests that the pressure behind the patients' rights debate is grounded in real patient experiences, not just anecdotes," says Drew Altman, president of the Kaiser Family Foundation.
The survey's findings are equally startling given how easily members' experiences can make or break a health plan's bottom line. Today's consumers are savvier than ever about what they are getting for their healthcare dollar and readily use the Internet to compare health plans. When they are dissatisfied, many simply choose to leave.
According to a new study on consumer loyalty, a resounding 82% of consumers surveyed have stopped using a company's products or services when trust was broken. And of all the factors affecting trust, 84% of consumers said they got the most fed up when they received poor customer service.
"Companies need to understand consumers' distinct patterns involved in building trust in a company or product, not only to win their trust but to shore up the bond when something goes wrong," says Margaret Booth, president of M. Booth & Associates, the New York-based public relations firm that commissioned the study.
As a result, many health plans are improving their responsiveness and problem-solving capabilities by equipping their call centers with specialized information systems. Such "customer relationship management" technology is designed to speed up response times and shorten the length of calls by giving customer-service representatives instant access to member data.
Santa Ana, Calif.-based PacifiCare Health Systems, one of the nation's largest health plans, has begun rolling out a new CRM system across its entire organization, starting with its Northwest region. The system, which was installed in PacifiCare's Oregon and Washington call centers in November, tracks the details of the contacts a member has with the health plan, whether they're made via fax, phone, letter or e-mail.
This information gives the company a more in-depth, "holistic" view of the member's experience, says Thomas Gibbons, PacifiCare's manager of customer service for the Northwest region. And that allows customer-service representatives to be more efficient and knowledgeable when helping that member in the future.
"What we were doing before was basically just tracking (individual) calls," Gibbons says. "Our new system provides a more consistent and comprehensive approach to customer service. It's helping us to better manage our entire relationship with the member, not just the phone call."
A recent Information Week survey found that 24% of health insurers plan to spend $1 million to $5 million during the next 12 months on similar CRM technology, and 13% say they plan to spend more than $5 million. An overwhelming 93% believe their investment will lead to higher customer loyalty, and 89% think this increased loyalty will lead to higher revenue.
Indeed, experts say it costs organizations five times more to attract a new customer than to keep an old one. A 1994 study by Bain Consulting in Boston, in fact, found that a 5% increase in customer retention can equal a 25% to 100% boost in profitability.
Experts, however, are quick to point out that it isn't enough to simply install new CRM technology. If a health plan truly wants to become more customer-focused, it must redefine its corporate culture from the top down.
For Blue Cross and Blue Shield of Massachusetts, this cultural shift began about four years ago when President and Chief Executive Officer William Van Faasen insisted the health plan do whatever it would take to improve its mediocre customer-satisfaction scores. Since then, top management has worked to reinforce the message throughout the organization that members always come first.
"It's about getting the entire company to unite around customer service," says Carole Waite, vice president of member service for the Boston-based plan. "When you know your CEO and the board are behind you, you really feel inspired, empowered and motivated."
The company, for instance, has authorized all of its front-line employees to make coverage and billing decisions on the spot, without having to go through a long chain of approvals. "Customer service isn't about saying `no' and wagging your finger at the member. It's about finding ways to say `yes,' " Waite says.
Outside observers have asked whether employees may end up approving too many claims and boosting expenses. But Waite says the company's costs haven't risen in the three years the policy has been in place.
"What we found (previously) was that in most cases, we ended up paying the claims anyway after members had gone through three or four levels of appeals and, at that point, were very unhappy," she says.
This approach seems to be working. From the end of 1997 to Sept. 1, 2000, the number of appeals dropped to 0.99 per 1,000 members from 1.29. At the same time, members are more satisfied. In the second quarter of 1998, 64% of enrollees said they were satisfied with the Blues' problem-solving; by the fourth quarter of 1999, the number had climbed to 81%.
Blue Cross and Blue Shield of Michigan has also made gains in customer satisfaction by redefining its corporate culture. Its strategy, however, centers on satisfied employees.
In 1999, the Detroit-based health plan began researching some of the nation's most successful and respected companies, including Disney and Ritz Carlton. What it found was a statistical relationship between happy employees and happy customers.
"These companies know that, when their employees are in a good mood, they will positively influence customers," says the Blues' spokeswoman, Cheryl McDonald. "Many times, our members call us when they are sick or upset; whether an employee treats them with sensitivity, care and empathy is often the determining factor in how they perceive the experience."
To emulate the winners in the hospitality industry, the Blues met with a union management team--nearly 85% of its customer-service representatives are members of the United Auto Workers--to find ways to motivate, build pride and generate a welcome feeling among its employees.
Since then, the insurer has implemented various programs to promote job satisfaction and service excellence. For example, it launched a process called "right fitting," in which employees receive assistance in transitioning to a new position within the company that better matches their talents and interests.
In addition, the health plan established the Blues Service Fanatic Award, which gives employees the opportunity to recognize colleagues who do outstanding work in customer service. The plan also encourages employees to work on initiatives that hold personal value to them, such as arranging company fund-raisers for charities.
"Our employees enjoy making a difference and I think our members can sense that," McDonald says.
Even the best of health plans must continually contend with the public's deteriorating image of the managed-care industry.
According to a Harris Interactive poll released this month, consumers perceive that only tobacco and oil firms provide worse customer service than managed-care plans. Of the 1,014 adults surveyed, only 29% said managed-care plans are doing a good job of serving their customers (See chart, p. 29). That's down 22 percentage points since 1997.
And things are likely to get worse before getting better, says Harris Chairman Humphrey Taylor. "The forces that have damaged public perception of health insurers, managed care and pharmaceutical companies are still in place and are likely to inflict more damage over the next few years."
Many health plans, though, are working to counter the industry's hard-nosed image by adding "personal touches" to enrich members' healthcare experience.
New York-based MultiPlan, one of the nation's oldest and largest PPOs, donates battery-powered toy Jeeps to many of the 3,300 hospitals it contracts with nationwide. Hospitalized children can "drive" the car to the operating room before surgery or to and from lab tests and other procedures.
Launched in 1998, the innovative program is designed to make the hospital experience a bit less frightening for sick children, says Anne Eagar, MultiPlan's vice president of quality management.
It also lets the hospitals and MultiPlan's customers--in this case, health plans and self-insured employers--know the PPO is willing to take that extra step to provide added value.
"People remember how hospitals treat them while they receive care. Patients notice little things that make them feel special," Eagar says.
Studies have found that women in particular value these "softer" services. And for health plans, improving satisfaction rates among their female members can have a dramatic effect on retention rates.
According to another survey by Harris Interactive, 90% of women say they are the primary decisionmakers on all healthcare-related issues in their households. Yet, at the same time, a higher percentage of women than men report having problems with their health insurers each year.
"In general, women place a much greater focus on relationships and personal contacts," says Mike Ritchey, senior vice president for Fischer & Partners, a strategic healthcare communications firm in Marina del Rey, Calif. "(They) are more likely to be motivated by messages that reinforce the value of belonging."
More than just another member
Other health plans are building customer loyalty by reaching out to patient populations that need extra care or to groups that traditionally have been underserved by the healthcare system--namely ethnic minorities.
Studies show that health status plays a significant role in customer satisfaction with health plans. Members who perceive themselves to be unhealthy are generally less satisfied with their HMOs and tend to prefer fee-for-service plans.
Many managed-care firms are working to overcome these negative findings by providing focused service to people with chronic illnesses, such as diabetes or high cholesterol. The programs provide these patients with wellness and prevention information and arrange for regular check-ups.
"Not only do these programs save money by improving (patient) outcomes, they also make (participants) feel more like an individual, not just another member," Kongstvedt says. "That promotes loyalty in a fiercely competitive market."
Kaiser Permanente has taken this idea a step further by targeting treatment programs to specific ethnic groups. The Oakland, Calif.-based plan, for example, has designed disease-management programs for its African-American members that target sickle-cell anemia, congestive heart failure and prostate cancer. African-Americans are more predisposed to these diseases than other groups.
Programs such as these are crucial given that African-Americans, Hispanics and Asians together now make up a majority of the population in California, Kaiser's largest market, says Oliver Goldsmith, M.D., chairman of Kaiser's National Diversity Council.
"Diversity is adding a new dimension to patient-satisfaction rankings," he says. "Minority groups want us to address their unique needs, and it's our responsibility to do so. It's just another way for us to provide quality care to our members."
Intermountain Health Care in Salt Lake City is also striving to provide more "culturally competent" service.
The health plan has created a Spanish-speaking customer-service team for its growing Hispanic population. It also has launched a special patient advocacy line, where customers can get help finding doctors who speak Spanish or arrange for a Spanish-speaking interpreter to accompany them to their medical appointments.
Getting customers involved
Customer satisfaction, however, remains a moving target.
Studies show that the reasons behind members' satisfaction and dissatisfaction evolve over the course of their relationship with a health plan. While new enrollees react more negatively to problems involving billing, claims denials and unresolved complaints, longer-term customers are more reactive to "human factors," such as discourteous staff, according to a recent survey by the market research firm Opinion Dynamics Corp.
So how can health plans stay on top of customers' changing needs, wants and priorities?
MVP Health Plan in Schenectady, N.Y., does so by seeking its members' advice. The insurer regularly surveys enrollees to ask about their experiences. This probing often uncovers valuable information, says MVP spokeswoman Amy Ertel Bellcourt.
"We had a number of complaints about our paperless referral system. Members were getting to specialists before MVP had faxed the doctor the referral," Bellcourt says. "We put together a new process and reduced the number of calls by 75%."
At Blue Cross and Blue Shield of Oklahoma in Tulsa, the member is seen as a partial employee responsible for co-producing the healthcare experience.
In 1999, its BlueLincs HMO subsidiary created a member advocacy council, which allows a broad cross-section of enrollees to provide direct comment on plan operations. For example, when a survey revealed that the HMO's written materials lacked clarity, the 10-member council studied the literature, made suggestions and developed a new membership packet and handbook.
"It's easy to develop a product we like, but it might not necessarily be a good product for the marketplace," says Michelle Burkett, BlueLincs' benefits administration manager. "That's why it's so important to get an outside perspective from the members, who are the actual end-users of the product."