America's hospitals have been on a "customer relations" kick for years, pledging to pamper patients with superior service and all the first-class amenities and attentive care of a luxury hotel. Unfortunately, many of these efforts have been fleeting and superficial, more apt to evoke images of a Motel 6 than a Marriott.
Until recently, most so-called customer-service plans were comparatively simple and superficial-little more than bare-bones programs to encourage employees to smile more often and be polite. The new generation of guest-relations programs aims to take a more comprehensive approach and can last for months or even years and cost hundreds of thousands of dollars. Under increased prodding from customers and competitors, hospitals are beginning to fully embrace this sensitive and sometimes nebulous notion, hiring high-priced outside experts to help transform the way they treat their patients-and their employees.
Companies like Disney, a leading name in customer service, and Ritz-Carlton, whose internationally renowned brand epitomizes top quality, have emerged along with a handful of independent consultants as leaders in this lucrative, rapidly growing niche. Other high-profile players include Baptist Health Care Corp. in Pensacola, Fla., which has expanded an internal customer-service program into a nationally recognized healthcare "leadership institute" centered on guest relations.
For consultants and hospitals alike, the stakes are high. Disney, Ritz-Carlton and the growing cadre of customer-service consultants are now vying for a share of a market that could amount to $50 million or more over the coming years, says Peter J. Plantes, M.D., vice president of business operations at VHA, a national alliance of community hospitals, which has about 2,200 members.
Before the Sept. 11 terrorist attacks that deepened the nation's economic woes, Plantes was predicting that the market for consulting services might break the $100 million mark. Despite the downturn, he says, hospitals with forward-looking executives have hit on the "theme of customer service as a way to generate patient-or customer- satisfaction."
"Look at past historical (down) cycles," Plantes says. "The organizations that emerged successfully out of the 1970s (including the U.S. auto industry) captured the consumer issues; they emerged as winners out of downtrend times. And the same thing is going to happen in healthcare."
Though customer service has been the watchword in some industries for decades, many hospitals operated under the assumption that the patient needed them more than they needed the patient, leading to an operating system that included two-hour waits in emergency rooms, haughty nurses and seemingly uncaring doctors. But declining reimbursements, increased competition and a far more selective clientele have changed that, along with the realization that customer service makes good economic sense.
"Sometimes, you have to sell people on the financial benefits of customer service," says Mary P. Malone, executive director of consulting services at Press Ganey Associates, the nation's largest patient-satisfaction surveying firm.
These days, of course, there's no shortage of experts eager to teach hospitals how to make their "guests" and their employees feel more comfortable or valued. Even faced with increasingly thin margins, many of the nation's nearly 5,000 hospitals seem more willing than ever to pay an often steep price to foster a new culture that puts patients first. The bottom line: A satisfied customer is always good for business.
Return on investment
"More and more hospitals are sending people through these programs-and they pay off," says Jeffry Peters, president of Health Directions, a Chicago-based consulting firm that works with doctors and hospitals. "If you want to attract the patients with the better insurance, and more discretionary dollars, those are the patients who are most discerning about customer service. They have more choices these days, and they're using them."
To some observers, this new-or perhaps renewed-emphasis on customer service is a critical evolution from the late 1980s through the 1990s, when hospitals lost sight of guest relations during an ill-fated and expensive frenzy of mergers, acquisitions and affiliations. The latest trend represents a blessed return to the basics, says Al Stubblefield, president and chief executive officer of Baptist, whose in-house leadership program has trained more than 4,600 healthcare workers since its debut more than two years ago.
"As an industry, we go through a lot of modern healthcare fads," Stubblefield says. "There's been a recognition in recent years of getting back to our roots. Look what happened to healthcare systems in the 1990s-integrated delivery systems, the purchasing of HMOs and physician groups. We all came out of that bloodied and beaten. These days, customer service is the new battleground."
No one seems certain how many hospitals have sought help from outside experts to beef up their guest relations. But hundreds of hospitals have sent employees to the two- or three-day seminars operated by Disney, Ritz-Carlton, Baptist and others. And the number continues to climb, as does the list of hospitals seeking far more comprehensive, custom-designed programs tailored to their specific needs and market conditions.
"Over the last two to three years, there's really been an emerging trend to focus on customer service," says Malone. "As a result, people are recognizing that they need to bring some real expertise about service into the organization."
Although most hospitals have taken at least some modest steps to improve customer service in the past decade, more executives are recognizing the potential financial benefits of long-range planning, Malone says. For administrators at those hospitals, patient satisfaction and employee satisfaction are one and the same.
"What's turned the corner for many hospitals is the relationship between employee satisfaction and patient satisfaction," Malone says. "People see this (new focus on customer service) as a need to renew and revitalize the workforce. There are definitely financial benefits."
Richard Wade, the American Hospital Association's senior vice president for public affairs, says customer relations is a new mantra for hospital marketing departments because patients, now more informed and more savvy than ever, are becoming more selective in how they spend their healthcare dollars.
"My guess is that, in some form or another, half the nation's hospitals have done this in terms of having some kind of organized program," Wade says. "And many others are working at it in some form."
Still, despite a sudden surge of outsourcing in the past year or so, only a relatively small percentage of hospitals has sought the expensive assistance of companies like Disney and Ritz-Carlton, including those that have discovered that in-house programs weren't working. Some observers estimate that only about 20% of U.S. hospitals have engaged outside firms to craft a guest-relations program of any kind.
That's expected to change. In addition to paying the hefty start-up costs for programs like Disney's, hospitals appear more willing to foot the bill for ongoing investments over many years for continued training and related initiatives.
"These programs work only if it's not something you do just once," says Judy Neiman, president of the Chicago-based Healthcare Strategy Institute, which specializes in educational programs for hospital executives. "You don't bring somebody in and do a training program and say you're all of a sudden customer-service focused. You've got to make it part of the culture."
Adds Kristine Peterson, a senior vice president at Greystone.Net, an Atlanta-based marketing and consulting firm: "Years ago, (the concept of customer service) was a marketing tool-a nice thing that sounded good. What I see being different now is that it's commanding the attention of hospital executives and board members. It never before achieved that level of priority."
Disney, which has been including healthcare employees in its open-enrollment customer-service courses for more than a decade, has standard program rates for seminars (a typical 90-minute presentation, for instance, starts at $7,500), but fees vary dramatically for more comprehensive programs, depending on how much time and staffing are required. A typical, 31/2-day program at the institute-a few blocks from the Magic Kingdom in Orlando's Walt Disney World-ranges from $2,795 to $3,295 per person, depending on the topic, including lodging and most meals.
A full program conducted by Ritz-Carlton's staff members can reach "hundreds of thousands of dollars," says Cindy Novotny, managing partner of the Ritz-Carlton Learning Institute, based in Rancho Santa Margarita, Calif. For a midsized hospital hoping to begin the process with an "initial implementation," the costs typically range from $30,000 to $50,000 she says.
Baptist, which generated more than $1.2 million in net income from its program in 2001 with almost no marketing budget, charges $1,200 per person for its two-day session.
For many hospitals, though, the seminars aren't nearly enough. Increasingly, the hospitals are paying top dollar to bring these same experts to their campuses for special training programs, extended seminars and even advice about hospital design. Most observers expect this line of consulting services to grow wildly in the coming years.
"I think if you took a global look at it, (the business) could reach (tens of millions of dollars), especially considering the competitive nature of the healthcare business," says Larry Lynch, director of business development at the Disney Institute. "There's definitely tremendous opportunity."
Ritz-Carlton, for instance, created its separate seminars for healthcare organizations just two years ago, Novotny says. Demand has grown steadily. "I think this is a business that we're right on the cusp of," she says.
Dennis Snow, a top Disney Institute official for more than two decades before he formed his own consulting firm three years ago, says he's now helping to develop extensive programs for about eight hospitals around the nation. He says the programs can last for months and cost between $500,000 and $700,000, a sizable investment but one that Snow contends will result in quick returns in customer loyalty, earnings per adjusted admission and other factors that help measure a hospital's success.
"There's a cost, but the companies willing to go to that level are the ones that will be successful," says Snow, who is based in Orlando, not far from his old offices.
Quint Studer, former president and CEO of 492-bed Baptist Hospital in Pensacola, has carved out a lucrative market of his own as a private consultant focusing on customer relations. Studer, who still works jointly with Baptist's leadership seminars, also provides on-site assistance for hospitals seeking new customer-service plans. Among his list of about 200 clients, Studer says, are the 114 facilities owned by Tenet Healthcare Corp. of Santa Barbara, Calif., the nation's second-biggest investor-owned hospital company.
Without specifying the costs of his programs, Studer acknowledges that they can be expensive. It's not unusual, he says, for a hospital system with three or four facilities to budget $750,000 for a complete program. But he says the impact on employee satisfaction and retention alone is often worth the price.
"Five years ago, the big issue was Medicare length of stay," Studer says. "Now, it's contract labor."
Tenet CEO Jeffrey Barbakow says he kicked off a program called "Target 100" (it stands for 100% satisfaction) about 21/2 years ago with 15 of the company's hospitals. That experiment, part of Studer's customer-service game plan, has grown to include every hospital and every employee in the company, he says.
"No one's ever trained 115,000 people in something like this," Barbakow says. "It stretches from the boardroom to whoever turns off the lights at night. What's most important is attitude. It's a lot more than sending 10 people to an institute. It's a cultural change, companywide."
Barbakow, who won't reveal how much Tenet has budgeted for the program, says his company decided to make an investment in people rather than physical assets. "We have a happier workforce, better outcomes, and we've cut down on turnover. If you can support the doctors, increase retention and be the employer of choice, I don't know that you spend a great deal of time worrying about what this costs."
At Jewish Hospital in Louisville, Ky., officials say they are taking their 20-year-old guest-relations program to "another level" with on-site assistance from Ritz-Carlton's experts after years of sending staffers to the Disney Institute.
"We were very happy with Disney," says Linda McGinity-Jackson, a spokeswoman for Jewish. "We just wanted a change; we wanted to push the envelope a little."
Officials at Jewish, which claims to have been among the nation's first hospitals with a comprehensive guest-relations program, estimate that the organization spends about $100,000 per year on its ongoing "customer-care" program.
"We're a hospital, but we're still in the hospitality business," says Pamela Best, the organization's vice president of guest relations, who is known, for better or worse, as the "Leona Helmsley" of Jewish Hospital. "Nobody wants to be in the hospital, so we need to make it as pleasant as we possibly can. I believe we need to set ourselves apart."
For many of Disney's clients, the standard, 31/2-day seminars often serve as a springboard for the more exacting and detailed customer-service plan. Typically, Disney's experts visit a hospital campus, meet with administrators and employees, and examine everything from the architectural environment to the existing customer-service processes, officials say. It usually evolves into a combination of scheduled seminars at Disney World and a wide range of programs at the hospital, tailored to specific needs.
Gordon Williams, vice president of administration at Duke University Health System, Durham, N.C., hired Disney in the mid-1990s to "differentiate" the level of customer service when he was executive vice president of the Chicago-based Northwestern Medical Faculty Foundation.
He did the same after moving to Duke. Starting in August 2000, when 38 workers from the Duke University School of Medicine were sent to Orlando, the Disney Institute has trained about 100 of the health system's employees during 18 months. Meantime, Disney officials have worked closely with staffers on campus, helping fine-tune the lessons learned in Orlando.
"I told everyone, 'This is not a free vacation to Disney-you're going to work,' " he says. "(The institute) gives you an appreciation for what service is. You never look at service in quite the same way."
As far as cost, Williams says, the total tab of about $300,000 is no more than the hospital would pay for any other top-flight consultant. "It's not inexpensive," he says.
Disney, which formed its institute in the early 1980s as a customer-service training ground for all types of businesses, developed a healthcare-specific program in 1997 as a result of growing demand, says Lynch, the institute's top official.
"A lot of healthcare organizations were asking, 'Can you gear this to our industry?' " Lynch says. "And when you think about hospitals and the hospitality industry, there are a lot of similarities. Taking care of the guest is taking care of people."
Although many hundreds of healthcare employees have passed through its open-enrollment programs (officials won't provide even general figures), Disney is now working with more than a dozen hospitals or healthcare systems on more widespread customer-service plans.
"Hospital administrators are recognizing that providing good healthcare has to come in conjunction with good service," Lynch adds. "As long as there's a competitive environment and everybody has the latest equipment and the best doctors, the next-best thing you can do is provide a phenomenal patient and family experience."
Ritz-Carlton, meanwhile, which recognized a new market in healthcare about the same time as Disney, now has about two dozen existing hospital and health-system clients, say officials. The company bills itself as the "gold standard of excellence." In most cases, experts from the learning institute are sent to individual hospital clients to create specialized programs.
Help for the 'dismal'
Baptist Health Care, a five-hospital system based in Florida's Panhandle, developed its in-house customer-service program in the mid-1990s as a way to try to reverse "dismal" patient- and employee-satisfaction scores, says Pam Bilbrey, the system's senior vice president of corporate development. Now, all five hospitals are in the top 1% of the Press Ganey database, she says, and the leadership institute itself has won national acclaim and attention. Moreover, Baptist was No. 10 in Fortune magazine's recent listing of the 100 best companies to work for in America.
Although similar in scope and concept to both Disney's and Ritz-Carlton's, the Baptist program offers one crucial distinction: "What sets us apart is that we are a healthcare provider," Bilbrey says. "We're not just consulting on this line of business; we're sharing in it each and every day."
Yet for many hospital executives, Disney's name recognition and presumed expertise in the business of pleasing its customers give it an edge over much of the competition. Lynch, the Disney executive, believes hospital companies are eager to "emulate" the fierce loyalty nurtured for many years by a company that has a reputation for putting customers first.
Among those seeking to emulate the Disney magic? Denver-based University of Colorado Health Sciences Center, which turned to Lynch about two years ago for help in reshaping its customer-service culture as it began a $4.3 billion relocation to a new, 217-acre home about seven miles east of the city.
Dennis Brimhall, president and CEO of the health sciences center, teamed Disney with national consulting firm Deloitte & Touche in a double-barreled customer-service effort. While Disney handles the guest-relations element, Deloitte is primarily involved with the organizational nuts and bolts, including meeting planning. Together, the firms have crafted a systemwide approach to customer service, which includes even the way the buildings were designed.
For instance, rather than provide close-in parking spaces for doctors, the university has reserved those spots for patients, limiting the longest walk to any parking spot to about 100 yards. Instead of placing waiting rooms in the middle of the building, a fairly typical approach, those areas are situated along the windows, providing an open feeling and a pleasant, relaxing view.
With these lessons in mind, many hospital executives are expected to follow Brimhall's lead, making certain that soothing architecture and customer-friendly facilities are part of any new construction.
"In the past, we've always designed healthcare facilities for the providers," Brimhall says. "We've always designed it to make it easy for us-for the employee, the doctors. Here, we've designed everything with the patient in mind. And that's really the key to customer service."
Brimhall says the health sciences center spent in the "hard six figures" for the consulting services, which included on-site visits by Disney officials as well as the costs of sending 16 employees to Orlando for seminars.
"Was Disney worth it, over some other approach?" Brimhall asks. "I'm not sure. But when you tell your patients and employees and others that we had Disney help us, you get a lot of traction on that. It's, 'Wow, you're going outside healthcare to solve some of these problems.' I'm glad we did it."
Based on the Disney experience, university officials say they've sprinkled lots of pixie dust around their new campus, creating an environment that values their customer-patients as the top priority along with high-quality medical care.
"We've redesigned everything around the patient-and Disney gave us the ability to do that," says Robert Harris, director of Project Diamond, the university's name for the Disney approach to customer service. "We needed to redefine ourselves, reinvent ourselves. As the folks at Disney say, we wanted to 'amaze.' We think we're doing that."
Observers from other industries would probably say it's about time.