News & Views

Perspectives
11/28/2018

Are Poor Patient Relationships Killing Your Hospital’s Bottom Line?

Health system finances are taking a beating in the transition from fee-for-service to value-based care.

The financial performance of U.S. hospitals has significantly worsened since the beginning of 2016, according to Harvard Business Review. And Fitch Ratings, one of the largest credit rating agencies in the United States, recently cited “ongoing struggles” with hospital operating margins across its entire hospital rating spectrum. Top factors driving the financial challenges hospitals face include shifts in utilization from inpatient to outpatient services, and growing competition from new providers such as retail clinics.

Executive-Level Takeaways:

  • Hospitals are struggling as IP utilization declines and competition increases.
  • Strategies to build loyal patient relationships fall short in 3 ways:
    1. Over-investing in clinical capabilities, at the expense of experience
    2. Focusing on individual touchpoints, instead of longitudinal relationships
    3. Failing to incorporate human connection with their digital strategy
  • New customer navigation models can help by building loyalty, retention, and growth.

Few health system executives will question that the key to a healthier bottom line lies in building loyal customer relationships. A loyal base translates to increased revenue, and greater control over per capita costs and improved health outcomes—keys to success in both a fee for service and value-based world.

But despite efforts to increase customer retention and loyalty, many hospitals aren’t seeing the results they need. Why aren’t their strategies translating to greater loyalty, and how can they adjust to get on the right track?

Here are three things hospitals are doing wrong, and how they can get it right:

Over-investing in clinical capabilities, at the expense of experience

The explosion of medical knowledge and technology is creating a never-ending list of clinical initiatives health systems feel they need to explore and adopt. It’s easy to see how offering a new procedure translates to more revenue. But very few health systems win in this clinical arms race, and many more are left with an unsustainable cost structure and little ability to differentiate.

Meanwhile, customer experience isn’t getting the attention it deserves. A report from Accenture found that hospitals in the United States that provided a superior customer experience gained net margins that were 50 percent higher, on average, than those that delivered an average experience. Another study, from Deloitte, found that a 10 percent increase in patients who rated hospitals as “excellent” increased margins by 1.5 percent.

ROI of Docent Health’s Patient Navigation and Engagement Approach:

  • 5%-40% reduction in mean length of stay.
  • 2%-4% net growth.
  • 10%-25% increase in patient retention post primary event.
  • 20%-30% improvement in appropriate home health utilization.

It’s time to focus and invest in strategies that improve the customer experience. Technology plays a big role (see more on this below), but health systems should also start tapping into the power of cost-effective staffing models, such as nonclinical patient navigators who help patients find their way through the complex and confusing healthcare landscape.

Leading health systems are noticing the transformational role this strategy can have on healthcare delivery and experience. A JAMA Oncology study, for example, touted the benefits of non-clinical patient navigators on improved quality and decreased healthcare spending. The program realized 10X ROI and saved the network $19 million annually.

Focusing on individual touchpoints, instead of longitudinal relationships

Most health systems do not address customer needs longitudinally. Instead, they focus on transactional touchpoints.

For example, post-discharge calls help reduce readmissions by catching clinical problems, and online scheduling helps improve access for digitally-inclined customers. But these efforts account for only one touchpoint and one service channel.

They don’t build on the hospital’s understanding of a patient as an individual, making it impossible for the hospital to consistently anticipate and address their needs over time. Instead, each touchpoint should help inform the next set of downstream touchpoints, improving quality and personalization.

For example, a quick call to a patient prior to the patient’s total joint replacement might prompt the patient to fill out the appropriate paperwork, so that when the patient is admitted, staff members can focus on meeting the patient’s clinical needs first. That pre-visit call might also reveal certain social determinants of health (such as transportation problems a patient has) that the hospital can then address to ensure the patient is able to attend their follow up appointments post-discharge.

Organizations that demonstrate a longitudinal commitment to their customers, and an ability to help them overcome not just the medical factors contributing to their health but also their socio-behavioral factors, will be the ones who reap the outsized benefits of customer loyalty.

Failing to incorporate human connection with their digital strategy

Many hospitals are focusing on how technology can augment patient care. Instead, they should be focusing on how patient care can be augmented by technology.

For example, while EHRs present a host of clinical benefits, they have disrupted the patient and clinician experience. Patients are frustrated by perceived clinician distraction during their interactions. And physicians are frustrated by endless documentation requirements and a poor EHR user experience.

A mix of technology and services that emphasize the importance of, and facilitate more, human connection in healthcare is essential.

Docent Health is working with leading health systems to provide this. It offers a mix of virtual and in-person patient navigators called Docents who help manage customer relationships longitudinally—whether the customer is in an active experience at one of their facilities or not.

Docent Health’s technology and services model allows allow them to do this at scale, and it helps customers understand and navigate their individual healthcare experiences.

By addressing customers’ socio-behavioral factors across their healthcare journeys, these health systems are able to build relationships that inflect behavioral change, improve health outcomes while reducing costs, and develop the loyal relationships that deliver sustainable bottom line improvement over the long run.

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