New research from Accenture has found that U.S. hospitals that deliver “superior” customer experience achieve net margins that are 50% higher, on average, than those of hospitals providing “average” customer experience.
The findings, which compared six years of hospital margin data with patient experience scores from the Hospital Consumer Assessment of Health Providers and Systems (HCAHPS), found that hospital margins and revenues among the top HCAHPS performers are growing at an above-average rate, with the growth of revenue outpacing operating expenses in these hospitals, according to a press release from Accenture.
“Patients are increasingly shopping for healthcare services, seeking the best possible overall experience when they need care,” said Jean-Pierre Stephan, managing director of Accenture’s Health customer relationship management offerings. “As a result, leading hospitals are growing profitability not by cutting costs, but by improving the patient experience and satisfaction.”
The research found that the correlation between superior patient experiences and higher margins is true for hospitals of every type and size: For-profits, non-profits, academic, non-academic, urban, rural, stand-alone hospitals and those that are part of a major health system. The margin benefit at urban hospitals is roughly eight times that of rural hospitals, suggesting that urban hospitals with superior consumer experience achieve nearly double the margins of an average-experience hospital.
For example, the analysis found that a hospital system with $2 billion in revenue would have to cut 460 jobs (based on an average loaded salary of $100,000) to achieve the same 2.3 percent margin benefit that improving the customer experience might bring through revenue growth.
The Accenture research found that this correlation is historical and growing in importance over time. The extent that hospital margins increased with a 10 percent improvement in HCAHPS consumer experience scores grew 70 percent over six years, from 1.04 percent in 2008 to 1.72 percent in 2013.
“As health consumers increasingly factor experience into their care selection decisions, the financial benefit associated with patient experience can only be expected to increase,” Stephan said.
To examine the relationship between patient experience and hospital performance, Accenture analyzed hospital income margin data reported to the Centers for Medicare and Medicaid Services and survey results from the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) between 2008 and 2013. The correlation between the overall rating and the financial margin was then stratified by hospital type and HCAHPS sub-factors to gauge whether the positive correlation was associated with particular factors.