Looking to improve financial results? Start by listening to patients: improving patient satisfaction can have a direct impact on your hospital's reputation--and financial results

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Author: Melvin F. Hall
Date: Oct. 2008
From: Healthcare Financial Management(Vol. 62, Issue 10)
Publisher: Healthcare Financial Management Association
Document Type: Survey
Length: 2,118 words
Lexile Measure: 1400L

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The rising costs of providing health care and the changes in payment systems are having an obvious impact on hospitals' bottom line. The Centers for Medicare & Medicaid Services (CMS), for instance, no longer reimburses the additional costs associated with certain hospital-acquired conditions and is transitioning from the current Reporting of Hospital Quality Data for Annual Payment Update system to a pay for-performance or value-based purchasing program.

The value of patient surveys has taken center stage with the public reporting of patient satisfaction data. CMS's emerging value-based purchasing bases reimbursement in part on the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS)[R] survey. Portions of payments will begin to be directed to those hospitals that provide the best care and have the highest patient satisfaction.

Healthcare financial leaders are realizing the importance of listening to patients. Greater flexibility in treatment options and new quality and transparency initiatives will place more power in consumers' hands. However, patients need more information than is available in HCAHPS. According to fledge Hanna, director of service performance for Emory Healthcare, Atlanta, "We try to measure everything we do, by looking at what we do and how we do it at the same time. That essence does not always come through in the HCAHPS survey" (Larkin, M., "Quality--Is HCAHPS Enough?" HealthLeaders, March 12, 2008).

In a 2008 national survey of hospital executives, the three major reasons respondents gave for organizations' focus on patient satisfaction were to improve quality of care (47 percent of respondents), measure loyalty (26 percent), and increase market share (13 percent) (2008 Press Ganey Client Survey). Indeed, there are multiple returns from improving patient satisfaction: enhanced community reputation (and future volumes), increased patient loyalty, reduced malpractice claims, improved efficiency, and greater employee and physician satisfaction.

Enhanced Reputation

There is no doubt that increased transparency will increase competition among hospitals and draw the attention of board members. But what differentiates two hospitals is not only their scores on quality measures; it is also their reputations in the community and the loyalty of their patients. These factors influence not only consumer choice but also where physicians send their patients and whether current employees recommend their hospital for employment.

The fact that hospitals with consistently high levels of patient satisfaction are also consistently among the most fiscally successful is not a coincidence. As the graph below shows, the most profitable hospitals generally have the highest levels of patient satisfaction, while the least profitable hospitals often have the lowest.

Reputations are built over time as word of mouth spreads through a community. A major study analyzed patient satisfaction in 1999 and then the subsequent changes in patient volume experienced between 2000 and 2004. The results were stunning. Hospitals with patient satisfaction in the 90th percentile experienced nearly a one third increase in patient volume--or, on average, an additional 1,382 patients per year. For hospitals with patient satisfaction in the bottom 10th percentile, the average volume loss was 17 percent (Press Ganey, "Increased Patient Satisfaction = Increased...

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Gale Document Number: GALE|A192588289