, Jan. 8, 2020
/PRNewswire-PRWeb/ -- Every business hopes its customers will be loyal. Loyal customers return for future purchases. They refer their friends and family. And they're usually more forgiving when the inevitable problem comes up. In some industries, loyalty can suppress the consumer's urge to look elsewhere, even when there are less expensive alternatives. Any way you look at it, a loyal customer is one of any organization's most valuable assets.
The same is true for hospitals and the healthcare industry. But unfortunately for some providers, patient loyalty has never been more at risk. As consumer out-of-pocket costs for premiums, deductibles, co-pays and care itself have reached record highs, patients (especially Millennials, Gen Xers and younger) are giving up on the old Primary Care Physician model of care delivery and looking for better value and convenience.
One of the biggest sources of patient/consumer frustration is related to their financial experiences, especially the lack of price transparency and the financial planning made possible by that transparency. For patients, cost is a big deal. So big in fact, that as many as half of Americans have reported avoiding or delaying care because of concerns about their ability to afford it. Those who do pursue care are more likely to abandon treatment or to neglect paying.
These observations were confirmed recently by a survey conducted by Access One, a healthcare finance company, to measure provider loyalty. Responding to the survey, more than 1,000 healthcare consumers said that:
- 40% of were unsure how they would pay for an unexpected medical expense under $500
- 60% said an unexpected medical bill of less than $1,000 would spark worry
- 22% said even $250 would prompt financial stress
The survey also explored patients' experiences figuring out how to pay for the care they have received. Here, survey respondents answered that:
- 20% don't understand their options for paying for medical procedures or other healthcare expenses
- Just 27% are very satisfied with their options for payment
- 74% say that their providers have not spoken with them regarding patient financing options or the availability of a payment plan in the last two years
Most significant for this analysis, respondents to the survey demonstrate a willingness to switch providers to find a more satisfying financial experience.
- 40% of respondents would switch providers to access affordable payment arrangements, including half of households with children
- 75% are willing to shop around for care based on price (38% already are)
- 81% are most likely to want to discuss financing/payment plans with their provider (any generation)
- Though baby boomers are least likely to consider switching, 71% want to discuss their ability to pay with their physician
We've written before about the persistent gap between the quality of a patient's clinical experience and their financial experience. The results of this survey underscore the financial and operational risks that this gap represents. To us, the message is loud and clear, hospitals can no longer afford to deliver sub-standard experiences in any dimension of the patient's journey - whether clinical, administrative or financial.
Calculating the value of loyalty
With patient relationships at greater risk than ever before, winning and retaining patients is critical for providers that intend to compete and prosper in today's increasingly consumer-driven marketplace. Patient retention - or loyalty - has become one of a hospital's most valuable financial indicators, so it's important to know how much each one of those relationships is worth.
One of the most straightforward ways to measure the value of a patient's loyalty is to calculate the average lifetime value of a patient relationship. The formula is a simple one: V x N x Y, where V = the average value of a billable patient encounters in any given patient population, N = the average number of encounters per year and Y= the average number of years the patient will visit the hospital. The calculation can be refined by segmentation and/or multipliers to account for the patient's influence on other patients.
Simplified even further, it's possible to calculate a rough estimate using the Centers for Medicare & Medicaid Services' (CMS) Net Healthcare Expenditure for 2018 figure of $11,172
- Let's say 50%, or of this per-person expenditure represents a patient's billable encounters with a hospital in a year, representing $5,586 in provider revenue. Please note: The revenue source (payer) is irrelevant because patient choice drives the revenue, not the relationship between the payer (insurance company) and the provider.
- Average annual per-patient hospital expenditure per year of $5,586 is multiplied by the average number of years the patient is expected to return to the provider, in this case 25
- Yields a Lifetime Patient Value of $139,650, which accounting for inflation of 2.1% over the lifetime of the patient relationship becomes $177,644 in hospital revenue directly attributable to each patient based on the behavior of the average patient.
This is of course a crude over-simplification, but it illustrates how any provider can use its own patient encounter and financial data to determine its own lifetime patient value. Hospitals may also have the ability to calculate the multiplier effect that loyal patients can have on patient acquisition. One analysis suggests that a patient's total lifetime value is more than $600,000
Using this calculation and the patient survey results cited above, providers must consider the impact of patient attrition in an increasingly competitive marketplace. If 40% of patients are willing to switch providers to access more affordable payment arrangements, how much revenue is at risk?
On the other hand, the upside opportunity for providers that step up to meet patients' expectations are tremendous. Here, innovative providers have the enviable opportunity to project the longer-term impacts if they are able to lure away 40% of their competitors' patients by offering more consumer-friendly financial experiences.
In our experience helping healthcare providers attract and retain more patients, "consumer-friendly" financial experiences are characterized by a number of attributes, up to and including:
1. Single-platform communications between physician/practice and patient, including financial information pertinent to the patient's care and treatment throughout their care journey
2. Price transparency before treatment begins, with estimations for the total cost of care as well as the patient's portion for payment
3. Payment plan options to assist patients whose financial circumstances do not allow for full payment when due
4. Investments in lower-cost care delivery channels, such as telehealth and/or urgent care facilities that offer lower costs, greater convenience and improved accessibility for non-emergent patients
5. Personalized wellness programs and content, leveraging patient data to inform ongoing patient communications to optimize health outcomes
Why a healthcare provider's brand matters more now than ever
At its highest level, a "brand" is defined as the emotional and psychological associations that a person (patient) or market makes with a hospital or healthcare system. Strong brands enjoy greater customer loyalty, better financial performance and higher valuations. But, as this analysis and the survey results above illustrate, most healthcare providers are damaging their brands' potential by delivering financial care that doesn't measure up to the high standards associated with their clinical care. Put plainly, these providers are putting revenue at risk.
At Loyale Healthcare, we're proud to have been chosen as the patient financial engagement platform for HCA Healthcare, recently recognized as one of healthcare's most valuable brands by BrandFinance. Working together with HCA and other healthcare enterprises across the country, we're bridging the gap between what patients expect and what they get in their financial dealings with their providers. With upfront price transparency; personalized, data-driven financial plans; patient financing; responsive digital patient communications and the industry's most robust patient financial portal, we're helping healthcare providers meet their patients' - and their markets' - highest expectations for financial care.
Our company was founded on the principle that fiercely loyal patients are indeed a provider's most valuable asset. Our founder, Dan Peterson
, was among the first to recognize the disruption that consumerism would inevitably bring to healthcare, so Loyale was developed to help providers compete and grow - with a platform designed from the ground up to complement and integrate healthcare providers' existing technologies to enable the delivery of comprehensive, holistic care.
By bringing the entire patient journey into view for patients and providers, we're helping companies like HCA Healthcare burnish their brands, build patient loyalty and improve financial performance. Based on the responses of patients, it appears we're on the right track.
is the CEO of Loyale Healthcare
Loyale Patient Financial Manager™ is a comprehensive patient financial engagement technology platform leveraging a suite of configurable solution components including predictive analytics, intelligent workflows, multiple patient financing vehicles, communications, payments, digital front doors and other key capabilities.
Loyale Healthcare is committed to a mission of turning patient responsibility into lasting loyalty for its healthcare provider customers. Based in Lafayette, California
, Loyale and its leadership team bring 27 years of expertise delivering leading financial engagement solutions for complex business environments. Loyale currently serves approximately 12,000 healthcare providers across 48 states. Loyale recently announced an enterprise level strategic partnership with Parallon including deployment of its industry leading technology to all HCA hospitals and Physician Groups.
SOURCE Loyale Healthcare