Patient Experience: A Whinging Rebuttal to the Notion that Patients are not Customers

I really like the fact that people comment and disagree with me.  That is how I learn from them.  However, if you want to have a battle of whits, it is best not to come to the fight unarmed. Below is my third response to an individual who commented repeatedly, and concluded that I am a liability. The post that seemed to have attracted his ire can be found here

The surgical gloves are off, and since I’m the guy paying for this pulpit, away we go.  I would love to read your thoughts…no, really.

If you built a hospital in the woods and nobody came would it make a difference?  It would because you would not have any patients.  Let me try this again in English, even as you write that I am a liability.

Retention is nothing like re-admission.  A retained patient or customer is someone who will come back to the business the next time they need to make a purchase.  Retention is when a gall bladder patient had such a positive experience that they come back for a bad knee, for an endoscopy, blood work—anything the hospital sells that someone needs.

Using my calculations, a person is worth between $180,000 to $250,000 over twenty five years.  Managed correctly, a family of four could be worth up to a million dollars in future revenues.  That is an asset any hospital CFO would fight for.  Those numbers work whether someone was a patient, is a patient, or may be a patient.  Care for a lifetime equates to a lifetime value of a patient.

If you do not retain me as a patient, what does it cost to find another person to take my spot?  The rule of thumb across industries is that it costs ten times as much to acquire a new customer as it does to retain one.

I recently spoke with three people with PhDs in healthcare economics.  I asked them if they had seen any data about what it cost to acquire a single patient.  They had not.  Business development is one of healthcare’s black holes.

If as you wrote, these people—the ones who are not considered patients simply because they were discharged or have never been treated by the hospital—were worth nothing, as in not an asset, then I am sure you will agree that we should close the marketing department and the business development department, take down the billboards, and quit advertising on NPR.  That would free up a lot of parking spaces.

As difficult as it is to make money in healthcare, one must ask why hospitals market themselves.  Are they simply altruists?  Or, are they trying to attract patients?  If they are trying to attract patients there must be a reason.  I think it is because patients are worth something, they have a value.  Patients pay for services—we all know that there are many, many hospitals who given a choice would like to have a higher percentage of their patients who can elect to have costly procedures—high earners.  This group of patients in effect underwrites the other group of patients that cannot afford to purchase as much healthcare.

As to why a hospital should keep up with a patient after the patient is discharged, the list is too long to complete.  However, again using me as an example, my hospital got four days of revenues for treating me for the heart attack.  Penn Medicine on the other hand has received eleven years of revenues for all of the follow up related to my heart disease.  Penn Medicine, because of my positive experience, treated me and my family for other things (none of which were readmissions.)

If hospitals do not treat people as customers as well as they treat them as patients, they will have neither.  The strategy you suggest is no different than telling the hospital that it must replace its entire base of patients every year if it is to earn as much as it did this year.

2 thoughts on “Patient Experience: A Whinging Rebuttal to the Notion that Patients are not Customers

  1. Interesting that this post created such ire. Patients are assets that need to be nurtured. I’ve been blessed with crappy knees. Faced with surgeries I started interviewing surgeons. I live in the geeky-tech sector; who knew surgeon hate being interviewed. let’s just say the results is that Stanford will NEVER get my business along with a whole host of ‘specialists’. I was made to feel like crap. I chose Dr. Dillingham (think 49ers and San Fran Ballet knees) at SORE and can tell you not only was I a repeat customer but have Referred a ton of business to him. He made more on the referrals than he did on me. Then again, he still needs to replace the buggers, so we’re not done tallying. I’m an asset of SOAR and expect to be treated as such.

    In the tech world, churn is a big factor. Every customer costs about $150K to $200K to win. Losing a customer is worse than just losing their revenue stream because they go on to tell 15 other people not to do business with that vendor. That’s a lot of lost revenue.

    The analog is the same in healthcare. I don’t have to go to Stanford. I can take my uber-expensive PPO plan and go anywhere. I went to the hospital and doctor that actually cared.


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