Several of you wrote and inquired about a term I have used, churn.  Customers churn, and patients churn.  Churn is the opposite of retention.  Instead of being retained patients churn, they go somewhere else.  For those seeking a mathematical explanation, churn is like multiplying retention by negative one.

I am curious to learn if any of us consistently has good customer experiences with the professional services firms we use.  I bet we do not.  We have satisfactory experiences; which we view as remarkable because of the many poor experiences we have.  We have portions of our experience that are somewhat satisfying, perhaps even bordering on good.  Because our experiences in general have degraded over time, what would have been viewed as a poor experience a few years ago now hides behind the veneer of acceptability.  Our standards of what is acceptable have declined right along with the professional services we consume.

Professional services firms include accounting, law, cable, phone, and healthcare, among others.  One characteristic about buying professional services has everything to do with the service; that is why ‘service’ is in the name.

A while ago I spent two days in Nashville at the Loews. Great hotel. The clerk in their lost and found gave me a power cord for my phone. The attendant in the exercise room thanked me for allowing him to serve me during my workout. Sort of makes me feel like I should return the towels—just kidding.  At the end, they asked me, “How did we do?” They didn’t ask about my room, or the food—they knew those things were perfect. They asked about how the people performed. Competing on service.

Hospitals ask about the room.

Last week I rented a car from National.  I always rent from Enterprise.  Enterprise has no perks, no frequent renter upgrades.  I get a car, the same car I could have received from any other rental company.  National gave me a car. I was the only person in line and it took twenty minutes.  I had to initial to form eighteen times.  National’s car was fine; same as what I would have rented from Enterprise. 

I will not rent from National again.  Why?  They did not ask me how did we do?  And how they did was poorly.  Enterprise knows their car will be perfect; they do not need to ask is everything with the car was okay.  Enterprise always asks how they did.  They do not need to ask because their service is always perfect, but they do ask.  They asked how the people performed.  They compete on service, not on cars.  The cars are the commodity.

Most professional services firms know you are no longer a customer because you cancel their service.  Actually, the firm does not know.  It is a closely held secret among you, the person with whom you spoke, the recording of your call—for quality and training purposes–, and the 1’s and 0’s in the computer storing your customer record.

Healthcare is unique in that hospitals never know you are no longer their customers.  Leakage—Roemer defines it as a problem for which you do not know the answer.  Leakage is looked at as a Black Swan event—random and unexpected is a common definition. It is also a definition, that whether intentional or not, hospitals use to explain away leakage.

Permit me to suggest that leakage of a patient—a customer—may be a lot of things but it is neither random nor unexpected. It occurs because somewhere along the way the person (customer and patient) had a bad experience.  The solution is to build robustness against the negative experiences and to exploit the positive experiences.

Robustness is built by actually designing each of the experiences.

Suppose two years ago you, or a family member, had their gall bladder removed at Our Lady of Perpetual Satisfaction.  Or, suppose last week you took your son in for an x-ray for an injury sustained playing baseball, and the x-ray showed that surgery was needed to repair the bone.

The hospital has no way of knowing two very important things.  One, they do not know that you had you appendix removed six months ago at another hospital or that your son had his surgery somewhere else.  Two, they do not know why you chose not to return to them for care.

Look at your call center for example.  It probably closes around 6:00 PM.  Not even Comcast closes at 6:00.  This means from a customer experience standpoint your hospital’s customer’s experience is already worse than that of your cable company.  By the way, that is not a good thing.

For the most part, minus chronic care, every patient is a new patient even though the patient may have been there several times before.  Each time the patient visits a hospital they have a choice about which hospital they will visit.  Unlike cellular companies, hospitals cannot lock in patients for a two-year term.

If hospitals do not know that you left, they will not make any effort to get you to come back.  Since they do not know why you left, they have no way of knowing what they could have done differently that would have caused you to stay.

That makes for a pretty tough business model. It makes it much worse when you realize that the lifetime value of each patient is between $180-$250,000.

The funny thing about being in a services business is that there are always plenty of people selling the same service.  I can probably get my hip replaced or my knee scoped at a dozen hospitals within ten miles of my home.  I believe that no matter which of these twelve hospitals I choose, my hip or my knee will be better when I leave.

I also believe that by definition the service I receive can only be the best at one of those hospitals.

Who among us is competing on service?

Just to throw a metaphorical tomato at the screen, buying patient experience data, or being able to recite your HCAHP scores does not enable you to compete on service.

I may be wrong, but I doubt it