This morning I cleaned out our spice cabinet. There were a few spices I was inclined to send to the Smithsonian believing that they may have been labeled extinct between the time I purchased them and today.

Thirty years ago, after talking with a GP about my testicular cancer symptoms, I decided where I would purchase treatment. I spoke with oncologists at MD Anderson, Johns Hopkins, and Texas Presbyterian, and I chose TP because they were a mile from my apartment.

Eleven years ago, staring at the ceiling of the ambulance, the ambulance driver decided where I would receive care for my heart attack.  As an aside, to this day that hospital does not know whether I am alive or dead because they never reached out to me after I was discharged.  This hospital was an order taker.  I was dropped off, got great care, and left. 

They had not marketed me directly.  Oh, I am sure there were marketing cluster bombs like billboards and ads on NPR, but those had no affect on me as I had no choice.  Truth be told, they would have had no affect on me had I had a choice.

Yesterday I took my children out to celebrate their first day of school.  Fats food—a Freudian slip—fast food—an oxymoron.  Anyway, at the four-way intersection were a McDonald’s, a Burger King, and a Wendy’s.  Three children.  Three competing interests.  It came down to choosing between a Frosty versus char-broiled—sorry McDonalds.

Drive throughs.  Drive-through fast food.  Drive-through health care.  Going from being an order taker to a provider of choice.  Can an argument be made that in excess of fifty percent of a hospital’s revenues come from taking orders?  I think it can and I think the number is well above fifty percent.

Doctors refer. Payers accept. Patients admit.

What then is the effect of the billboards and NPR ads and Facebook ‘likes’ and telemarketing?

Not much.

The numbers are changing, and the hospital business model is ill-equipped to benefit from the change—there’s a news flash.  By the way, neither is the payer business model.

Fast forward three years from today. People—patients and prospective patients; people—the insured and the prospective insured—are issuing virtual RFPs for both healthcare and insurance.  They are buying.  They are not being sold.

And they are churning; in droves.

The problem is that both providers and payers have a business model that assumes they know how to sell.

There are two takeaways for this missive. 

1. Neither providers nor payers know how to sell.
2. Even if they did, people are not being sold, they are buying.  And providers and payers do not understand the difference.
3. The real bad news is that they are dumping providers (hospitals and insurance companies) faster than they are buying.

For those unfamiliar with “churn” it is a term that will rule your lives for the next decade.  Churn 101: customers drop you and buy services from another firm.

If your annual churn rate is ten percent, and you want to grow your number of customers by five percent, you actually need to grow it by fifteen percent to make your goal.

Now, when was the last time either a payer or provider grew its customer base by fifteen percent in a single year.  Therein lays the problem.

The editor of HealthSystemCIO.com asked me to reply to an article published in the Wall Street Journal.  I would welcome your opinion and comment.

HealthSystemCIO.com:  j.mp/15g169Z

I was reminded of the adage, “What do you call a thousand consultants at the bottom of the ocean?” A good start.  I thought I would start today by being self-deprecating in case it may lead you to thinking of me as being winsome.

What do you call HCAHPs?  A good start?  A start?  Regarding patients and managing their experiences, we are not at the end, we are not at the beginning of the end, nor are we at the end of the beginning—somewhat of a paraphrase of Mr. Churchill.  He also said, “Dogs look up at us, cats look down on us, and pigs look us in the eye…I think I will have a pig.”

We do not know what we do not know.  The funny thing about HCAHPs is almost every hospital would be making the same effort to improve these metrics even if HCAHPs did not exist.  Why?  Because it is simply good business.

The funny thing, the unfortunate thing about applying metrics to business goals is our tendency to hit what we aim for.  In most cases this is lipstick on a leprechaun—achieving the metric has little value other that stating that you hit what you set out to do, because the improvement target was so exiguous as to be inconsequential.

I believe this is the case with how many health systems approach improving their HCAHPs scores.  Let us visit together, your favorite and mine, the hospital, Our Lady of the CMS Anathema.

Thirty-two survey questions.  Thirty-two responses calculated to the hundredth percentile. For the poly-sci majors this may not mean much, but to those of us who labored in the sciences, or anything above mathematics for librarians, there may be something of note. 

For example, let us assume that 1,000 patients completed the survey, and for the question about the cleanliness of bathrooms your hospital scored a 6.28.  the internal HCAHPs improvement committee meets, and they decide that the hospital needs an action plan to raise its clean bathroom score—as best as those patients can recall from seven months ago about whether their bathroom was always clean, usually clean, or if its cleanliness reminded them of the cleanliness of an Amtrak rest room in Manhattan—from a score of—6.28 to a whopping 6.31.  Using our fingers and toes to do the math, don’t forget to carry the one; that difference equates to 30 cleaner bathrooms per one thousand.  A herculean feat? I bet that most patients cannot remember what floor they were bivaqued on seven months ago let alone the cleanliness of their bathroom.

So what do we have? We have an action plan for thirty patients. Add that to the action plan for improving our scores on the other 31 CMS questions and what do we have?  We have an action plan for looking like we are doing something.  We don’t know where we are going but we are making really good time.

Here is my point.  To improve some of the HCAHPs scores requires a mix of art and science—pain management. Hospitals would be working their darndest to improve this metric even if CMS did not exist.

However, and this is my real point, is there a hospital in the US that should be penalized for having unclean bathrooms and too much noise?  Of course not.

No management committee worth its salt—or its salary—should be developing an action plan to have ten percent cleaner bathrooms by the start of 2014.  That is absurd.  Everyone reading this has taken their family on some form of road trip.  You wind up in “Who the heck knows where I am Iowa”, you pull off the highway because you saw a big blue sign indicating that the next exit has Bubba Joe’s Motel, disco, and taxidermy, last rest stop until you reach Singapore.  You have driven thirteen hundred miles since your last stop, your prepubescent son now needs to shave, and you figure “What the heck?”

You pay Anthony Perkins for two rooms—younger readers should Google the movie Psycho, you check out the bathrooms and decide it is safe to shower.  Why is it safe?  On the faux granite counter are ampoules Of Bubba Joe’s Agent Orange skin defoliant, shampoo, and conditioner.  The end of the toilet paper roll has an origami fold, shaped like an architectural model of the Our Lady of the CMS Anathema hospital.  A paper band is wrapped around the lid of the toilet, and the shower plug is in the closed position.

While Bubba Joe’s is not the Ritz, the evidence in the bathroom shows it has been cleaned.  How then if Bubba Joe can clean his bathrooms can a hospital score at the HCAHPs median for clean bathrooms?  If the hospital’s CEO announced over the intercom, “A patient survey indicated that one of our bathrooms was not cleaned. I am coming down in an hour to check it,” you have to believe that all of the bathrooms would be recleaned within the hour. (Apparently recleaned is not a word in Office; it is now.)

This is a freebee.  Clean the bathrooms.  If some Podunk hotel can clean its bathrooms one hundred percent of the time, so can a hospital. Do not set your goals to improve your rating of the cleanliness of bathrooms by 10%. Imagine how the Four Seasons Hotel would react if it noticed that one-third of its bathrooms failed to get a satisfactory rating—that problem would be solved in less than a week.  Set your goal for cleaning all bathrooms every day.

Now, here is the ten-cent freebee.

I am in my bedroom reading. The children are asleep. My wife is watching a reality show on Bravo, Anorexic Albanians making a mirepoix for one thousand refugees in a thimble.  I ask her to turn down the volume because I am reading the complete works of Shakespeare engraved on the side of a single grain of rice.

We get to the point that if she drops the volume of her television show again she will not be able to hear her show and she will not know how to make the mirepoix.  She has done everything she can do to cut the noise to a point where she can still here her show and to where I will not be inconvenienced. If she drops it any more there is no value to her.  Jump back with me now to HCAHPs and the futility of pushing water uphill.  What if there was something I could do that would enable my wife to hear her show and that would allow me to read me book?

What to do.  What to do indeed.  The way hospitals look at the noise problem is to do all they can to make sure that the noise is as small as possible.  Any other marginal improvements would be like squeezing blood from a stone. Ergo. 

Think out of the box.  Most people believe they are already thinking out-of-the-box. You and I both know that while most people claim to be out of the box, their out-of-the-boxness cannot be attributed to thinking, it has much more to do with having followed the lemmings. If everyone is out of the box, all that has happened is that the box has moved.

Change your perspective, if just for a moment.  If your hospital has done everything it can to reduce noise, you have wrapped foam cushions from the Space Shuttle around the salt-free Jell-O you serve at lunch to reduce the extraneous noise, and that has not solved the problem, rethink the solution.

If you cannot reduce the noise your patients hear, maybe you can reduce the noise heard by your patients.

Ten cents. One dime. 

If you have ever flown business or first class to anywhere outside of “God Bless the USA”, you get to your seat, the stewardess or flight attendant—I do not claim to know the PC term for the job—but if you are flying in business class or first class—presents you with a mimosa, and a dopp-kit.  The dopp-kit, which cost them a dime, contains a pair of socks, a sleeper mask, and a pair of earplugs. 

If there was ever a barometer for poor customer experience the airline industry is front and center. “We would like to thank you for flying with us…but we won’t.”  Hospitals. We would like to thank you for having your hip replaced with us…but we don’t.

Once the hospital has done all it can to alleviate the noise, their next step is to think out-of-the-box.  What if the hospital gave patients a way to cut the noise from their end?  Hospitals cannot put noise buffers on the Jell-O.

Why not give patients ear plugs, a sleeper mask, and a pair of socks? Even if it does not solve the entire problem it may lead patients to believe you are trying to help. If you want to be fancy consider a pair of noise cancelling headphones.

I apologize in advance for the length of this piece, but there is a lot that needs to be said.  Grab a sandwich or a coffee, and set aside a few minutes.

“I’ve been working magic here. I could at least get an ‘attaboy.’” Saul Goodman—Breaking Bad

Breaking Bad, Badder, Badest.  Don’t worry about the grammar, this is not freshman English.  Let us assume you have heard all sorts of great feedback about the AMC show Breaking Bad, and so you decide to watch all six seasons of it.  You logon to Netflix, or Amazon, or Hulu and search for the show.  What you discover is that of the six seasons, the only season available to watch is season 4.

Not to be dissuaded you watch season 4.  It leaves you with a feeling like having ordered a steak dinner—or a turkey burger if you are a vegetablist—and the only thing the waiter brings you are the toppings for your baked potato.  Not very satisfying.  Something is missing; a lot of somethings.

If that analogy does not work for you, think about buying a book only to discover that most of the chapters have been deleted.

It is important to have the whole picture, especially if you are basing a business strategy around it.

“If you’re committed enough, you can make any story work. I once told a woman I was Kevin Costner, and it worked because I believed it.” Saul Goodman.

So, I was reading the August issue of HealthLeaders magazine.  The feature story was titled “New Approaches to Patient Experience.”  I could not have refrained from commenting if I had been chained to the floor.  Having already determined that the old approaches were not improving patient experience, I could not wait to read about the new approaches.

“Did you not plan for this contingency? I mean the Starship Enterprise had a self-destruct button.”  Saul.

I read the article.  I read it again, and then I read it a third time.

Perhaps the term ‘new’ is meant to have a certain nuance about it, like when a box of laundry detergent is imprinted in bold letters with the word NEW.

I began looking for the newness and I found plenty of things having to do with communications, hearing, dreams, and culture. I also learned about NPS, the Net Promoter Score, developed by Bain Consulting.  For those who think that if a finding comes from Bain, Booz, or McKinsey, it must be sacrosanct, I have never been one of ‘those’.

NPS shows that the only people (patients) that will likely recommend the hospital are those whose scores are nine or ten on a ten point scale.  Looking back at HCAHPs, almost every hospital has scores in one category or another that are an eight or below.

As an example of why I think it is important for someone to ‘cry wolf” or to yell ‘the sky is falling’, let us look at how the game of golf is scored.  Everyone knows a golfer is given a point for every stroke above par and a point is taken away for every stroke below par.  However, golf is also scored another way using the Modified Stableford System.  This system involves the same players and the same number of shots—it just computes them differently.

NPS does that with patient experience.  It computes the score using the same patients with the same illness undergoing the same procedures.  It even admits to using basically the same questions as HCAHPs—it just computes them differently; it is somewhat akin to counting in Base 12 (think military time) instead of Base 10—whatever the number, it is still the same time in Des Moines.

Please stay with me.  I am still looking for the newness regarding “HealthLeaders’ article…New Approaches to Patient Experience, still searching for innovation—I assume the article meant to include the verb ‘improving’ in its title as every patient has an experience but not all experiences are good. (You too should be.)  Then I come across the bit that discusses how most of the emphasis in the article has to do with inpatient experiences, suggesting or implying that outpatient experiences are somehow or perhaps noticeably different.

Patient experience and satisfaction is listed as a top priority for 63% of hospitals.  Patrick Ryan, Press Ganey’s CEO is quoted as saying “patient experience is ambiguous”.  It is indeed, and improving it becomes more arcane the more nuanced it gets by looking only at the experiences as defined by CMS.

So, here are my talking points.  For the following reasons I can state with a 95% or higher degree of certainty that your hospital, that 19 out of 20 hospitals are not innovating patient experience.

• Plus or minus any given experience initiative, every hospital is doing the same thing.
  • It is all centered around HCAHPs or NPS—measuring a different way does not change the result
  • Hospitals’ efforts to improve patient experience only deal with patients—as opposed to patients and prospective patients
  • It only deals with patient interactions that occur within the hospital facility
  • It mostly deals with inpatients
  • The people who are excluded from all of the costly efforts to improve experience are:
    • Those not surveyed
    • Outpatients
    • Prospective patients
    • These people are a hospital’s potential future revenue stream
    • If every hospital claims they are thinking out-of-the-box regarding patient experience, the only thing that has changed is the location of the box.  For example, if your firm manufactures toothbrushes, and your firm’s idea of a transformative, competitive strategic innovation, one that will gain market share, is to manufacture a purple toothbrush, think again.
    • Hospitals are not focused on prospective patients—a hospital’s future revenue stream
    • Hospitals do not know the experiences of patients or prospective patients for interactions that occur outside of the hospital:
      • On the web
      • On mobile devices
      • When the call the hospital

Continuing to beat a dead horse, does not make it deader.  Get out of the box, way out.  Make it easier for people to do business with your hospital—that is the first step to innovating patient experience.

Study the diagram. What can you be doing to improve the experience of everyone who interfaces with your hospital?

When one considers all of the things that make up a person’s experience with a hospital—I use person instead of patient because prospective patients, people who interact with the hospital online and on the phone have experiences—the impact, positive or negative, of any single HCAHP becomes de minimis.

For example, a hospital buys its data. The survey establishes that the nurse in radiology can be cranky.  The hospital then hires a coach. The nurse learns how to smile.  Problem solved.  What is the ROI on the data buying and coaching hiring?  I do not think there is an ROI, at least not a positive one.

Here is what the voices are telling me.

• ·       Ordinary people (people not employed by the hospital) do not know what HCAHPs are, nor can they define them

• ·       Nobody who does not work at your hospital knows your hospital’s score and they do not know how it compares to the scores of your competitors

• ·       That means people do not use your hospital’s HCAHPs in determining whether to buy healthcare from you—it is a non-factor in their purchase decision.

• ·       These same people do know how difficult it is to schedule an appointment, to understand their bill and to file a claim.

• ·       The hospital does not know the difficulty.  The hospital does not know how that difficult translates into a poor experience and into lost patients.  The hospital does not know because it does not ask and it does not measure.

• ·       Most hospital employees cannot tell you their hospital’s score, how it compared to last year and what is being done to improve the score.

• ·       Employees cannot tell you whether last year’s patient experience initiatives were successful and whether the initiatives raised or lowered the overall score.

• ·       Most hospital financial executives probably do not know what was spent on improving patient experience and what that expenditure cost for each tenth of a point it raised their score. (Some hospitals that spent money to raise their scores actually saw their scores drop.)

If HCAHPs scores are a non-factor for patients and prospective patients—the very people whose experience hospitals are trying to affect, then it is important to ask the question ‘why are we focused only on improving HCAHP-experiences?’  Shouldn’t hospital executives be asking themselves whether paying for a coach to change the temperament of the radiology nurse affected their HCAHP score enough to reduce the penalty?  That is, what did they get for what they spent?

CMS penalizes half the hospitals based on poor HCAHPs, readmissions, and a combination of other factors.  The total penalty will amount to a dollar figure per bed times the number of beds, let’s pick the number $4,000 per bed.  For a 300 bed hospital the penalty in this example is $12,000,000.  A substantial amount no matter who you are.

However, I discovered that the average person who contacts a hospital is worth $7,000 to that hospital that year.  How many people contact your hospital each day?  To keep the math simple, let us assume the answer is 10.  Ten people times 365 days times $7,000 of potential revenue per person is $25,550,000 that could be earned.

The elephant in the room that nobody is asking about is what kind of experience are those ten people having when they contact the hospital?  Was it satisfactory? Did they hire us to provide their healthcare?

The other day we discussed that nobody knows what it costs to acquire a patient.  I confirmed that today with three people, each of whom has a PhD in healthcare economics, and each who help lead the healthcare programs at our country’s leading business schools.

It appears the exact same number of people do not know what it costs to lose a patient.  My take?  It is very expensive.  I am stupefied, especially when we know that McDonald’s can tell you the cost of a single French fry.  A hospital CFO friend of mine told me ‘We know what we charge for everything, but we have no idea what any individual procedure costs.”

Today let’s look at two costs; the cost of losing a patient, those people who choose not to purchase any more services from your health system, and the cost of losing a prospective patient, someone who chooses not to buy any services from your health system.

Some would argue, erroneously, that there are no costs from losing a patient since those people were never our patients, essentially arguing that you cannot lose something you never owned—Word did not like my use of the pair of double negatives.

I also asked the question of these three learned men whether they were aware of any data around the lifetime value of a patient—there is none.  So I did a fair amount of research and cut and pasted and interpreted and came up with a range that I think is pretty defensible.  It appears a case can be made that over twenty-five to thirty years an individual is worth somewhere between $180,000 to $250,000 to a hospital.

Just so neither you nor I need to pull out our Texas Instrument calculators, for this discussion I will use the figure $200,000. 

Retaining one hundred patients in a year is worth twenty million dollars over the next 25-30 years.  (That is only one retained patient every 3.65 days.)  Gaining one hundred new patients in a year is worth twenty million dollars over the next 25-30 years.  Do both in a year and you are looking at forty million dollars in new revenues over the next 25-30 years.  Do both every year and all of a sudden you have good cash flow problems.

Does your hospital have a plan to do either?  Probably not.  A hospital could not erect the number of billboards it would take to generate those numbers.  Taking care of TQE (the Total Quality of a person’s Encounter) seems like a much more cost effective alternative.

The next logical question is what is the relative value of the revenues from a $200,000 patient as compared to the bed-penalty that may be assessed by CMS?  Without boring anyone with the math, the ROI of getting and keeping one patient is grotesquely higher than the per patient CMS penalty.  Given that, why are all the hospitals focused solely on penalty avoidance instead of new revenue streams?

Let me throw in two other thoughts.  First, creating and retaining new customers and avoiding the CMS penalties do not have to be mutually exclusive efforts.  The only reason that they appear to be mutually exclusive is that hospitals are only really focused on avoiding the penalties.  The overarching theory seems to be that lifting the HCAHPs scores, will not only avoid the penalties, but it will have prior patients so in-like with the hospital that the effort of raising HCAHPs will somehow create an equal number of new customers.

Billboards.

Thought number two.  One hundred retained patients and one hundred new patients.  These patients have friends and families, and those people are or will be patients, perhaps even at your hospital.  That means the revenues associated with those retained and new patients are significantly understated.

A free PowerPoint presentation about why their business model has changed.

What do you think?

Your hospital’s million dollar lobby.  The business process pictured below is the one called WAITING.  Is that coffee I smell?  Arrive at 6 AM for surgery.  Sit with the other people who arrived at 6 AM.  Why couldn’t these people have used their iPads to have admitted themselves online the night before?  What is the level of satisfaction for patients, friends and family members, and prospective patients?  By the way, why is the woman in the back row smiling?

Your hospital’s WEBSITE lobby—Where is Waldo?

You came to the site to decide if you were going to seek a second opinion from another hospital.  You spend 7-10 seconds deciding if you have come to a site that can help you.  Do you stay and hunt, or do you try another website?  See if you can find the arrow to help you get what you need about getting a second opinion.  You could not find the link because it is not there.  It is not there on 99% of hospital websites, yet fifty percent of people go to your hospital website looking for it.

If 99% of the people who visit your website are either patients or prospective patients, why do you have all of the other links on your homepage?  If all of these things are so important to a visitor, why then does your hospital lobby not have all of these signs confronting visitors the moment they walk in the front door?

Did the website deliver a remarkable experience for every patient every time on every device?  Didn’t think so either.

Your hospital’s call center ‘lobby’. How good was this experience?  Will they ever call again?  Did they call outside of 8-5 Monday through Friday?  Did they get the same answer as the last person who called with the same question?  Was the answer correct?  Was their call transferred to someone else?  Do they have to call back?

While I hate to always be the one belaboring the obvious, here it comes.  Clearly bad experiences for patients and prospective patients happen many different ways.  None of these bad experience were caused by any cranky staff members, so you do not need to hire a firm to coach nurse Ratched.  (One Flew Over the Cuckoo’s Nest. “If Mr. McMurphy doesn’t want to take his medication orally, I’m sure we can arrange that he can have it some other way. But I don’t think that he would like it”.)

None of these bad experiences were the result of the bathrooms being 3.2% less clean than the standard deviation from the mean norm of optimal—I don’t know what that means either.  What it does mean though is buying data some firm about how people viewed your organization will not improve any of the bad experiences depicted above.

Mobile. On the web. On the phone.  In the hospital.

A remarkable experience every time for every person on every device.