Hospitals Are Catering to Customers

¶ … Hospitals Are Catering to Customers

For many years, hospitals have been taking measures to improve and expand their facilities (EAJ, 2005). Because access to capital is limited and competition is great, hospitals are now taking even more steps to attract and retain customers. More and more hospitals are offering hotel-like amenities, adopting a customer-service approach to business, offering Internet access, and expanding visiting hours and the availability of private rooms.

In an effort to attract patients and beat competition, many hospitals and medical centers are working to eliminate the cold, impersonal feel associated with many traditional waiting areas and exam rooms (Terlep, 2003). This is just one way hospitals are working to increase revenue from paying patients, who are as likely to pick a hospital for its reputation as for its location. For this reason, uncomfortable seating, long waits and a dreary atmosphere are now being replaced with designer decor, luxury hotel-like service and extra perks.

For example, California's Stanford Hospital recently launched a $2.5 million advertising campaign in the hopes of increasing its patient base (Wood, 2005). The hospital will position itself as specializing in major treatments such as transplantations and brain surgeries, while also treating minor ailments. The hospital hopes to create an image of a cutting-edge hospital that offers clients a broad range of services and options for all types of treatment.

It's an image and awareness campaign," said Lee Wills, director of marketing and communications for the Stanford Hospital (Wood, 2005). "You cannot turn the television on without seeing an open market, and what we're doing is allowing customers to have a choice." popular hospital in Detroit used $10 million in donations to renovate waiting rooms, and build an indoor courtyard with artificial vegetation and a Dr. Seuss-style playroom for children (Terlep, 2003). These types of perks are popular among patients, who gave high ratings to the additions in recent surveys and increase waiting lists at new facilities.

This revamping of hospitals is happening throughout the country. Henry Ford Health System recently opened a $1 million Harbortown Center, which features a coffee corner and Internet hookups in its industrial-style waiting area (Terlep, 2003). New hires are being recruited and trained by the same company that trains employees for the glitzy Ritz-Carlton hotel chain, which is known for top-notch customer service.

The variety of efforts made by hospitals to accommodate customer needs appear to be paying off. According to a recent study by J.D. Power and Associates, more than two-thirds of recently discharged hospital patients reported a high level of service satisfaction with their overall hospital experience (Consumer Affairs, 2004). The survey interviewed 2,350 patients about their recent hospital experiences. The results were very positive (Consumer Affairs, 2004):

32% indicated they were "delighted" with their overall hospital experience, rating their stay a 10 on a 10-point scale.

42% of patients stated that they were "pleased" with their hospital stay, rating it either an eight or nine.

A mere 12% of patients expressed dissatisfaction with their hospital experience.

When comparing these customer satisfaction scores with other service industries, J.D. Power and Associates discovered that the proportion of "delighted" or "pleased" consumers is highest for the hospital industry (Consumer Affairs, 2004). For example, only 56% of hotel rated their experiences an eight, nine or 10, compared to 74% of hospital patients.

There is a strong consumer movement in the healthcare industry. Consumers are being asked to pay more for their healthcare, creating the need for hospitals and other providers to deliver on the promise of a better healthcare experience," said Steven D. Wood, Ph.D., executive director of the J.D. Power and Associates healthcare division (Consumer Affairs, 2004). "Hospitals that deliver high levels of patient satisfaction will be better positioned to attract patients and retain staff."

Satisfaction was measured using five key factors of the general hospital service experience (Consumer Affairs, 2004):

dignity and respect; speed and efficiency; comfort; information and communication; and emotional support.

Recent research indicates that the majority of hospitals in the United States today need to replace outdated facilities and technology (Carpenter, 2004). A 2004 Hospitals and Health Networks survey confirmed that most U.S. hospitals interviewed cited improving operational efficiency and patient flow as an influencing factor. Another key driver is the need to meet consumer demands for privacy and family-centered care. This is especially true for high-growth areas where future demand is greatest. Because baby boomers make up approximately 30% of the U.S. population, building new hospitals is necessary to keep up future needs. To do so, several hospitals in the planning stage will be at least one million square feet, a once unheard of size.

More and more hospitals are also featuring environmentally friendly building principles with the goals of preserving resources; increasing operating efficiencies and reducing costs, and improving patient care through higher-quality facilities. Hospitals are also providing concierge services to hospital workers to increase satisfaction and productivity. Floors and units will be built to improve workflow, which is needed due to staffing shortages. According to the Environmental Assessment Journal (2005): "Overcrowding in emergency departments will lead many hospitals to carefully examine supply and demand for emergency care in their market and consider limiting access or redesign efforts."

Consumerism is a popular term nowadays in the hospital business. Both new and older hospitals are focusing on friendlier staff, better food, improved comforts and better care (Rundel, 2004). Hospitals are offering more and more amenities, hoping to attract customers with private rooms and consultation spaces, Internet access and big-screen televisions.

Just ten years ago, hospitals were closing their doors as managed-care providers reduced long inpatient stays and many surgeries moved to outpatient sites. However, as the baby-boom generation ages and facilities become outdated, it is clear that hospital construction and marketing need to keep up.

Many hospitals built in the 1950s have become "necrotic," says Charlie Cosovich, a strategist in the health-care consulting division of Kurt Salmon Associates in San Bruno, California (Rundel, 2004). In addition, they are inefficient, as expansion projects have had to work around the original structure. Such facilities are expensive to run and difficult to wire for electronic records and other technologies.

Many years ago, private hospital rooms were a luxury only the wealthy could afford (Rundel, 2004). However, today they are in high demand and a major draw for patients. For this reason, many new hospitals have abandoned "semi-private" room-sharing arrangements in favor of more private rooms. Many hospitals are also eliminated prescribed visiting hours, and are inviting patients' families and loved ones access at any time and even the opportunity to stay overnight. Hospitals are making "huge investments in clinical information technology," to modernize clinical decision making, promote quality and cut down on medication errors, says Lewis Redd, national leader for Capgemini LLC's Atlanta-based health-care consulting practice (Rundel, 2004). "This is going to be a decade-long journey."

While these luxuries account for a very small portion of the industry's $544 billion gross in-patient revenue in 2001, according to the American Hospital Association, they help generate cash flow and are revolutionizing the movement toward more broad-based, consumer-oriented patient care (Santelmann, 2002). It is apparent that efforts to market luxury accommodations seem to be working, as hospitals report that average customers, as well as wealthy customers, are splurging for luxury treatment. "VIP services used to be a well-kept secret to those who could afford it," says Jean Chenoweth, executive director of Solucient Institute, an Evanston, Ill.-based healthcare database and information company (Santelmann, 2002). "Now hospitals are recognizing that the rich and famous are not the only customers." recent Forbes study reported what high-end hospitals are offering their customers (Santelmann, 2002). The survey found broad similarities in luxury units, including mahogany furniture. Customers can request larger rooms with nicer furnishings, including convertible couches for family sleepovers; marble-and-tile bathrooms; stocked refrigerators; VCRs and satellite television; a gourmet chef; elegant table service; and attentive concierge.

New state-of-the-art hospitals are also more appealing to nurses and other medical staff. Many nurses report that "specialty hospitals" are a welcome change for nurses who are tired of long hours, staffing shortages, and bureaucratic problems (Stringer, 2001). Therefore, many newer hospitals hire a minimal number of administrators to allow employees more of a say in policy decisions, and nurses are cross-trained to handle more responsibilities.

Heart hospitals are the most popular manifestation of this new philosophy. Known as luxury hospitals, these facilities are known for amenities such as gourmet meals created by personal chefs and rooms stylishly decorated - all for the same price of a procedure at a traditional hospital and covered by insurance (Stringer, 2001). By providing high revenue procedures, specialty hospitals can minimize overhead costs and use the profits to increase patient comfort.

These hospitals are appealing to both patients and nurses, but are not without criticism. Many critics say these luxury facilities are taking the highest revenue procedures from public hospitals that need the money to pay for less lucrative programs, such as trauma centers.

However, many believe that specialty hospitals increase competition, forcing hospitals to offer better patient care (Stringer, 2001). Heart hospitals are foregoing the traditional systems with a model known as patient-focused care. In this model patients stay in one room throughout the entire procedure, rather than the traditional method of waiting for beds to open as they transfer from one unit to another. This one-room approach also works to reduce the time spent in the hospital. The Heart Hospital, which has 12 beds, usually sends patients home in three days, in comparison to five to seven days in a conventional hospital.

In addition, medical staff is generally paid higher salaries at specialty hospitals. Nurses can earn between $5 and $7 more per hour than their counterparts in traditional hospitals (Stringer, 2001).

A study by health care research firm HCIA.com in Maryland demonstrates that the amenities of specialty hospitals are winning over more and more patients (Stringer, 2001). The study revealed that two public hospitals performed between 25% and 35% fewer heart procedures on Medicare patients in 1997 than in 1996, the same year a heart hospital opened in the area. Specialty hospitals are also attracting the most experienced caregivers, often taking them from traditional hospitals.

The trend is driven by expected demand from aging baby-boomer patients who are accustomed to luxurious touches -- such as herb gardens and stress-reducing aquariums - that do not exist in traditional hospitals (Japenga, 2005).

People often assume that luxury hospital accommodations are only for the rich, according to Jack Sternlieb, M.D., the boyish founder and director of The Heart Hospital. However, the majority of his patients are on Medicare (Japenga, 2005). "Full service hospitals are big white elephants," he says, "bogged down in administrative costs."

On the other hand, luxury hospitals specialize in high-volume, big-ticket, in-patient procedures such as heart and orthopedic surgery (Japenga, 2005). These are the same profitable procedures that traditional hospitals depend on to cover the cost of less lucrative -- but important - services.

This trend can really hurt the full-service hospitals," says Tom Scully, president of the Federation of American Health Systems, a group representing 1,700 privately owned and managed hospitals (Japenga, 2005). "It's a very dangerous trend." niche hospital can come in and siphon off the procedures that pay well, chipping away at the financial stability of the full-service community hospital," adds Rick Wade, senior vice president for the American Hospital Association (Japenga, 2005).

As a result of design features that promote tranquility (for example, the wires and bleeping monitors are hidden behind custom cabinets), patients are less likely to suffer the common anxiety and fear that patients face in traditional hospitals (Japenga, 2005).

Many large university hospitals, as well as famous facilities such as the Mayo and Cleveland clinics, now include suites for high-profile patients who want luxury accommodations to match their state-of-the-art medical care (MacDonald, 2002). For an additional daily fee of $400 to $1,500 above what insurance pays for, customers can wine and dine by candlelight on gourmet food made by a private chef, have the daily newspaper delivered directly to their rooms, and have the family visit anytime or even stay with you. Access to a concierge, hair stylist and other services are also part of the deal in many hospitals.