What do you really know about patient loyalty?
Written by Brian Wynne, VP and General Manager, NRC Health
This article also appears in the October issue of Becker’s Hospital Review.
For any business, it’s hard to thrive without loyal consumers. Healthcare is no exception.
The numbers on the balance sheet bear this out. Returning patients bolster revenues—one patient’s lifetime health spending is worth about $1.4 million per individual, or $4.2 million per family.
Caring for loyal patients is also more cost-effective. When patients come back, they don’t need to go through repeated onboarding processes, and they’re less likely to receive redundant tests and screenings, which drain hundreds of thousands of dollars from hospital coffers every year.
The efficiencies aren’t just financial. Health systems have a much easier time coordinating care when patients stick with them. That reduces the chance of miscommunication between providers, and improves compliance with post-discharge orders.
Bottom line: loyal patients are invaluable. They drive revenue up, drive costs down, and end up healthier than their disloyal counterparts. But health-system leaders struggle to cultivate loyalty from their patients. Why?
Part of the problem stems from three persistent loyalty myths that cause organizations to misdirect their efforts:
Myth 1: A Satisfied Patient Is a Loyal One
To solve this problem, many organizations might default to a focus on the care experience. By getting the experience right, they’d hope to secure loyalty in the long term.
That’s a logical course of action, but ultimately ineffective. NRC Health’s 2018 Market Insights research found that, while 78% of patients were happy with the care they received, more than 80% of them would consider switching for convenience factors alone. Their satisfaction, in short, did not secure their commitment.
This is an artifact of the way organizations measure patient satisfaction. Most healthcare surveys—like CAHPS—focus exclusively on individual care-encounters. While CAHPS produces valuable data for improving care, it can’t assess if patients are going to come back again.
To do that, organizations need to stretch beyond the narrow confines of the care encounter. They need to take stock of every interaction a patient has with their brand, covering issues like access, advertising, billing processes, and community involvement.
Myth 2: Patients Are a Loyal Customer Base
Your patients may appear loyal. They might rave about your organization. When a new health need arises, your hospital may be the first one that comes to mind, but could leave forever due to any one of many factors, such as a change in health insurance coverage. This situational, or transactional, loyalty can be deceiving.
The truth is that patients are some of the least loyal consumers in the marketplace. They switch healthcare providers about as often as they switch cell-phone carriers. More than 40% of healthcare consumers have stated they are not loyal to a local hospital or health system.
Additionally, that rate is unlikely to improve. Consumers expectations are only going to rise in the coming years, and the number of ancillary players in the healthcare market will rise along with them. This will make patients even more likely to switch as time goes on.
Myth 3: Frequency Is Equivalent to Loyalty
In healthcare, a returning customer is not always good news—no organization wants to see a patient readmitted. But if a new health need should arise, organizations would hope that their prior patients would elect to see them again.
They use a simple metric, the retention rate, to measure how many of these patients come back. While retention rates have the benefits of being objective and intuitive, they miss a crucial component of genuine customer loyalty.
Because retention rates depend on objective observations, they only capture consumer behavior. They overlook consumer attitudes, which means they can’t tell healthcare leaders why patients come back, or why they stay away.
The phenomenon of spurious loyalty makes this a cause for concern. When a customer’s loyalty is spurious, they offer their repeat business to an organization without feeling attached to a brand. And research has shown that patients with spurious loyalty may come back to an organization, but they will switch providers after just one negative healthcare outcome—regardless of whether or not the provider is at fault!
This is the hazard that comes along with superficial measures of loyalty. If loyal behavior isn’t backed up by a genuine underlying passion for the brand, it will quickly fall apart.
The Hard Work of Myth-Busting
These three myths consistently hold organizations back. But once leaders recognize them, what are they supposed to do about it?
NRC Health’s new white paper, Are These Three Patient Loyalty Myths Holding Your Organization Back?, offers some suggestions. In it, you’ll learn:
– Why these myths affect strategic decision-making—for the worse
– How organizations can bust these myths by understanding what loyalty really is
– Specific, actionable tactics to improve patient loyalty at any organization
Bring clarity to the difficult work of securing loyal consumers. Read the full version of the white paper at nrchealth.com/loyaltymyths.
 NRC Health. “The real reason loyalty lacks in healthcare.” June 20, 2017. Retrieved September 5, 2018, from https://nrchealth.com/resource/real-reason-loyalty-lacks-healthcare/
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