Consumerism becomes an economic imperative for hospitals

October 1, 2007

As patients take more ownership of their disease management regimens, hospitals are beginning to re-evaluate their processes-clinically, administratively and culturally.

"Patients are being encouraged to ask questions and get those questions answered," says Rhonda Anderson, pediatric administrator for Banner Children's Hospital at Banner Desert Medical Center in Phoenix. "Evidence shows that clinical outcomes are much better if patients are totally involved in their care and own some of the responsibility."

The rising cost of healthcare is one reason behind the rise of consumerism.

Another reason is economics. Competition in the hospital industry, where the number of wellness clinics and outpatient surgical facilities is growing, is intense. Plus, hospitals in big cities across the country compete for patients by undertaking major marketing and advertising campaigns, much like what goes on among competitors in the retail industry.

Hospitals are also investing millions of dollars in improvements to remain competitive as consumers demand more from them. They are redesigning private rooms and wards to make them more aesthetically pleasing, considering major upgrades to their IT systems that would enable them to better estimate patients' share of the cost of treatment, and becoming more transparent in their quality and cost reporting.

Health plans are also offering their members more providers within networks, and members are comparing the choices in those wider networks, Fifer says.

All of this makes it an economic necessity for hospitals to respond to consumerism.

"Patients vote with their feet," says Bill Powanda, vice president of Griffin Hospital in Derby, Conn., near New Haven. "They have increased expectations of their hospital stay. If we don't meet their expectations, they will go to another hospital the next time."

RESPONDING TO PATIENTS

Griffin Hospital implemented numerous changes that would qualify as "consumer-friendly" 25 years ago when it was struggling to remain financially afloat in one of the most competitive hospital markets in the country. (There are seven other hospitals within 15 miles of Griffin, including Yale-New Haven Hospital.)

"The future viability of the hospital was in question," Powanda says. "Consumerism saved us."

Griffin conducted a community perception survey in 1982 that included the question: "If there were a hospital you would avoid, what hospital would it be?" Nearly one-third of the respondents named Griffin.

From that question, however, Griffin used market research to transform itself into a hospital that was more patient-centered. The transformation began by turning its maternity ward into a childbirth center complete with family rooms and open visiting with no restrictions. Griffin then applied this patient-centered approach to other units in the hospital.

The result is that there has been a 25% growth in admissions and almost 70% growth in outpatient business during the past decade.

Griffin has asked the same perception question a dozen more times since 1982. For the past two surveys, in 2003 and 2005, the avoidance rate was at 11%.

Another area where patients are asking hospitals more questions is in price and quality transparency. As consumers continue to take on a greater cost burden for their healthcare, interest will continue to grow in how hospitals formulate their pricing structures, and consumers will want justification for prices, says Jim Alexander, technical director for the Healthcare Financial Management Assn.

Consumers will also demand to know the quality of care from a hospital, including the success rates of procedures.

Fifer believes that there will be a variety of indicators from many sources-public and private-which consumers could use to judge price and quality.