Every industry has a recurring trend, where a concept is introduced as important. It gains traction and becomes a buzzword. But even as that concept gets widely adopted, it also gets differently-defined and bastardized to the point that someday, someone wakes up, realizes that the concept has no clothes, calls it out, and starts a new trend with a different concept. In a series of essays, I will explore one such concept: loyalty.
Before I begin, let me make a few points to address the concerns I can already see forming in some of your heads. First, let me state that I think loyalty is important. This is not an essay about how healthcare, or any industry, should not care about building loyal relationships with their customers. My problem with the word “loyalty” in healthcare is that it doesn’t have a useful meaning and is often a shorthand for other things, and a poorly-defined shorthand, at that.
Second, you may be wondering why I am talking about loyalty at all, when I write about the patient experience. I have spoken of Fred Reichheld and the Net Promoter Score in these essays in the past. While my feelings on NPS are complex, I do feel its focus on top-box scores are more beneficial than looking at mean scores. Too often the biggest enemy of patient experience is feeling that “good” is good enough. The reality is that top-box scores are inexorably linked to concepts of loyalty and loyalty is firmly entrenched on healthcare conversation. One cannot talk about one without the conversation veering to the other.
Third, I am not suggesting that the concept of loyalty is a fad, destined to the ash-heap of every other business-oriented buzzword. But what I am suggesting is that our inability to define it, especially in healthcare, leads to confusion and cross-purposes between an organization’s strategic thinkers and tactical actors. These essays then will explore why the lack of clarity in how healthcare defines loyalty can lead to wasted time and effort.
Fourth, I am also not suggesting that people who use it are trying to be confusing. There are plenty of words that get cross-platformed in an organization in an effort get people on the same page that in reality lead different departments astray. Ask your Finance, Quality, Compliance and Clinical teams to define “service,” “efficiency,” “resources,” or any other word that feels obvious and see how different their answers are. This is not about calling out stupidity or adopting a superior attitude. It is about simply drawing attention to the fact that a word we think we all know means different things to different people.
This implicit confusion seems a good place to start. This essay will explore how the concept of “loyalty” differs in healthcare from other industries and what this difference means to the patients and healthcare leaders who use it.
Consumer Loyalty in Healthcare
Loyalty in customer service generally means establishing a preferential relationship between a business and a customer, so that, when given a choice of many vendors, a customer will default to one business. So, while a customer may spend money at multiple grocery stores, gas stations, or coffeehouses, they spend most of their money at one location or one chain. Using this definition, I certainly have a gas station, grocery store, and coffeehouse that I am loyal to. I will turn left to get to my preference instead of turning right to get to a competitor. I will even pass other gas stations to get to the one that I like.1
But there are three things that make loyalty different in the eyes of a consumer when it comes to healthcare: control, urgency, and overall usage.
- Control: Patients may use a specific health system less because they feel passionate about that health system, and more because the in-network requirements of their insurance provider dictate that they use that health system. Patients may develop loyalty to a specific provider or clinic, but even that loyalty is predicated upon available options. Further, that loyalty may quickly wane if that doctor leaves the market or the clinic closes down. As insurance companies move to narrow their networks, patients will feel they have less control and that lack of control obviates the need for loyalty. The cost difference between in-network versus out-of-network makes the insurer’s preference more important than theirs.
- Urgency: When I had my spa day, I went to the emergency department that was closest and not to the one that was in-network. I did this because my doctor told me to immediately go to the emergency department. That strongly-worded suggestion made me feel that urgency was in order. Later, I realized that this was also convenient for my family to visit me, as it was close to where they lived as well. So, while control may trump convenience, healthcare often comes with a sense of urgency, which can drive decisions more than loyalty.
- Overall Usage: I need to fill my gas tank because I keep driving. I need to buy groceries, because I keep eating groceries. I know that, when I enter arrangements for these services, I may be thinking about the long-term relationship. I sign up for a loyalty card or give my phone number for membership perks because I expect to need this service for the long run. But many, especially younger people, don’t view healthcare in that same way. Setting up a relationship with a health system seems silly, given that someone may only go get care when something goes wrong. As we age, we may see value in yearly check-ups, but even then, that commitment seems more aligned to the provider and not the system and dependent on how important that relationship is to the patient. I remember presenting to a board meeting about patient experience and the leader in charge of marketing for the hospital confessed that he had not established care with a physician in the system because it wasn’t important or a priority to him. Let that sink in. The man in charge of building loyalty felt no loyalty to the system because he felt no need for care.
Even as patients will acknowledge that having consistent relationships with providers will improve care, that sentiment generally does not translate into a sense of urgency to establish loyalty. Back when I worked with the research firm, we would conduct a yearly National Consumer study. One pattern that was consistent every year was that a majority of patients would identify a “preferred hospital” in their market, but when further questioned, it turned out that only a third of those patients with a preferred hospital actually felt any loyalty to that hospital. I haven’t done the work, but I would wager that in any other industry, there is likely only a third who are NOT loyal to their grocery store or gas station. If I am wrong, please correct me below.
Hospital Loyalty in Healthcare
Businesses crave loyal customers. Creating loyalty means not having to reacquire customers when a competitor enters the market or increases its services. Obviously, this is overstated a bit, as businesses that have loyal customers still advertise and still have sales. But there is a reason why every retail shop has a loyalty program.
Hospitals also want loyalty, though they define it differently than most retail outlets. There are two significant differences with how hospitals pursue loyalty relative to other industries. First, health systems chase wholesale and not retail loyalty. Most businesses chase loyalty in a retail fashion, as in, by building loyal patrons one person at a time. This includes traditional customer service models as well as asking every customer at checkout if they are a member or want to be a member. Hospitals do advertise and can gain patients one at a time, but their primary focus is on larger populations. They seek to maintain good relationships with insurers, or to sign exclusive arrangements with businesses, often by creating their own insurance products. By creating preferential arrangements with a school district or a police force or a local manufacturer, they are pulling in hundreds, even thousands, of patients at once. I call this wholesale, since they are capturing customers in large blocks.
Some may read this and think I am being judgmental or disrespectful of their approach. I certainly am not. The demand for expensive technology and specialized employees requires creating economies of scale. Given the amount of time needed to pay off or amortize an MRI machine, in combination with how rarely an individual person needs an MRI means having to be more global with your pursuit of patients. Plus, once acquiring them, you still need to make them happy, or they will leverage their union or business to form an alliance with a different system when the contract comes up.
There may be leaders in healthcare, especially healthcare marketing, that will push back at this assertion. But I would ask them one simple question. How do you treat self-pay patients? If you cared about building a loyal patient population one person at a time, then surely you treat self-pay patients the same as anyone else. The reality, though, is that increasingly, hospital systems are cancelling self-pay appointments in favor of those with insurance coverage. It is certainly the case that some patients won’t pay their bill in the end, so having insurance cover some of the costs and having a long-term relationship with the patient might ameliorate that risk. I will not ridicule you for making that calculus, but don’t tell me that you are aggressively chasing retail medicine.
Second, hospitals cannot provide perks to patients directly. A poorly-kept secret in healthcare is that because it is important to foster good relationships with insurers, the cost of an MRI will vary depending on a number of factors. How things get coded and classified determines what get paid for and what does not. The fee schedule between a hospital and an insurance company states compensation for certain tests and procedures. Again, this is not meant to cast aspersion, but simply to call out a fact. Anyone who learned the difference between a “screening” and a “diagnostic” colonoscopy or mammography once they got their bill, knows what I am talking about. Meanwhile, though, hospitals cannot provide any differences in care directly to patients. The law is very clear that patients cannot receive inducements to encourage them to pick one hospital over another hospital. This is why your clinic doesn’t have a punch card, where every fifth vaccine is free, or, if you tell a friend, you get a free coffee mug or a fifty-dollar gift card.
Again, this is not a problem in-itself. Frankly, I think this is a good thing. The opioid epidemic would not have been helped with an ‘every tenth refill is free’ promotion. But in combination with the wholesale approach, hospitals may desire loyal patients, but there are structural impediments (some legal, some self-imposed) that prevent them from treating loyalty like other businesses do. So, while they may say that they want loyal patients, they don’t know how to get them.
If the concept of loyalty is simply different in healthcare than it is in any other field, then our approach to loyalty needs to reflect that difference. If we don’t first acknowledge this, we will spend a lot of time chasing unproductive and, at times, illegal ideas. For example, I have had more than one CEO tell me that they want to create different classifications of patients, depending on their insurance class, calling it a VIP, Red Carpet, or Concierge service. I have listened to insurers offer services and support designed to subtly prioritize their covered patients over other patients. When I called them out on the legal and public-image ramifications of these plans, they realized what they were proposing and changed course. Some might look at these stories and be horrified. But I tend to look at these stories as evidence that people don’t understand what loyalty is and what it means in healthcare. They then quickly realize that what works in many customer spaces cannot work in healthcare.
Those of you in PX know the prevalence of this word and have probably used it a few (hundred) times. I am not saying to stop using it. I am suggesting that when you use it, make sure you define it. When others use it, ask them to define it. This may seem pedantic, but by simply telling an audience what you mean when you use the word “loyalty,” you will be defining what is essentially in- and out-of-scope for the conversation and you will save your team and yourself a lot of time and energy.
1The importance or value of this makes sense depending on context. Obviously, this might mean more when I lived in Omaha, NE, when there were five different grocery stores within a 10 blocks radius of my house, than it does when I live in rural Wisconsin, where there are three grocery stores in the closest town, which is fifteen minutes away.
PX Matters with Joseph Snipp 
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