Patient Satisfaction: An Undervalued Driver of Financial Success 

There’s no argument that for healthcare providers, patient satisfaction is a top — if not the top — priority. A patient’s perceived good or bad experience can affect their willingness to follow treatment plans, which in turn affects their potential outcomes.

However, in recent years it’s become increasingly clear that patient satisfaction is also critical to the longevity of any healthcare institution. In the last decade especially, several studies began showing how patient satisfaction has a direct impact on a provider’s bottom line. 

One study, by Deloitte, looked at six years of data and found that hospitals with an “excellent” Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) score — a nationally standardized rubric for measuring patient experiences — operated with an average net margin of 4.7%, while those with “low” scores only averaged 1.8%.

That’s a big difference in profitability. But the financial impact of patient satisfaction is not only significant, it’s also complex, with several key factors at play. It’s an issue in which the upsides are vast but the costs are equally dire, and understanding the nuances can go a long way in making tangible improvements. 

Increased patient retention 

It’s considered common marketing wisdom that, in most industries, it costs around six to seven times more to acquire a new customer than to retain an existing one. The stakes are possibly even higher in healthcare, where all patients, but especially younger ones, are switching providers at increasingly high rates. 

Interestingly enough, those same young people also care much more about their experience with a provider than their older counterparts, who were primarily focused on cost. This represents a changing tide in which providers need to invest heavily in keeping patients happy in order to reap the rewards. 

In fact, it seems to be a situation in which the rich only get richer. Research has also shown that providers who focus more on patient experience do in fact spend more, but they make that up by increasing profits in the long term. 

Whether that means staying up to date on professional development for staffers, revamping operations with new technology and management systems or renovating facilities to make patients more comfortable, it’s clear that the results pay off. 

In terms of where to start, though, it seems like there’s still no replacement for a great bedside manner — especially for nurses. Data shows that positive experiences with nurses was the factor most highly correlated with financial benefits. 

Enhanced reputation 

Reputation is a double-edged sword, and both sides can affect a provider’s bottom line. 

For one thing, a bad reputation can be extremely costly — a study by Medical Economics found that one patient’s negative word-of-mouth about a healthcare provider can cost that provider up to $400,000 during the patient’s lifetime. 

The larger a hospital or healthcare network is, the more likely it is that a few bad reviews will slip through the cracks. While that’s an inevitable fact of life, minimizing these negative experiences as much as possible can save potentially millions of dollars. 

Meanwhile, positive experiences can lead to referrals, which is one of the most efficient and least expensive ways to acquire new patients. This is doubly important considering the increased spending that may be required to increase patient satisfaction: While those efforts may raise costs, simple savings like these can help cushion the blow. 

Long term, an increased reputation could mean a growing profile regionally or even nationally, as providers with higher standing are more likely to get coverage in the press and appear at the top of their respective rankings. This in turn opens up new opportunities like an improved talent pool for recruitment, opportunities for research grants and more. 

Decreased malpractice risk

It’s a much less exciting consideration, but it’s a fact that higher satisfaction relates to a lower risk of malpractice suits. And, as all healthcare administrators know, these lawsuits can be extremely costly — on average, a settlement rewards over $240,000, while suits that go to trial average out closer to $1 million. 

Mitigating risk is critical here, and patient satisfaction plays a key role. One study compared satisfaction rates on a five-point scale from “very good” to “very poor,” and found that for each point a provider moved down the scale, its chance of facing a malpractice suit increased by over 20%. 

It makes sense that patients who aren’t happy with their care are more likely to be litigious, but it’s yet another reminder of the importance satisfaction plays in preserving a provider’s financial stability. 

Improved operational efficiencies

It’s also worth noting that the patients are not the only ones who benefit when a provider doubles down on satisfaction. A rising tide lifts all boats, and in this case, improvements across the board can have a range of effects across an organization. 

Consider an example. A hospital, hoping to make scheduling easier for its patients, overhauls its healthcare management system with a newer, easier-to-use version. The result improves the experience for the patients, who can now make, change and review appointments more easily, but perhaps it also changes things for the administrators and doctors by giving them a simpler way of logging patient data. 

There’s also the sheer fact that happier patients make for happier employees. One study of physician burnout rates found that a sense of empowerment and a feeling of connection with patients were two of the biggest factors determining a doctor’s satisfaction with their work. 

Wait times also play a role here. Not only are long waits associated with low patient satisfaction, but they’re also indicative of a workplace where time isn’t being used as efficiently as it could be. It’s a classic situation where patient dissatisfaction may be indicative of a larger area for improvement. Plus, longer wait times are tied to more abandoned appointments, which results in lost revenue for providers. 

All of these issues — and countless more — stress just how tightly satisfaction and financial success are connected. When either improves, the other tends to follow suit.