Rewarding patient loyalty vs. earning patient loyalty


A new article in JAMA recommends that ACOs and health systems develop patient loyalty programs comparable to those offered by coffee shops, hotels and airlines (McMahon et al, “Health System Loyalty Program – An Innovation in Customer Care and Service” JAMA, March 1, 2016) . The value of patient loyalty to the health system is clear: greater share of wallet plus an ability to manage patients’ health in a more integrated way. Integration should be valuable to the patient as well, but – conditioned perhaps by years of being asked to repeat their medical history to every member of a practice at every step of care – they are suspicious of its reality. The authors pose the question: if other industries are using loyalty programs to good effect, why not healthcare?

There are a few reasons why not healthcare. We should start with a understanding of why patients switch. People are creatures of habit and undertaking a new physician relationship (finding a new physician, figuring out where they are, filling out the initial intake questionnaire, etc.) is not a trivial effort. Some possible drivers:

  1. No choice: New insurance product, new network, large co-pay differences to using the system’s preferred provider vs. others (especially for O/P facilities) (Note: the article is focused on Medicare FFS ACOs where this particular barrier might not apply; however the issue of patient churn – and its resolution – is not just in the domain of Medicare FFS)
  2. No access: Many surveys tell us that consumers desire fast access while many practices are booking appointments weeks – not days or hours – out.
  3. Not convenient: The in-system referral option (e.g. a specialist) may be far away or have a meaningful co-pay difference (e.g. in-system vs. stand-alone imaging)
  4. Not aware/weren’t asked: Multi-system ACO constructs are difficult even for the experts to follow, let alone patients. Further, in our experience, physicians themselves may not know or may be uneasy selling the virtues of a participating physician vs. another, especially if the ACO is just a few years old.
  5. Bad experience: We can’t rule out that the physician has for whatever reason lost the patient’s confidence.
  6. Not convinced of loyalty’s clinical importance: if a patient needs to review their medical history, allergies, etc with a provider at each new encounter, how can we fault patients for thinking loyalty is clinical meaningless?

Although the authors suggest that a loyalty program can encourage customers to “overlook problems and inconveniences,” it is hard to see how such a program could overcome most of these issues — maybe #3 (marginally making the longer trip or higher copay seem worthwhile) or #4 (by incentivizing the patient to do some research on which providers are in network or being willing to trigger the discussion with a “sales”-shy provider).  But, given that patients seeking new providers are clearly already willing to pay  switching costs, the loyalty program would need to be pretty rich to overcome the barriers. Survey data suggests #1 (no choice) and #2 (no access) are far more important barriers to loyalty and, in our consulting experience, #4 can be a serious issue as well particularly when new provider business relationships (e.g. a merger or affiliation) cross across old referral relationships (between, say, two physicians who went to school together but now work in different systems).

Becoming more consumer oriented will be hard and healthcare has a long way to go. No one tactic being used by a major consumer or retail company can be plucked out of context, deployed and expected to succeed. Loyalty programs are not easy short-cuts and many fail. The ones that succeed among consumer and retail companies are coupled with a long-standing and laser focus on a quality consumer experience so the loyalty program solidifies a relationship where loyalty is easy and rewarding already, not when it is hard work. Churn drivers analogous to the ones listed above are being aggressively addressed in parallel at the best performing of these organizations.

More generally, I believe healthcare should be cautious about becoming consumer-oriented in such superficial ways. The authors are clearly skeptical of patients’ ability to assess a provider’s technical skill and quality of care and with good reason. But they are too quick in my view to suggest, in effect, that providers resign themselves to replicating value propositions developed for coffee shops and airlines. Consumers know healthcare is complicated and recommending that they choose care based on free parking vouchers or discounts from a network of participating restaurants not only won’t be credible, it will seem patronizing. Better for providers to study what patients want, carefully enhance their ability to deliver consistently across their system and find ways to communicate that value in ways that patients will find compelling.