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Weekly UpdatesEXECUTIVE SUMMARY
The need for healthcare executives to better understand the relationship between patient satisfaction and admission volume takes on greater importance in this age of rising patient expectations and declining reimbursement. Management of patient satisfaction has become a critical element in the day-to-day operations of healthcare organizations pursuing high performance.
This study is guided by two principal research questions. First, what is the nature of the relationship between patient satisfaction (as measured by scored instruments) and inpatient admissions in acute care hospitals? Second, does the relationship between patient satisfaction (as measured by scored instruments) and inpatient admissions differ between teaching hospitals and nonteaching hospitals? Although not suggestive of direct causation, the study findings revealed a statistically significant and positive correlation between patient satisfaction and admission volume in teaching hospitals only. In contrast, a nonsignificant, negative correlation was seen between patient satisfaction and admission in nonteaching hospitals. In the combined teaching and nonteaching sample, a statistically significant, negative correlation was found between patient satisfaction scores and admission volume.
With financial performance being driven in part by admission volume and with patient satisfaction affecting hospital patronage, the business case for a strategic focus on patient satisfaction in teaching hospitals is clearly evident. The article concludes with a set of recommendations for strengthening patient satisfaction and organizational performance.
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In today's healthcare marketplace, providers increasingly compete against one another for business. In the late 1980s, healthcare executives were confronted with the realization that they could not just increase charges to generate revenue, but rather they had to contain costs as well. Providers now compete on business factors other than price, such as quality, service, reputation, and other nonmonetary attributes. Ettinger (1998) stressed that successful competition relies on the provider retaining awareness of who it wants to serve, what value it creates for the customer, and how it ,,viii create that value operationally. In the end, the provider needs to be strategic rather than tactical and proactive rather than reactive. Providers must shift their focus externally to the consumers' requirements rather than their own.
The need for research regarding patient satisfaction and market share is evident in this age of declining reimbursement and rising patient expectations. Monitoring patient satisfaction has become a standard operating procedure in most healthcare organizations, especially with new Medicare reporting requirements under the HCAHPS program. While patient satisfaction has been widely studied, a gap exists between the impact of customer satisfaction and organizational performance (Kovner and Neuhauser 2004).
The purpose of this research is to study the relationship between patient satisfaction and inpatient admissions among teaching and nonteaching hospitals. The use of inpatient admissions in this study functions as an indicator of volume rather than as a surrogate measure of hospital size. According to Simone (1999), academic healthcare institutions represent an eclectic mix of traditional academia, hospital operations, multiple academic layers, and patients. Today's teaching hospitals, compared with the nonteaching hospitals, are complex organizations trying to perform an often conflicting array of responsibilities. This complex environment can be organizationally and politically challenging to individuals working in such an environment and, as this study begins to explore, may affect patient satisfaction. Furthermore, a teaching hospital's central mission is to provide specialized tertiary care that supports its central objective of training new physicians. In contrast, nonteaching hospitals are organizations that provide general medical-surgical care in an environment that is not focused on training and educating physicians.
Two principal research questions frame this study. First, what is the nature of the relationship between patient satisfaction (as measured by scored instruments) and inpatient admissions in acute care hospitals? Second, does the relationship between patient satisfaction (as measured by scored instruments) and inpatient admissions differ between teaching hospitals and nonteaching hospitals?
LITERATURE REVIEW
Although teaching and nonteaching hospitals alike continue their struggle to capture admissions and, ultimately, market share, research on the relationship between patient satisfaction and volume of admissions has been somewhat limited. A prominent aspect of the relatively sparse body of literature on patient satisfaction as a driver of performance is the difficulty in quantifying customer satisfaction's direct impact on financial indicator outcomes. Accordingly, substitute measures, such as market share or service volume, are often employed as surrogate indicators of organizational performance.
Woodside, Frey, and Daly (1989) provided early evidence to support the premise that patient satisfaction may directly affect volume. The authors conducted an exhaustive literature review of service quality and satisfaction measurement. Based on this review, they developed a framework of relationships among service quality, customer satisfaction, and behavioral intention for service purchases. Service quality, customer satisfaction, and behavioral intention data were collected from patients discharged from two hospitals. Overall customer satisfaction was associated (r = 0.85, p = 0.05) with behavioral intention to return to both hospitals. Despite some question of the generalizability of a two-hospital study, the research does provide substantial evidence for a meaningful relationship between overall customer satisfaction and behavioral intention for buying a major service. A further, recent example of the link between patient satisfaction and service volume can be found at the University of Colorado Hospital (UCH), which launched an online system designed to streamline the arrival process by allowing patients to complete insurance paperwork, patient consent forms, and Health Insurance Portability and Accountability Act notification acknowledgments before visiting UCH. Patient satisfaction scores increased, helping boost outpatient visits in one year from 608,689 to 631,332 (Burt 2006).
Valuable contributions to expanding our understanding of the connection between patient satisfaction and organizational performance outcomes can also be found in groundwork laid in earlier research conducted by Rust and Zahorik (1993). The researchers identified elements of service satisfaction that may significantly affect customer loyalty and market share; however, the focus of their research was on retention of existing business versus new customer development. While retention of patients for future business purposes is important, attraction of new customers for outpatient services, surgical services, and obstetrics clearly translates into increased volume through ancillary referrals.
Finally, research performed by Andoleeb (1998) stressed how the public is inclined to pay more for care from quality institutions with which they were satisfied. Andoleeb's study identified several variables that shape patient satisfaction with health services, including quality of communication, perceived competence of service provider, quality of facility, demeanor of hospital staff, and perception of cost and patient satisfaction. The explanatory power of these variables underscores that hospital marketing professionals need to be cognizant of these areas. Andoleeb's argument postulates that a positive association exists between patient satisfaction and patronage (i.e., volume). Accordingly, strategy formulation should focus on gaining a competitive advantage through delivering high levels of service quality, especially in an age of consumerism where perceived service quality is linked to patient satisfaction, which in turn may result in improved patronage (Scotti, Harmon, and Behson 2007).
METHODS
Study Sample
The study sample consisted of seven teaching hospitals and seven nonteaching hospitals examined over the five-year period from 1999 to 2003 in response to an invitation extended to all Press Ganey client hospitals in New Jersey. Data for all admitted patients who completed the satisfaction survey were included in the study. Press Ganey Associates functioned as the clearinghouse for data to maximize confidentiality of participating hospitals. The sample included seven hospitals in the north region, five hospitals in the central region, and two hospitals in the south region of New Jersey. The questionnaire mailing yielded study participants from geographic regions exhibiting demographic diversity with respect to income levels, insurance coverage, average age, ethnicity, and other characteristics. The patient satisfaction data were collected for each hospital using the complete data sets collected through discharge surveys conducted at the respective institutions. The geographic distribution of New Jersey hospitals statewide is shown in Table 1.
Teaching hospitals, by their very mission, participate in the education of physicians through formal residency training programs. Depending on the type and number of residency programs offered, a hospital is generally designated either a major teaching or minor teaching institution. To be a major teaching hospital, the facility typically offers residencies in medicine, surgery, obstetrics/gynecology, and pediatrics. Many major teaching hospitals also offer residencies in several subspecialties, such as pathology, anesthesiology, and family practice. A minor teaching hospital typically has only two or three residencies, which may include surgery, geriatrics, or obstetrics/gynecology. Depending on the involvement and politics of an academic university, teaching hospitals are often university hospitals, university affiliated, or independent (Swayne, Duncan, and Ginter 2006).
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