Inconsistencies between Customer Satisfaction and Profitability in Health Care Organizations

It is generally assumed that increased customer satisfaction lead to profitability. However, this is not always the case because this assumed relationship is, by and large, inconsistent across different organizations, including health care organizations. This research aims to address the inconsistencies between customer satisfaction and profitability. This paper will further discuss why these inconsistencies exist in health care organizations. Other elements that will be discussed in this paper include: assessment of price vs. quality of services; impact of insurance on the market share of a health care facility; how health care organizations can use patient satisfaction to their advantage; and how health care organizations can use both qualitative and quantitative data to improve their market share. 

Inconsistencies between Customer Satisfaction Scores and profitability 

Studies indicate that there exist a number of inconsistencies between customer satisfaction and profitability (Eklof et al., 2018). Numerous factors result in these inconsistencies. A study was conducted to statistically determine the inconsistencies between customer satisfaction score and profitability. Data was collected using a semi-structured interview, which was composed of open-ended questions. A sample of the data obtained is as shown in Figure 1 and Figure 2. 

Table 1: Overall customer satisfaction 

Table 2: Extent to which the services met customer expectation 

From the statistical data obtained, it was evident that the level of satisfaction was very high, yet the health care facility was performing poorly in terms of financial performance. This is the situation in most of the health care organization and this is a great concern. From the business perspective, organizations that have high customer satisfaction score ought to be very productive (Eklof et al., 2018). The fact that is not the case clearly indicates that the data collected is biased. As such, the data collected does not give a clear picture of the services provide by the respective health care facility. 

The inconsistency between customer satisfaction and productivity is due to a number of factors which include: hospital staff encouraging patients to fill reports that the health care organization provide quality health care; the satisfaction report being filled by the hospital staffs instead of the patients. Of course, staff tend to rate the organizations they work for positively. The other factor that led to the inconsistencies is the fact that only a sample proportion of customers was taken for the study. There are higher chances the few who have been selected were manipulated to rate the organization positively. This resulted in the inconsistencies between customer satisfaction and productivity. 

Price vs. Quality of Services in Health Care Organizations 

Usually, patients like associating price and quality of health care services. Many patients believe that health care facilities which charge high prices for its services have medical staffs who are highly trained or experienced (Russo et al., 2015). As such, they believe that such health care organizations offer high quality services. However, this is not always the case. Certain health care facilities tend to charge their patient high prices, but offer low quality services. Hospitals which charge high prices but offer low quality services usually gain negative publicity in the market. As such, these hospitals start losing customers and in the long run they lose their market share. 

In most cases, hospital that charge their clients highly provide services that are of high quality. These types of health care organizations hold to their market share because of their positive publicity (Russo et al., 2015). The surety of quality services that these hospitals provide makes them retain their clients and win new ones and this increases their financial performance. 

It is vital to note that there are situations where health care facilities offer high quality services at a lower price. This is the case for hospitals that are located in low and middle-class communities. In these regions, hospitals serve people who are economically disadvantaged and thus they have to provide health care services that are affordable. The hospitals risk losing their customers if they increase the cost of their services. This is regardless of the quality of services these hospitals provide. As such, hospitals located in low and middle-class communities ought to provide affordable health care services in order to increase their market share and improve their financial performance. 

Impact of Managed Care and Insurance on the Market Share of Health Care Organizations 

Growth in the size of managed care and insurance companies is widely thought to have the ability to transform the structure as well as the functioning of the health care system. Not only do they bring broad, system-level changes in the delivery of health care, but also impact market share of health care organizations. Other than the cost of health care services, competition in the health care industry has set in in different forms when it comes to the health care market. The U.S. is seeking to reform its health care system in order to make it more affordable and accessible to the general public. Today, the U.S. government requires its citizens to belong to a medical scheme. Because of this, insurance firms are offering policies that will allow them to cover an individual’s health care bills in the event that this individual seeks medical services. It is, therefore, clear that for a health care organization to hold a good market share, it has to reform its system of payment and allow for payment through schemes and insurance companies. This because, currently, these are the schemes that are used for payments. 

High Patient Satisfaction and Managed Care Contract 

For many health care organizations, managed care contracts are key to profitability or an organization’s financial performance (Gruessner, 2016). Managed care dollars contribute significantly to an organization’s revenue, and managed care contracts that are successfully negotiated tend to preserve an organization’s revenue as well as result in additional revenue through new insurance products and models. In addition, they enhance patient satisfaction. This is because strong managed contracts facilitate patient access to comprehensive treatment and services. 

Many clients prefer registering with manage care organizations that are associated with health care facilities that provide quality services. Health care organizations with good customer satisfaction scores tend to have a positive publicity (Gruessner, 2016). Thus, negotiating for a better pay to the health care organization is easy. This is because a managed care organization would rather pay the health care organization well in order to continue retaining their clients and keep winning more using the good publicity they will have created as a result of working with the health care facility. 

However, there are ethical issues that arise when presenting patient satisfaction score. There is need to provide a true reflection when presenting the scores. It is unethical to provide wrong or invalid information when attempting to partner with other organizations. This is because it may result in the termination of the contract. In addition, the organization may tarnish its name when the information hits the media. 

Importance of Qualitative and Quantitative Data in Improving the Hospitals Market Share 

In the health care industry, there has been an upsurge of interest in the use of both qualitative and quantitative data to not only improve the delivery health care services but also improve organization’s market share (Shah, 2019). The legitimacy for the use of these two methods has result from the recognition that they allow health care organizations to create holistic views of patients and advance treatment methods (Shah, 2019). In addition, these methods help personalize treatments and enhance health outcomes. In order to make informed decisions, especially when it comes to customer satisfaction and improving marketing share, health care organizations need a description of the state of things in the hospital. 

Qualitative data provide an aspect of quality that can be used to predict future trends and what to expect (Shah, 2019). With regard to quantitative data, health care organizations require a large quantity of exact values of data that will help provide a wide sample space and their analysis. This will help provide a clear picture of situations, helping health care organization improve the provision of health care services. This will help improve their customer satisfaction scores and publicity, thus increasing their market share. Overall, this will improve the financial performance of the health care facility. 

References 

Eklof, J., Podkorytova, O., & Malova, A. (2018). Linking customer satisfaction with financial performance: an empirical study of Scandinavian banks.  Total Quality Management & Business Excellence , 1-19. 

Gruessner, V. Health payer tips for negotiating managed care contracts. [Online]. Retrieved February 23, 2020, from https://healthpayerintelligence.com/news/health-payer-tips-for-negotiating-managed-care-contracts 

Russo, P., & Adler, A. (2015). Health Care Efficiency: Measuring the Cost Associated With Quality.  Managed care (Langhorne, Pa.) ,  24 (7), 38. 

Shah, A. (2019). Using data for improvement. BMJ, 364 : 189. https://doi.org/10.1136/bmj.l189