Patient experience can be indicator of hospital financial performance

Performance on patient experience scores can impact the cash flow and operating profit margins of hospitals, which may mean organizations have to align quality metrics and leadership to influence patients’ perceptions of their care.

The study, presented by A.T. Still University professor Lihua Dishman, DBA, MBA, at the American College of Healthcare Executives (ACHE) Congress in Chicago, aimed to answer two questions: What is the relationship between patient experience and financial performance? And what role does the hospital’s type play in moderating that relationship?

Using CMS data sources, including Hospital Compare and Healthcare Cost Report Information System files, nearly 1,400 inpatient acute care hospitals were included in the study sample.

Dishman found patient experience in those hospitals did have an impact on financial performance, specifically finding it had positive relationships with cash flow margins and operating profit margins across for-profit, non-profit and governmental hospitals.

Those different types of hospitals did have a moderating effect on the experience-financials relationship, she said, with governmental hospitals have the greatest moderating effect. Dishman theorized those facilities may “sacrifice operating revenues,” as in treating fewer patients, or incur additional costs “in order to continue improving patient experience after achieving a certain level.”

This is an area where smaller hospitals may outperform their larger counterparts, as Dishman said facilities with more than 50 beds and 100 employees were consistently scored worse on patient experience.

“Maybe (for) smaller hospitals, it’s easier to make changes,” Dishman said. “Maybe rural hospitals are more familiar with … what their patients need, are closer to the communities they serve.”

Dishman said her study should have implications across healthcare organizations. For hospital and health system boards, she recommended establishing a “standing patient experience oversight committee” within existing governing boards, train those boards on quality metrics related to patient experience and include those metrics in the key performance indicators for hospital executives.

For hospital leaders, she recommended developing a Chief Experience Officer (or CXO). That role has become increasingly common in healthcare C-suites, with a 2015 survey of 1,000 hospitals by the Beryl Institute finding 63 percent of facilities already having such an executive in place.

Dishman emphasized those efforts can’t stop at the C-suite and board level. She also recommended steps for employee engagement, like maintaining appropriate nursing staff levels and implementing daily nurse leader rounds to observe patient interactions.