Customer loyalty programs work in retail. Why not healthcare?

A large 2015 study evaluating the Pioneer ACO program found that, on average, the organizations suffered a patient churn rate of 38 percent at the end of just one year. Might those patients have chosen to stick around had they simply been encouraged to do so by the kind of card-based reward programs that are ubiquitous in consumer industries?

Yes, they surely may have, says a team of three researchers from the University of Michigan’s Institute for Healthcare Policy and Innovation.

Commentating in the March JAMA, Laurence McMahon Jr., MD, MPH, and colleagues write that loyalty programs carefully adapted for healthcare could offer substantial advantages to patients and providers alike.

“Much like a typical tiered-loyalty program, these benefits may be scaled or enhanced over time to ensure that patients with the greatest health needs are most helped,” the authors write. “The ecosystem of such information would not necessarily end in the health system; rather, information regarding discounts, special offers or sales from organizations such as medical supply companies, pharmacies or paramedical services could be provided to improve access and awareness.”

With such a program in place, they continue, a health system would stand to improve health metrics and commercial value in at least three ways:

1.  Patients would be more likely to seek services within the sponsoring health system over nonaffiliated clinicians. “By retaining more of the care within their health system,” McMahon and colleagues point out, “the problem of patients seeking more costly or less clinically appropriate care (with subsequent costs attributed to the sponsoring ACO) may also be mitigated.”  

2.  Loyalty program members “are more likely to view the health system positively, which could lead to improvements in patient-satisfaction scores.”

3.  Health systems could move beyond the traditional hospital-centric model to embrace a focused population health model. “Linking alternate care centers such as retail, urgent or walk-in clinics to enhance patient satisfaction,” the authors write, “while reducing financial and geographic barriers to accessing such care is one example of how this new model may be enacted.”

McMahon et al. note that these latter examples point to the concept’s potential for helping ACOs and health systems attain the coveted “triple aim” goal of optimizing the patient experience, improving population health and reducing the per capita cost of healthcare.

The authors acknowledge several legitimate concerns the model raises, chiefly the possibility that healthcare loyalty programs could create perverse incentives for patients predisposed to behave like “frequent flyers.”

With this potentiality in play, those who design the programs “must be careful to base preferred tiers on length of membership and loyalty to health system clinicians and centers over nonaffiliated partners,” they write, “rather than on the absolute number of health care visits or hospitalizations.”

“Loyalty programs could empower patients to manage their health in new and innovative ways while enhancing the business model for health systems,” the authors conclude. “If successful, such programs may help improve both customer care and clinical care. That’s one membership card worth having.”