Focus on Finance

Profitability vs. Patient Satisfaction

Jack Ahern, MBA
03/20/2008

"NO MARGIN, NO MISSION." There is an inescapable wisdom to this widely accepted healthcare-finance mantra. It was attributed to a nun who presumably managed a nonprofit healthcare system and needed to point out that only healthy finances can support high ideals. Without a sound financial base, healthcare entities cannot, and in fact do not, sustain high quality patient care. So admit it or not: Profitability sustains performance as much as performance sustains patients.

Let’s Focus on Finance

This is the first in an ongoing series of "Focus on Finance" monthly columns dedicated to sustaining and enhancing the financial health of renal providers; while not compromising the greater mission to improve the quality of life for every renal patient. You can expect "Focus on Finance" to provide you with straight talk and in-depth analysis of those financial topics that directly impact your bottom line. We will address the fiscal challenges faced by the full spectrum of renal professionals, be they nephrologists, nurses, dietitians, technicians, social workers or administrators.

We also delve into the inside drivers that, although rarely mentioned, ultimately shape the entire financial infrastructure of our industry. For instance, we will have a look at those key factors that persuasively influence investors and legislators to provide capital and funding for renal care.

Your Concerns: Our Focus

Ultimately, you, the reader will set our agenda by letting me know what money issues matter to you most. You can expect this column to provide relevant, real-time perspective, addressing your concerns, and yes, even challenging you to do a few calculations of your own.

All topics are open for discussion—ranging from hot-button, broad-based issues, such as Medicare reimbursement, to more personal challenges, such as how much increased professional compensation to expect from your present employer during your annual review.

Send your topic suggestions to me at jahern@ahernconsulting.com; I look forward to hearing from you. Please note your comments will be addressed, but your name will not be mentioned in any column without your permission.

Profitability vs. Patient Satisfaction

In the greater healthcare arena, much has been said about patient satisfaction and its overall beneficial effects including, but not limited to, better clinical outcomes, more patient referrals, increased market share, higher hospital occupancy, greater leverage when negotiating with managed care providers, lower frequency of malpractice claims, higher clinical staff morale and increased philanthropic support. However, comparatively little has been written about the impact of patient satisfaction on the bottom line of outpatient dialysis clinics/nephrology practices.

Send Us Your Thoughts!

So here are the questions I am throwing out for reader discussion and which will be addressed in-depth next month.

All clinicians are held to high standards when it comes to patient care, but we all know some items are optional or discretionary, such as recognizing a patient’s birthday with a card, or choosing a more comfortable dialysis chair. Obviously these items are nice to do, but are these and similar discretionary efforts cost effective? Do they measurably improve overall patient satisfaction? Can optional items to enhance patient satisfaction increase or decrease the overall profitability of outpatient dialysis clinics and nephrology practices? If patient satisfaction impacts the bottom line, can we accurately estimate the numerical value of dollars saved or lost? In the final analysis, can we really ever know the true cost/benefit of discretionary measures to increase patient satisfaction?

How can you know the true cost of enhancing patient satisfaction?
Are discretionary efforts to increase patient satisfaction primarily expenses and must therefore be rationed? Can patient satisfaction be accurately viewed as a source of revenue and should therefore, even from a purely financial standpoint, be maintained at the highest possible level? How do we capture the true cost of these items?How do you accurately measure patient satisfaction?
What metrics best capture patient satisfaction? How do you best assess patient satisfaction? Are questionnaires the way to go? What questions should you ask? Who would you ask? What about number of referrals from patients? What about the opinion of referring clinicians? What are the most cost effective patient satisfaction enhancers?
What can be done to increase patient satisfaction and what do these enhancements actually cost? What is the priority ranking of the various dimensions of patient satisfaction—what matters most?What are the dimensions of patient satisfaction? Are clinical outcomes the only factor that counts?
What about the feelings of the patient’s family? What types of factors would you look at to assess patient satisfaction?What metrics best capture the clinical and financial benefits of increasing the level of patient satisfaction?
Do we look at revenue generated per patient: with and without additional discretionary efforts? Should we count opportunity cost or staff recruiting and retention cost?

Please email your comments and opinions to me at jahern@ahernconsulting.com and check out next month’s issue of the Renal Business Today’s "Focus on Finance" column, for a stimulating and thought provoking look at how patient satisfaction affects the bottom line. Again please note, your name will not be mentioned without your permission.

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