South Florida Hospital News
Monday August 19, 2019

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May 2008 - Volume 4 - Issue 11




Hospital Success in the Experience Economy

Today, we live in an experience economy. Our marketplace behavior can testify to the truth of its existence. When we have an "exceptional experience" with a person or company, we often share that experience immediately with those in our contact list, cell phone directory, or we blog it or download it to the web. Tens, hundreds and thousands of people can immediately know of and share our experience. This experience economy coupled with todayís mass-distribution-of-information technology offers an explosive viral marketing combination.

This reality holds true for hospitals and other healthcare providers. The patients and guests of a hospital are likely to "sneeze" their experience on others, good or bad. Professor Ashish Nanda of Harvard Business School defines value in the experience economy this way:

Value = f(Experience Ė Expectations)

The more extreme, extraordinary, or over-the-top the experience of a patient or guest compared to their expectations, the higher the value received. The opposite also holds true. The greater the difference between what a patient or guest expects and what they receive, if not done well, creates negative value. Either way, the greater the difference, positive or negative, the greater the impact on customer value received. The greater the value difference, the more likely the "sneezing" on others.

Patient and guest loyalty is another important dimension of success in this economy. With product, quality, and service expected, customer loyalty is significantly a product of oneís experience. If one can go to the hospital down the street and receive the same experience, loyalty can be fleeting.

The relationship between loyalty and experience can be represented this way:

Loyalty is the dependent variable. Oneís experience is the independent variable. Most of us anticipate a linear relationship between oneís experience and their loyalty. As oneís experience improves, customer loyalty increases. This is reflected by the line A.

A "bended" relationship, though, is more accurate and hereís why. If you are the first-in and offer a unique service, customer loyalty is fairly inelastic. Even with a slightly favorable experience, customers will come back. This is represented by a "bow" curve or curve B. As oneís experience improves, loyalty rises sharply and will remain high even if the experience is not excellent. Options for a similar experience are just too few. This phenomenon has held true with innovative products and quality. As long as there are a few or no alternatives, the "bow" curve prevails.

But once the experience can be reasonably duplicated, the "bow" becomes more linear and ultimately begins to "sag." The "sag" curve C, reflects a highly-elastic reaction to oneís experience. Given alternative, very good experiences, a slight decrease in oneís experience can have a significant diminishing effect on customer loyalty.

Here is how a hospital or healthcare provider can excel in this experience economy. There are two courses of action that will optimize customer loyalty.

  • The first course of action is to invent new and extraordinary experiences. This course of action insures the longer term existence of a "bow" curve like curve B above. The newness of the experience is enough to keep patient and guest loyalty high.
  • The second course of action is to create an environment and culture where consistent excellent experiences are the norm. This course of action is especially important when the customer loyalty curve begins to "sag" with similar alternative experiences available. Consistent, excellent experiences keep patient and guest loyalty high.
Letís put these courses of action into a context and quest for results that hospitals and healthcare providers can understand. Quality care and healing are basic expectations of patients and their families. Add to this equation massive hospital expansion readying for the aging baby-boomers, a longer-term shortage of nurse staff, and competition for physicians and leading and managing a medical and healing practice is plenty complex to occupy the attention of administrators, physicians, and nurses.

To help compensate for these significant investments in equipment and infrastructure, and the related increase in costs and debt service, hospitals are focused on increasing patient flow, improving bed turnover, and improving the utilization of and, consequently, the return on investment of diagnostic and treatment equipment.

Patient flow has an "experience" dimension beyond return on investment. Good patient flow minimizes wait times. Long wait times can be a significant dissatisfier. Good patient flow also provides the opportunity for important customer "touches" that can render an experience "extraordinary" if done right. For instance, transporting patients from rooms to diagnostic and treatment areas, if done well, can optimize utilization of revenue-generating equipment. With the right hospitality-oriented and well-trained transporters, a patientís hospital experience can become a hospitality experience.

Hospitality-oriented transporters, beyond expected infection control and injury-minimizing lift practices, can offer a warm greeting, add a blanket to increase the comfort and privacy of a patient, sit the patient up for transport, if advised, and warmly depart upon delivery to the receiving department with a salutation using their name. Couple this experience with a welcoming and warm greeter at the entrance, a convenient valet parking service, a concierge to assist with patient and guest arrangements, and a Starbucks in the lobby and you have a "bow" curve formula and the consistency of excellence that can optimize loyalty on a "sag" curve.

Your hospitalís success in this experience economy depends upon your ability to invent new and extraordinary experiences and create an environment and culture where consistent excellent experience is the norm.

Dave Geenens is President/CEO of Avascend Healthcare Hospitality. For more information, visit or call (800) 432-2920.
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