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Should Hospitals Use Starbucks-Style Loyalty Programs?

Hospitals are basically service businesses, so some doctors are advocating that this is the next logical step.

Should Hospitals Use Starbucks-Style Loyalty Programs?

Photo: Flickr user Andrew

Hospitals should run loyalty schemes like Starbucks does, say three doctors at the University of Michigan, and for the exact same reasons. Yes, there are benefits to the customers, but the hospitals themselves stand to win biggest.

A new paper, published by doctors Laurence McMahon, Jr., Renuka Tipirneni, and Vineet Chopra, shows how important marketing is when your health service is run like any other commercial entity. Here are the three big benefits that hospitals will see if they adopt loyalty programs like those used by pretty much every chain in the country:

  • Customer retention. It costs more to attract new customers than it does to hold onto existing ones.

  • Customer goodwill. Receiving perks tends to lessen the sting of a bungled order or slow service.

  • Word-of-mouth advertising. People who take part in a loyalty program are more likely to say good things about the company and spread the word about it.

A loyalty scheme, say the authors, is an essential tool to retain customers in a world of Accountable Care Organizations, where 'customers' can move between hospitals and doctors easily. Of course, one might say that the best way to retain a customer is to offer great service at a good price, but those priorities seem to have deserted most businesses, so the advice of McMahon, Tipirneni, and Chopra to skip straight to the loyalty scheme is practical at least.

Flickr user Cheon Fong Liew

What matters most to patients, they say, isn’t the technical expertise or performance of a hospital, but the service they get, and this informs their choice of hospital. Most people have no idea how to asses the technical quality of a hospital, so they rely on recommendations, word of mouth, and partially on online ratings sites. Recommendations come from friends and family who have gotten what they see as good service—kind staff, being treated well, and promptly—the usual things that make us re-use a store, restaurant, or other establishment.

Loyalty schemes, then, are of obvious benefit to the hospitals. But what’s in it for you? The authors make a few suggestions: "Free parking vouchers, cafeteria discounts, preferred rates at local restaurants or hotels." That also suggest that hospitals might partner with medical supplies companies, pharmacies and so on, in order to pool information and make customized offers to patients.

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