Creating Customer-Focused Healthcare Organizations through Human Resources

The problem with human resources management (HRM) thinking is that it addresses only 50 percent of the “people equation,” focusing on internal customers to the exclusion of external customers. The goal should be to link the external customer’s requirement with the internal human capabilities, thereby optimizing the utility of both. Consequently, the goal of the human resources (HR) function is not to make employees happy or satisfied at work; rather, it is to make happy those employees who are making the external customers happy. Most healthcare organizations’ mission proclaims, “People are our most important asset.” Yet no one really believes such statements. What they really mean is, “People who are serving customers well are our most important asset. Others must either convert to serving customers well or leave.”

Healthcare organizations have not traditionally been focused on the needs, wants, or desires of their patients/customers. As a result of their history and reimbursement sources, they have concentrated on meeting the expectations of their medical staff and third-party payers. The medical staff have historically had the power to decide where their patients would go for services, and their provider organizations have gone to great lengths to make them happy. Because third-party payers pay the bills, organizations have also spent considerable effort in satisfying them. This limited definition of “customer” has resulted in organizations focusing only on increasing market share, decreasing costs, and expanding revenues to retain the support of their third-party payers and on providing sophisticated technology and in-house amenities to satisfy their doctors. Meanwhile, the patient has been overlooked and underappreciated as the ultimate customer. Even the term “patient” implies a passive person who patiently waits for service from experts who know what that patient needs and who often provide it without consultation with or explanation to the patient.

This paradigm has led to an increasingly unhappy and vocal patient. One study commissioned by the Voluntary Hospitals of America and another survey published in Fortune magazine report the following consumer attitudinal trends toward healthcare organizations (Alliance 1998):

Public trust in healthcare institutions has declined…with health plans losing more ground than physicians or hospitals. The decline in trust is especially pronounced among consumers age 40 to 59; those with higher income and education levels; and those who have recently changed, added, or selected a physician or hospital. Consumers gave hospitals only a 67 percent satisfaction rating, and compared with 31 other industries, hospitals rank 27th. This placed them just above the Internal Revenue Service and 10 percentage points below the tobacco industry.

Furthermore, 80 percent of Americans agree that hospitals have cut corners to save money, and 77 percent agree that these cuts endanger patients (Healthcare Advisory Board 1999). While these findings are from 1999, such dissatisfaction and cynicism from the public continue and are probably worse today. Currently, many consumers think that in the event that they become seriously ill, their health plan will be more concerned about saving money than providing the best medical care (National Coalition on Health Care 2008).

None of these findings is surprising given that the services paid for by private insurers and government are not likely to reflect consumer preferences for convenience and personal control (Herzlinger 1997, 95). The increasingly involved healthcare consumer (this term, or plainly “consumer,” is used throughout the chapter to refer to “patient”) and the newly evolved competitive market are forcing healthcare institutions to consider who their customers really are. They are starting to rethink the old paradigm of “take care of the doctors and third-party payers and all good things will follow” and follow the new paradigm of “don’t forget the patient as customer” (Ford and Fottler 2000). Today’s consumers, however, have much more knowledge and access to information about the value and quality of their healthcare alternatives. They are more savvy about what they are getting for their healthcare dollar and are increasingly involved in the decisions about how those dollars are spent. Because they have many choices when it comes to insurance coverage and healthcare providers, their voice is being heard. In addition, increasingly vocal consumer groups have changed patients’ mind-set from being passive consumers into active participants in their own healthcare decisions.

Regina Herzlinger (1997, 3–4) describes this new healthcare consumer as follows:

They want what they want, they want it fast, and they want it when they want it. Well-informed, overworked, and overburdened with child and elder-care responsibilities, they are a new breed of consumer, and their demands for convenience and control have caused many American businesses to greatly enhance their quality and control their costs…the consumer revolutionaries want their healthcare system to provide them with the same kinds of convenience and mastery they have found with Home Depot, Consumer Reports, and Nordic Track, so that their health status and costs will improve even further.