It’s common knowledge that acquiring new patients is significantly more expensive than keeping existing ones. How much more expensive? According to this Harvard Business Review article—which WebPT’s Kylie McKee cited here—“Depending on which study you believe, and what industry you’re in, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one.” Even if your numbers are on the low end of that range—and that seems unlikely for healthcare providers—that’s an awful lot of money to spend making up for lost patients, especially when there are relatively simple things you can do to keep your current ones. We’ve already covered several strategies for reducing patient churn in a previous post. But today, we’re going to discuss the concept of the patient loyalty program (a.k.a. patient rewards program). Here’s what you need to know:
Loyalty programs are becoming increasingly popular in health care.
While loyalty programs once only seemed appropriate for grocery stores, coffee shops, hotel chains, and air travel companies, they’re now showing up in health care. After all, as the author of this Modern Healthcare article points out, “frequently switching clinicians can result in fragmented and poorly coordinated care, yet addressing the issue has not been easy. Loyalty programs might be one way to think outside of the box. And the concept is slowly generating interest among healthcare leaders.” According to this Advisory Board post, a 2016 article published in The Journal of the American Medical Association recommends healthcare organizations take advantage of these programs, which in the past have been relegated to the retail industry. Apparently, the article’s authors “argue that hospitals can adapt the approach to fit the health care market, offering perks such as parking vouchers or discounted cafeteria food.”
They’re good for patients and providers.
Adopting such a program is good for both patients—who not only earn “perks and rewards,” but also experience consistent care—and healthcare organizations, as these programs can strengthen the patient-provider or patient-organization relationship. Furthermore, the Advisory Board said, these types of programs may encourage healthcare providers to “partner with gyms, pharmacies, or other healthcare organizations to provide loyalty rewards—incentivizing patients to focus on their health, which can lower the cost of care.”
The Botsford Hospital in Farmington Hills, Michigan launched its VIP program in 2010: card-carrying members can access “free valet parking, a concierge to help connect them with a physician or specialist, access to a physician within 24 hours, and a 10% discount at the gift shop and on nonprescription drugs at the outpatient pharmacy.” Additionally, the Primary Health Network offers patients points every time they see their doctors, which they can then redeem for things like branded merchandise (up to a $50 value per calendar year).
It’s important to reward the right behaviors.
Some providers and administrators have voiced concerns that implementing loyalty programs in healthcare organizations and provider offices could cause “patients to seek unecessary care just to rack up rewards”—which, the JAMA authors say, can be avoided when providers base rewards on “the duration of the relationship, rather than how many times the patient visits.” Others doubt the effectiveness of loyalty programs because “patients care more about clinical excellence than anything else.” Thus, they may be willing to “wait in line, struggle to get an appointment, and endure subpar service if it means they can get great care.” But, the authors of the JAMA article believe it’s a both/and situation: “a combination of excellent care and quality customer service is a new way to attract and retain patients in a highly competitive market.” We couldn’t agree more.
But, it’s equally important to provide value.
According to Jason Wolf—president of the Beryl Institute, a global community dedicated to improving the patient experience—in the above-cited Modern Healthcare article, organizations must ensure they’re providing value to their patients before implementing a rewards program: “Dropping a rewards program into an organization that is not focused on improving outcomes or making care affordable will not make a difference,” he said. A reward program is an “extra layer,” not a standalone solution. Renuka Tipirneni—author of the above-cited JAMA article—“agreed and warned against creating incentives that encourage overuse of low-value services or those that create inequitable access to care. It’s not about increasing their number of visits, but rewarding patients for taking the appropriate steps to better their care.”
Now, rehab therapists are all about providing high-value care that produces exceptional outcomes. Thus, you may have the perfect setting to experiment with a loyalty program for your patients. While the possibilities are nearly endless, to help get you started, here’s a short list of things rehab therapist could reward their patients for:
- Going to all scheduled sessions and completing their plans of care
- Showing up to all appointments on time
- Completing their home-exercise programs
- Reading specific content related to their condition
- Bringing a friend or caregiver to their appointment for support
- Attending complimentary educational seminars
There are loyalty program pitfalls, especially with Medicare patients.
As WebPT’s Charlotte Bohnett explains here, the APTA says providers may offer incentives to patients or prospective patients when receiving reimbursements from federal healthcare programs (e.g., Medicare) as long as the “incentive is to promote the delivery of preventive care services” and that “the delivery of such preventive services is not related to the provision of other services.” Furthermore, you may not give cash, anything that can be converted into cash, or anything with a value that is “disproportionately large in relationship to the value of the preventive care services.” You must also ensure “that the provision of the gift does not have the purpose of securing your services to a patient.” Confusing? You betcha. According to Wolf, loyalty programs are “an innovative but conceptually tricky proposition,” especially with regard to CMS’s patient marketing rules, such as the Federal Anti-Kickback Statute and the Medicare Inducement Law. Here’s what you need to know about each:
The Federal Anti-Kickback Statute
According to this Lexology article, “The federal anti-kickback statute makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimbursable by a Federal health care program.” And violation of this statute is a felony that could land providers with up to five years of jail time and/or fines of up to $25,000.
The Inducement Law
According to the same source, “The Inducement Law prohibits any person from offering or transferring remuneration to a Medicare or Medicaid beneficiary that the benefactor knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier or any item or service for which payment may be made, in whole or in part, by Medicare or Medicaid.” In short, this means that providers are prohibited from “offering or transferring inducements [which you can think of as bribes] to Medicare or Medicaid beneficiaries.” Failure to comply could lead to civil fines and/or being unable to participate in Federal healthcare programs. Now, the Office of the Inspector General has stated that nominal incentives (i.e., those valued at no more than $10 per item or $50 total annually) aren’t prohibited under the Inducement Law. (Notice the $50 annual limit that Primary Healthcare Network places on its reward program.)
The Bottom Line
Unless you happen to be a compliance expert and/or healthcare attorney yourself, I would strongly suggest that you get professional help to ensure your reward or loyalty program is structured in a way that satisfies all compliance and legal requirements—and that recommendation stands whether or not you’re working with Medicare patients. Also, the APTA recommends all providers review their state laws and practice acts before implementing any type of patient rewards program.
And the ROI isn’t clear yet.
The Advisory Board points out that while “several health systems” have already begun “offering loyalty programs to their patients, it’s not yet clear whether they generate ROI.” Regardless, though, the Board does support “the need for health care organizations to adopt a more customer-service oriented approach.” After all, its research has found that “after care quality, the strongest predictors of loyalty—in both primary and specialty care—are patient experience factors such as physician respect, staff patients, and helpfulness, patient education, and short wait times.”
What do you think? Would you consider implementing a patient loyalty program in your practice? If so, consider this: the Advisory Board urges all providers to focus first “on efforts that increase access, minimize critical service flashpoints, and deliver a consistent, exceptional experience to the patient.”