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Griffin Hospital in Derby, Conn., provides patients and their visitors with private kitchens. Photographs by Peter Gregoire and Vern EvansIt is always tough to pull the plug on a community hospital. Griffin is typical of a worldwide subculture of hospitals and other health-care facilities that in the past 20 years have taken the idea of customer service to heart and transformed themselves.
The Tough Business of CaringVisibly, vividly, most of today’s hospitals do not work for the customer. One reason that people-centered health care has been slow to take hold in many hospitals is the underlying reality: The customer, at least in the sense of the person who pays the bills, is usually not the patient. They started in 1982 by surveying residents of the six towns in the Naugatuck Valley and were stunned to learn how dismissive the area’s residents were of Griffin.
Having enjoyed such success with its maternity experiment, Griffin began to rebuild its whole facility using the same customer-oriented approach. Griffin got the idea for this innovation from the Planetree Health Resource Center, a San Francisco nonprofit membership organization dedicated to improving patients’ experience in health care. Griffin, meanwhile, continues to tap the market for insights into improving its operations. Treating the SpiritAs Griffin was refashioning itself, a more extreme example of the people-centered health-care movement was coming together independently five time zones away, on Hawaii’s Big Island. Earl Bakken, inventor of the first wearable, battery-powered cardiac pacemaker and founder of the medical technology giant Medtronic, became a third powerful influence when he retired to the Big Island in 1990. First-Class ServiceRecovering from surgery is usually a miserable experience, but surgeon Alan Pierrot of Fresno, Calif., was determined to change that and make a buck in the process. Indeed, that is true of most of the innovations of the people-centered health-care movement. In particular, because of higher co-pay policies among many health insurance companies, insured consumers are spending more out of pocket for their coverage. Meanwhile, spurred in part by malpractice litigation, a new transparency is spreading across health care.
Global Health-Care CompetitionHospitals also face sharper competition, not just from nearby facilities, but from distant hospitals that offer special treatment packages. Some health-care specialties, such as laser eye surgery and cosmetic surgery, are already consumer markets, because they are rarely covered by insurance.
More and more hospitals realize that they have much to learn from consumer products companies.
Hospitals are also discovering that if they create strong brands, they can attract more customers and inspire more donors and volunteers.
The passion people feel about health care has suddenly become a critical component of the business environment for medical providers.
Many hospital executives equate people-centered health care with the need for improved amenities and facilities, but it’s really much more than that. Unfortunately, hospital leaders who ignore the broad consumer health-care movement do so at their peril. For example, what if patients got one clearly organized bill for everything — doctors, medication, the whole package — related to a hospital stay?
Two insurance giants, Aetna and the Blue Cross system, recently announced that they are introducing their own debit cards (with either Visa or MasterCard affiliation). Gary Ahlquist ([email protected]) is a senior vice president of Booz Allen Hamilton based in Chicago. Institute for Healthcare Improvement: Quality improvement clearinghouse for physicians and practitioners. Articles published in strategy+business do not necessarily represent the views of the member firms of the PwC network. In the early 1980s, the board of Griffin Hospital, a struggling institution in the working-class Lower Naugatuck Valley of Connecticut, had to wrestle with that decision.
In the process, they are demonstrating that service-minded health-care institutions can thrive financially even amid escalating costs and competitive pressure.
They’re attempting to build health-care centers with the customer-friendliness of Nordstrom, the reliability of FedEx, and the transactional accuracy and simplicity of American Express.
Some people-centered practices are clinical, including the enforcement of such fundamental (but too often forgotten) measures as having doctors and nurses wash their hands between treatments, installing better ventilation in hospitals, and responding reliably to the call button. Employers, insurers, and governments (in the form of national health services, or in the U.S. In the years immediately after the act went into effect, many of the nation’s hospitals were operating in the red, including 35 percent of the teaching hospitals (according to a 2004 study in the Annals of Family Medicine). They wanted service: an institution more focused on them and their families, with a friendlier staff and longer visiting hours.
Griffin’s CEO at the time, John Bustelos, put a 28-year-old assistant administrator named Patrick Charmel in charge of the effort to transform its maternity service into a modern birthing center. In 1977, Angelica Thieriot, the wife of the San Francisco Chronicle publisher, had been hospitalized with a mysterious viral fever. In 1994, it broke ground on a new north wing, the first hospital building designed from the ground up around Planetree principles.
In 1997, Griffin saw an opportunity to capitalize on the approach that had brought it such success and purchased Planetree. Every Griffin patient gets a phone call 15 days after discharge to check in on his or her experience at the hospital. In recent years, inpatient admissions have leaped 25 percent (from 5,866 in 1997 to 7,349 in 2004), and its outpatient services have grown even faster (from 94,567 in 1997 to 160,427 in 2004, an increase of 70 percent).

Research studies (such as those conducted by the Center for Health Design) show that patients who have access to nature, natural light, and art have less stress and better outcomes. Laurien Hamilton, director of patient financial services, notes that every hospital bill comes with a handwritten note explaining each entry in detail, along with the direct phone number of the person who wrote the note. In 1984, he and some fellow physicians set up the Fresno Surgery Center as a hybrid of an outpatient center and a full-service hospital. And although mavericks like Griffin Hospital, North Hawaii Community Hospital, and the Fresno Surgery Center still represent a tiny minority of hospitals, the movement is gathering momentum. According to an estimate from Hewitt Associates, a human resources consulting firm, people are paying double what they paid just six years ago.
Industry leaders are becoming aware that they face a future in which every mistake and lawsuit, as well as complete price lists and outcomes ratings, will be displayed for the world to see on the Internet.
Studies by researchers Elliott Fisher, Mark McLellan, Elizabeth McGlynn, and others have consistently shown that health-care costs, charges, and utilization rates vary widely, with no demonstrable connection to mortality rates or other outcome measures. World-class medical centers in South Africa, India, Thailand, Malaysia, and Singapore, with good outcome statistics and physicians trained in the U.S. Scores of health-care institutions are teaching their entire staffs the Toyota production system (TPS), taking apart every process in the institution to see if it can be done better, faster, and cheaper, with more satisfied customers.
They also gain an advantage in negotiations with insurers, who cannot afford to ignore a locally popular institution. As a result, this strangely distorted industry is feeling the impetus to make deep internal changes that would have seemed unthinkable two decades ago. As hospitals find themselves competing in an increasingly consumer-directed marketplace, they will have to transform their entire way of doing business. That is a near impossibility today, but it could happen from the bottom up, without any government agency or single company mandating it from the top. This is actually an opportune time for those who want to be creative and strategic thinkers; it will be easier now to transform health-care organizations in ways that few people could envision before.
Reviews and mentions of publications, products, or services do not constitute endorsement or recommendation for purchase. This movement goes by a number of names — people-centered health care, health-care improvement, medical quality, and consumer-driven health care.
They believe that making hospital stays more pleasant will pump up market share and revenues, boost the quality of clinical care, create less stress for the staff, and generally turn their business around. The people-centered health-care movement responds to this chronic neglect of the patient experience by proclaiming a call to arms. It established categories called diagnosis-related groups (DRGs) for inpatient services and set prices for each one — one price for an uncomplicated birth, another for a gallbladder removal, and another for an acute myocardial infarction (a heart attack).
Even now, as health-care costs continue to shoot up, hospitals get the slimmest part of the increases.
Her medical care was of the highest quality, but her experience nonetheless left her traumatized. Griffin paid off Planetree’s debt, transferred its operations to the Naugatuck Valley campus, and proceeded to grow it into an international association with more than 100 affiliated hospitals. Griffin executives can see the results, including narrative comments, by the 10th of the following month, allowing them to track the impact of even tiny changes such as resurfacing the parking lot or changing food vendors. Some observers claim that they have an unfair advantage; the American Hospital Association and the state associations are trying to stymie the spread of such specialty clinics through legislation and litigation.
Their prices rise only moderately (or, in the case of laser eye surgery, have actually fallen steeply). In 2004, Park Nicollet Health Services in Minneapolis, with plans for an expensive new parking structure on the drawing board, undertook a TPS-inspired study to understand why the parking lot was always jammed.
In addition, having a strong brand makes it easier for a hospital to expand its offerings, which is critical to keeping the red ink at bay.
No magic wand will wave away the mess that is health care in the United States — overpriced, disorganized, short on results, and unnecessarily traumatic. Many patients are already acting more in their own interests and expecting more from health-care providers. A smart hospital executive would be thinking about how to hook the doctors into this system so that this one card would produce a single itemized bill with radiology, the operating room, and the doctors’ charges included. It is led by a host of advocacy and research organizations that include an international nonprofit managed by Griffin Hospital: Planetree, an association of 100 hospitals aimed at improving the patient experience. Ask him about the treatment and cure and he lights up, overflowing with praise for the miracles of modern medicine and the skill of its practitioners.
Hospitals, say leaders of this movement, should never add to the pain and trauma of being sick or injured.
Everything a hospital sells, from an aspirin to the use of an operating room for a heart bypass, is ordered not by the patient or the payer but by the physician. Operating a hospital is often a matter of hair-thin margins (rarely hitting 3 percent) and desperation measures (such as cutting ambulance services and hospice care). At the same time, a new north–south highway brought in thousands of white-collar commuters who worked at GE Capital, Xerox, Union Carbide, UBS AG, and the other corporations that were then moving into southern Connecticut.
He replaced the harsh fluorescent lights with indirect incandescent lamps, installed carpeting to absorb sound, and constructed family rooms and kitchens stocked with snacks.
Medical records were made available to patients, who could have them explained and even write in their own comments. Charmel oversaw the design, escorting more than 400 staff and potential patients through room mockups in a local warehouse. Every two years, Griffin conducts a large-scale customer perception survey that recalls the first one in 1982. In Hawaii, where almost all hospitals are state supported, North Hawaii Community is an exception. Also fueling the new health consumerism are the increasingly popular consumer-directed health plans (CDHPs), which give individuals wide latitude in choosing how to spend their health-care dollars. They offer a proliferation of new techniques, of payment methods, of providers, and of information, and have rising quality standards — much like any other consumer market.

The group found that most of the cars belonged to patients who were sitting for long periods in waiting rooms. But it may well be that a combination of market factors and new payment mechanisms can force the industry into reform that no legislation, litigation, or commission could ever have mandated.
Health care made more efficient, more effective, and deeply compassionate might just become the model and catalyst in the transformation of many another service industry.
Although the transparency that consumers will ask for (and that health information technology will enable) is scary, the opportunities are huge. The hospital’s financials were sickly, and it was losing market share to the seven larger health-care institutions, including Yale New Haven, that lay within a 15-minute drive. Other leading organizations include the Institute for Healthcare Improvement (known for its crusading founder, Dr. DRGs and similar schemes for outpatient treatments and other types of treatments have since become the core code sets of the industry’s finances, and the subject of constant and brutal negotiations. Using intelligence gained from his reconnaissance missions and from the marketing surveys, Mr. Volunteers came in to bake muffins and cookies for patients and staff, filling the corridors with comforting, homey smells. Of the doctors who at first resisted the change, some were unconvinced that it would lead to better results and others were worried that the information could be used against them.
She founded Planetree in 1978 to push for change by publishing information about disease, treatments, and medical self-care, and by promoting the development of hospital environments designed to post nurses closer to the patients, ease access for family members, and involve the patients in their own care. The wing features decentralized nursing stations, one for every four beds, constructed without barriers to foster communication among patients, their families, and the medical staff. Kaiser led them to Patrick Linton, CEO of Yavapai Regional Medical Center, in Prescott, Ariz., who had pioneered the use of consumer-friendly health-care management techniques. Even operating rooms and the intensive care unit have windows, set high in the wall for privacy. Its operations generate a positive cash flow of approximately $2 million each year, according to Mr. We wanted to keep the surgery center culture — good customer service, high efficiency, rapid turnover of patients, good morale, and an on-time culture.
Pierrot and his colleagues started by asking themselves what they’d want if they were patients. As of December 2005, 10 percent of insured consumers in the United States subscribe to CDHPs or similar plans, and benefits managers surveyed by the industry publication Inside Consumer-Directed Care expect that percentage to at least double this year. The survey is a voluntary program, but as of October, hospitals that do not take part will lose 2 percent of government reimbursements.
These include building not just new customer relationships, but also new business relationships with physicians, especially the procedure-based specialists who drive most hospital revenue and profits. Griffin could brag that it was the most affordable hospital in the state, but its tight budgets left it with little cash to keep up with new technologies or to expand. All payers demand steep reductions in the prices that hospitals set, and the government imposes the discounts. Charmel planned a birthing center with such then-unusual features as a separate entrance, private rooms with bathrooms and showers, a greater variety of anesthesia choices, the option to have fathers and siblings attend the birth, and more female obstetricians and midwives.
Musicians were brought in to play live music, and visiting hour restrictions were eliminated.
Most were won over when they realized that open records led to fewer, not more, malpractice claims.
Pierrot figures that he makes up for the extra costs with savings on personnel, in both salary and turnover expenses.
Wilner, vice president and medical director for behavioral health at New York Presbyterian, “patients measure their satisfaction differently than they did before. Booz Allen Hamilton recently estimated that adoption of CDHPs by only 15 to 20 percent of the insured market will cause the entire health-care industry to begin operating much more like a retail consumer market.
Through a single-minded devotion to customer service — one that many in health care regard as quixotic, superfluous, or even downright fanatical.
The place to see the people-centered movement in action is in Griffin Hospital and some counterparts around the world. With sinking market share, dismal rankings, and a crumbling physical plant, the board came to a consensus: Do it.
It also included innovations that are still rare in hospitals today: double birthing beds so that fathers could comfort mothers in labor, whirlpool baths, family waiting areas with kitchens and special play areas for children, unrestricted visiting hours, celebration dinners, and classes for grandparents. Griffin’s records show claims against the hospital dropped more than 43 percent, from 32 in 1996 to 18 in 2005, even as discharges rose 40 percent (from less than 9,000 to more than 12,000) during the same period. The surroundings are designed to comfort, with gentle colors, natural lighting, and large aquariums. Linton to consult on the design of the new North Hawaii Community Hospital, and eventually hired him as its founding CEO. They want to control the physical aspects of the space, such as light, sound, and temperature. Charmel tried to order 14 double birthing beds, for example, he discovered that no supplier had heard of such a thing. Other amenities include valet parking, concierges, and escorts to accompany patients as they check in. In 1982, Griffin’s board commissioned a market survey, an unusual step at the time in health care.
And such services as massage therapy and visits from Kahunas (traditional Hawaiian priests) are available to both patients and staff.

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