Amenities such as massages, scenic views and hotel-style room service are becoming more influential in hospital competition for market share, particularly in areas with well-insured patients. The study "The Emerging Importance of Patient Amenities in Hospital Care," which was published in the Dec. 2 issue of The New England Journal of Medicine, has examined the implications of patient amenities, such as how they may influence the definition of hospital quality or impact healthcare costs.
John Romley, PhD and co-author of the study, is an economist and faculty member of the Leonard D. Schaeffer Center for Health Policy and Economics at University of Southern California in Los Angeles. Dr. Romley discussed the trend with Becker's Hospital Review, along with the cultural factors influencing patient perks and which hospitals are most focused on them.
Q: The article you co-authored mentioned hospitals are now competing for patients directly through hotel-like perks, whereas in the 1990s they attracted patients by recruiting talented physicians. Can you sharpen this timeline? Is the emergence of amenities something we've seen in the past 5, 10 years?
Dr. John Romley: Amenities weren't invented yesterday. We found records from a Los Angeles hospital from the late 1980s with pictures of a hospital staff member in waiter's garb, serving wine to a patient. But we do believe there is an important trend in the direction of patient amenities. Partly, this is somewhat anecdotal since we live in west Los Angeles. Several major hospitals here seem to be focusing on creature comforts to compete for patients.
This notion combines with a couple of recent developments. The first is the move from HMOs to PPOs. When HMOs came in in a big way during the 1990s, those plans were pretty aggressive in their approach in terms of having restrictive networks and otherwise managing utilization. Then we see managed care has evolved from tighter, HMO-style care to the direction of PPOs, where people are given more choice but forced to pay more to exercise that choice. The point is, in this past decade, patient choice in healthcare matters has increased relative to what it was.
The second thing to note is that hospital construction has been booming. It's gone from $10 billion a year to $30 billion, and this has created opportunities for hospitals to start over in how to design their facilities and what kind of creature comforts they want to include. We live in a consumer-oriented society, where people want choices and expect to be treated well. Why wouldn't we expect that in healthcare as well? This is increasingly the case when there is emphasis on the idea of consumer-directed healthcare as a potential avenue for improving healthcare performance. When you empower consumers, they are free to behave in ways that may not be expected or desired.
Q: The study also elaborated on implications with this trend, such as how amenities may muddle the definition of hospital quality and affect healthcare costs. What other implications should we be aware of?
JR: I think it will depend on how cost pressures take form after healthcare reform. If providers are squeezed financially, there will be less to spend on whatever draws patients. That is, amenities in addition to quality of care. Value-based purchasing by CMS may favor clinical quality over amenities, whereas previously DRG-based reimbursement paid the same amount for a patient, even if a hospital provided amenities at the expense of quality of care. But maybe clinical quality won’t be favored. HCAHPS performance may be a part of value-based purchasing, and patient assessments of the hospital experience may be influenced by amenities, even though HCAHPS was not designed to include that.
Q: In research cited within the report, improvements in amenities cost hospitals more than improvements in quality of care — but improved amenities had a greater effect on hospital volume. Do you think this is an accurate reflection of patients' priorities right now?
JR: Our studies suggest that clinical aspects of the hospital aren't a trivial cost. They are contributing to costs, but appear to cost significantly less than non-clinical aspects. We were shocked by that. Our analysis was based on data from earlier in the decade, so one can imagine that patients are in a different place right now. Some people may look at this information and think, 'Ok, patients care more about amenities than quality of care.' That's too strong of an interpretation.
It's very hard for patients to assess quality of care at hospitals. It may be easier for them to assess whether they will get a private room with good food and nice people. But even if people were able to understand clinical quality reports better, or if they had better information available to them, amenities would still play a role in their decision. Some patients out there are willing to trade a little quality for nice amenities.
Q: Are there any trends in the type of hospital or patient demographic that is particularly focused on amenities?
JR: Wherever competition is fierce, hospitals are more likely to compete with the amenities they offer. Hospitals in metropolitan and urban areas are more likely than rural hospitals to face intense competition. Also, certain patients may value creature comforts more than others. Affluent people value anything that's good, and they're willing to pay for it. However, they also want to pay for good quality of care. Where a hospital should focus its efforts between those two patient demands isn't obvious.
The acuity of the patient also factors in. It's striking that amenities still matter to heart attack patients to some degree, but they do. One type of patient for who this trend may be particularly important is for women and families expecting babies. Hospitals really try to get you in their OB/GYN unit — that's an area of hospital business that is highly competitive. I expect competition for mothers to be especially strong.
Q: There also seems to be an ethical issue at stake here. At the root of this, do you think there is some mild deception at work, or do you think this trend is merely healthy competition for patients?
JR: Our study is one of the early conversations on this trend — some people are well aware of what's going on, but there's has not been much conversation on this issue before. We can only imagine how this will go, but we do imagine that people will have pretty different perspectives. From the economist viewpoint, amenities seem to be giving pleasure and enjoyment to people, even if they don’t improve health outcomes (which they may). They may have value we should recognize as legitimate. There's another opinion, though, that amenities will result in patients being tricked. Hospitals are now hiring people from the hotel and hospitality industry, so they're catching on to what patients want. There are going to be different opinions on this issue and we imagine it's going to be fairly controversial in the future.
Read full study "The Emerging Importance of Patient Amenities in Hospital Care" at New England Journal of Medicine.
Read more about hospital value and development:
- 5 Ways to Raise a Hospital's Value Before a Sale
- 5 Factors Influencing a Hospital Value
- 5 Ways Evidence-Based Design Adds Value to Hospitals
John Romley, PhD and co-author of the study, is an economist and faculty member of the Leonard D. Schaeffer Center for Health Policy and Economics at University of Southern California in Los Angeles. Dr. Romley discussed the trend with Becker's Hospital Review, along with the cultural factors influencing patient perks and which hospitals are most focused on them.
Q: The article you co-authored mentioned hospitals are now competing for patients directly through hotel-like perks, whereas in the 1990s they attracted patients by recruiting talented physicians. Can you sharpen this timeline? Is the emergence of amenities something we've seen in the past 5, 10 years?
Dr. John Romley: Amenities weren't invented yesterday. We found records from a Los Angeles hospital from the late 1980s with pictures of a hospital staff member in waiter's garb, serving wine to a patient. But we do believe there is an important trend in the direction of patient amenities. Partly, this is somewhat anecdotal since we live in west Los Angeles. Several major hospitals here seem to be focusing on creature comforts to compete for patients.
This notion combines with a couple of recent developments. The first is the move from HMOs to PPOs. When HMOs came in in a big way during the 1990s, those plans were pretty aggressive in their approach in terms of having restrictive networks and otherwise managing utilization. Then we see managed care has evolved from tighter, HMO-style care to the direction of PPOs, where people are given more choice but forced to pay more to exercise that choice. The point is, in this past decade, patient choice in healthcare matters has increased relative to what it was.
The second thing to note is that hospital construction has been booming. It's gone from $10 billion a year to $30 billion, and this has created opportunities for hospitals to start over in how to design their facilities and what kind of creature comforts they want to include. We live in a consumer-oriented society, where people want choices and expect to be treated well. Why wouldn't we expect that in healthcare as well? This is increasingly the case when there is emphasis on the idea of consumer-directed healthcare as a potential avenue for improving healthcare performance. When you empower consumers, they are free to behave in ways that may not be expected or desired.
Q: The study also elaborated on implications with this trend, such as how amenities may muddle the definition of hospital quality and affect healthcare costs. What other implications should we be aware of?
JR: I think it will depend on how cost pressures take form after healthcare reform. If providers are squeezed financially, there will be less to spend on whatever draws patients. That is, amenities in addition to quality of care. Value-based purchasing by CMS may favor clinical quality over amenities, whereas previously DRG-based reimbursement paid the same amount for a patient, even if a hospital provided amenities at the expense of quality of care. But maybe clinical quality won’t be favored. HCAHPS performance may be a part of value-based purchasing, and patient assessments of the hospital experience may be influenced by amenities, even though HCAHPS was not designed to include that.
Q: In research cited within the report, improvements in amenities cost hospitals more than improvements in quality of care — but improved amenities had a greater effect on hospital volume. Do you think this is an accurate reflection of patients' priorities right now?
JR: Our studies suggest that clinical aspects of the hospital aren't a trivial cost. They are contributing to costs, but appear to cost significantly less than non-clinical aspects. We were shocked by that. Our analysis was based on data from earlier in the decade, so one can imagine that patients are in a different place right now. Some people may look at this information and think, 'Ok, patients care more about amenities than quality of care.' That's too strong of an interpretation.
It's very hard for patients to assess quality of care at hospitals. It may be easier for them to assess whether they will get a private room with good food and nice people. But even if people were able to understand clinical quality reports better, or if they had better information available to them, amenities would still play a role in their decision. Some patients out there are willing to trade a little quality for nice amenities.
Q: Are there any trends in the type of hospital or patient demographic that is particularly focused on amenities?
JR: Wherever competition is fierce, hospitals are more likely to compete with the amenities they offer. Hospitals in metropolitan and urban areas are more likely than rural hospitals to face intense competition. Also, certain patients may value creature comforts more than others. Affluent people value anything that's good, and they're willing to pay for it. However, they also want to pay for good quality of care. Where a hospital should focus its efforts between those two patient demands isn't obvious.
The acuity of the patient also factors in. It's striking that amenities still matter to heart attack patients to some degree, but they do. One type of patient for who this trend may be particularly important is for women and families expecting babies. Hospitals really try to get you in their OB/GYN unit — that's an area of hospital business that is highly competitive. I expect competition for mothers to be especially strong.
Q: There also seems to be an ethical issue at stake here. At the root of this, do you think there is some mild deception at work, or do you think this trend is merely healthy competition for patients?
JR: Our study is one of the early conversations on this trend — some people are well aware of what's going on, but there's has not been much conversation on this issue before. We can only imagine how this will go, but we do imagine that people will have pretty different perspectives. From the economist viewpoint, amenities seem to be giving pleasure and enjoyment to people, even if they don’t improve health outcomes (which they may). They may have value we should recognize as legitimate. There's another opinion, though, that amenities will result in patients being tricked. Hospitals are now hiring people from the hotel and hospitality industry, so they're catching on to what patients want. There are going to be different opinions on this issue and we imagine it's going to be fairly controversial in the future.
Read full study "The Emerging Importance of Patient Amenities in Hospital Care" at New England Journal of Medicine.
Read more about hospital value and development:
- 5 Ways to Raise a Hospital's Value Before a Sale
- 5 Factors Influencing a Hospital Value
- 5 Ways Evidence-Based Design Adds Value to Hospitals