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British Journal of Healthcare and Medical Research - Vol. 10, No. 2
Publication Date: April 25, 2023
DOI:10.14738/jbemi.102.14477.
Kwon, I.-W. G., & Kim, S.-H. (2023). Healthcare Consumerism and Patient Loyalty in the Age of Telehealth: An Exploratory Roadmap.
British Journal of Healthcare and Medical Research, Vol - 10(2). 507-518.
Services for Science and Education – United Kingdom
Healthcare Consumerism and Patient Loyalty in the Age of
Telehealth: An Exploratory Roadmap
Ik-Whan G. Kwon
The Center for Supply Chain Excellence,
Saint Louis University, Saint Louis, MO, USA
Sung-Ho Kim
Department of Healthcare Management,
Cheongju University, Republic of Korea
ABSTRACT
Customer loyalty is known as a source of sustained revenue steam and means of
building and maintaining a strong relationship with customers for lifetime
shopping experiences. Although there are a few studies in patient loyalty in
healthcare fields, there is no theoretical or empirical studies on patient loyalty
under the telehealth environment. This study, therefore, borrowed the framework
from the commercial consumer loyalty model and build patient loyalty framework
for healthcare practices in telehealth environment. There is a growing trend in both
academic and industry circles that telehealth will stay as a one of the viable
healthcare management alternatives even after Covid period. This study reviews
the current status of patient loyalty based on the existing literature and explores a
pathway to establish patient loyalty in telehealth platform.
Keywords: Customer loyalty, Patient loyalty, Brand loyalty, social determinants of health,
Healthcare consumerism, Normative goods, Transaction cost, Determinants of patient
loyalty, Digital health literacy.
INTRODUCTION
As out-of-pocket healthcare costs and health payer deductibles have both grown, the patients
increasingly consider themselves as major payers for their care. In the United States, the
ongoing growth of cost-sharing has given consumers greater influence over healthcare delivery
and cost management. For example, between 2006 and 2015, the average deductible for
employees with employer-sponsored insurance grew by more than 120% (Flavelle, 2015).
Consumers now directly control $330 billion annually in out-of-pocket healthcare expenses
worldwide (WHO, 2020). The choices that they make have the potential to affect 61% of all
healthcare spending (Anand et al., 2016). Accordingly, it is not surprising that consumers are
beginning to actively engage in making decisions about their health, healthcare and spending.
Consumers in healthcare now become active participants in search for the best buy for their
health management creating healthcare consumerism. The concept of consumerism in health
care is a relatively new in the healthcare industry. The concept is generally understood as that
people proactively using trustworthy, relevant information and appropriate technologies to
make better-informed decisions about their health care options with limited healthcare budget,
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British Journal of Healthcare and Medical Research (BJHMR) Vol 10, Issue 2, April- 2023
Services for Science and Education – United Kingdom
both within and outside the clinical setting (Carman et al., 2019). Kwon and Kim (2022, p.2)
further advanced three factors underline successes of consumerism; “trust-based commitment,
comprehensive information display, and technologies”. Absence of any one of these
requirements will hamper successful healthcare consumerism. Commitment to the patients
that they would receive the best care is the most important requirement in creating and
fostering patient loyalty. Now more than ever, patients armed with technologies are surfing
provider’s capability and “reputation” to deliver care that they consider “worth” for their
spending.
LITERATURE REVIEW
While patient consumerism is seeking a better “value” from their spend on healthcare services,
the provider has been equally active in branding their products in such a way to create patient’s
“loyalty” for sustainable value creation. Customer loyalty is a commitment between a customer
and a brand that causes the customer to make repeat purchases. Customer loyalty is different
from brand loyalty. While customer loyalty is transactional in nature and occurs as the result
of money-saving offers from the brand, brand loyalty stems from a stronger, emotional and
personal relationship between the customer and the brand (Blizzard, 2005). A separation and
switch from their favorite brand cause emotional stress with high anxiety that many customers
try to avoid and stay with their brand(s) even if the price is higher than competitor’s. In the
healthcare industry, many patients are attracted to the brand name (e.g., reputation of
healthcare systems, such as Mayo Clinics) even if there are some products/services within the
system subpar to their brand name because patients trust the brand name.
Can patients become repeat customer? There is evidence in healthcare industry that patients
could become repeat customers with their providers when and if they consider that they
receive cares worth of their spending. For example, in 2018 in the United States, each
healthcare consumer in average repeated their purchases 2.67 times (National Hospital
Ambulatory Medical Care Survey, 2018). Although the report does not reveal whether 2.67
visits per patient is repeat visits to the same providers, we can only speculate that some of them
especially for the older population who consume the bulk of healthcare resources and who have
been with the same providers for many years, could be repeat customers. Spend on healthcare
by older population is larger than in any other age brackets. For example, among the top five
percent of Americans on healthcare spending, the vast majority of these individuals were 65
years or older. Although this population shares only 16% of the total population, they consume
36% of total healthcare spending (Sawyer and Claxton, 2019). These older population has been
emotionally attached to their providers for many years and seldom considering switch to other
providers. Such A behavior would create a long-term relationship leading up to patient loyalty.
Healthcare is a “normative and social” goods. It is a normative since healthcare is considered as
a “right” for every consumer and it is a “social” goods as it is a part of societal health status (e.g.,
pandemic). If we face a situation where normative condition prevails, consumers are
empowered to “shop” providers who have been known with reputation as a system or
individual. A lack of open and credible information exchange between providers and patients
may hamper active search for the best providers whom patients wish to be as a “repeat”
customer, a pathway for creating “loyalty”. Providers are aware that customers/patients are
searching for the best providers (social goods), yet they (providers) are not ready to
accommodate due mainly to a lack of infrastructure.
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Kwon, I.-W. G., & Kim, S.-H. (2023). Healthcare Consumerism and Patient Loyalty in the Age of Telehealth: An Exploratory Roadmap. British Journal
of Healthcare and Medical Research, Vol - 10(2). 507-518.
URL: http://dx.doi.org/10.14738/jbemi.102.14477.
Once patients become repeat “customers”, anxiety for being at healthcare environment (“white
coat syndrome”) diminishes as repeat patients became aware of “surroundings” not just for
setting (impersonal), but more importantly personnel who intimately engage with patients on
their care (personal). The emotional “wall” between providers and patient is to be removed.
Provider’s office and building become familiar place where personal and emotional interaction
between patient and provider become much more conducive, opening up a door where intimate
information sharing becomes less awkward. However, information sharing between providers
and patients should not be limited to only medical issues, but more importantly other areas
such as family dynamics, circle of friends, social networks, etc.(social determinants of health)
that patients are interacting on a daily basis. It has been reported that “chit chat” between
patients and physicians improves patient’s “total wellbeing” and remove artificial wall between
patients and providers (Pollack, 2019). It was also reported that focusing on personal
interventions has the most effective for increasing portal use in vulnerable populations
(Grossman et al., 2019). Under the current healthcare system where revenue is determined by
the volume, providers may argue this approach unacceptable, less attractive and uneconomical,
therefore operationally unworkable. Yet, this practice leads to creating “loyal” and “repeat”
patients where a long-term revenue stream is to be secured.
Repeat customers not only render a steady revenue stream, more importantly they are also
major contributors to decreasing transaction costs, a cost/expense that incurs by engaging in
economic exchange of any kind, e.g., recruiting new patients. Transaction cost in general consists
of costs for searching for new patients (search cost), cost searching for right treatment
(negotiation cost) and cost to verify whether information on patients and supporting groups
correctly entered into the healthcare system, thereby the providers render the most effective
and efficient treatment for patients (verification cost). The marketing cost (search cost) to
recruit new patients will be lowered as repeat patients tend to stay with the same providers
thereby decreasing or eliminating repeat cost (investment) on repeat patients. Providers can
easily access to the up-to-date information on the repeat patients and therefore, resources
(marginal cost) to be spent on repeat patients should be lower than new patients. Finally,
providers have completed, up-to-date information on repeat patients in dashboard so as to
provide best and timely treatment and thereby less resources will be needed to verifying
treatment process and outcomes (verification cost).
Considering the sizeable investment into advertising ($29.9 billion in 2019) by the healthcare
industry (Rapaport, 2019), a steady flow of repeat patients into the same healthcare system
with low transaction cost certainly contributes to a higher profitability (Heskett, Jones and
Loveman, 1994). According to one study, most loyal customers - the top 20% of total customers
- not only provide all the profit but also cover losses incurred in dealing with less loyal
customers (Heskett et al., 2011). On the other hand, loss of repeat patients is a costly problem.
According to one study, seven to ten percent of patient attrition represents as much as $100
million in lost revenue opportunity per hospital (Walker, 2018). Reichheld and Sasser estimate
that a 5% increase in customer loyalty can produce profit increases from 25% to 85%. They
conclude that quality of market share, measured in terms of customer loyalty, deserves as much
attention as quantity of share. Using service-profit chain model, Heskett et al. (2011)
established relationships between profitability, customer loyalty, and employee satisfaction,
and productivity leading to a conclusion that patient loyalty improves the provider’s
profitability. Hallowell (1996) further illustrates a sequential relationship of customer