How Much Does It Cost a Health System to Book an Appointment for a Patient?
Booking an appointment is a basic function for a health system. Patients are the healthcare consumer and they can only avail themselves of health care if they can see a healthcare practitioner. Therefore, the appointment is one of the most important units of production created by the healthcare industry. So a logical question is, “what is the cost of production of that unit”?
This basic question has become even more important with the growth of digital health. Healthcare providers are inundated with vendors trying to build a digital footprint and a digital front door. And rightly so. Healthcare is the last anti-consumer industry left in America. The 2010’s cemented e-commerce as a mainstay of American life. E-commerce introduced us to shopping from home, booking from home, and reserving from home. Home soon became, wherever you have a smart phone and internet connection. You could book your vacation from the back of an Uber on your way to work. E-commerce companies, followed by traditional brick and mortar enterprises realized the power of having multiple channels for patients to obtain products and services. And soon, everyone was talking about the importance of the shopping cart; that tool to get people to select, buy and become a loyal customer. And many channels were open 24/7/365.
Healthcare by and large has ignored this trend. There are no shopping carts on healthcare websites. Trying to get routine care or arrange for care “after hours” is difficult to impossible. Yet healthcare is spending billions of dollars on digital strategies before it understands whether or not it has a digital problem.
In actuality, healthcare has an analog problem. Contrary to other industries, 8 out of 9 healthcare consumers prefer to conduct business with their providers over the phone and not over the web. Coupling this fact with the lack of self-service scheduling opportunities offered on the phone (and the web for that matter…see below), healthcare providers would be well advised to solve their analog problem and develop an analog-to-digital strategy before investing solely in digital. But since the appointment is the unit of production for healthcare, it would behoove us to understand the cost of that unit of production as part of any consumer engagement strategy.
Let me calculate this cost for you. If we take a representative health system with 400,000 encounters a year, this generates 2.8 million interactions. 85% of these occur on the phone where 60% of calls fail due to long wait times, multiple ineffective transfers, poor customer service, out-of-service numbers, or broken IVRs. With a direct labor cost of approximately $1.60/minute and the average duration of a scheduling call of just over 11 minutes, the cost to schedule an appointment on the phone is about $18. This excludes hardware, software, seat licenses, maintenance, rent, etc… Other industries have managed to push the figure close to 0 by effectively moving consumers to the lower cost digital option.
Currently, healthcare is going through a similar strategic pivot and there are a myriad of vendors trying to help. Unfortunately, many health systems believe that it is better to build their own digital strategy than buy it. They are investing millions in digital health teams, digital marketing departments and digital patient experience teams, without fully understanding how this is adding to the cost of acquisition. So let me do the following calculation for you. How much does it cost to acquire a patient on the web?
If we use the same representative health system as above, the typical web scheduling team budget is $822,000. With a conversion rate on average of 2–3%, this team enables 8,900 appointments to be scheduled a year resulting in an average of $92 spent per scheduled appointment.
Eighteen dollars per appointment on the phone and ninety-two dollars per appointment on the web!? Could you imagine how Elon, Jeff, or Sundar would respond to the VP who brought them this business plan? Yet healthcare providers do this repeatedly, throwing more money at the wrong problem. So what is the takeaway message?
Don’t try to create a solution without first understanding the problem. For healthcare that means solving the analog problem through automation and creating an analog-to-digital strategy that opens channels capable of providing self service transactions and information retrieval.