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Quality Matters: Service Recovery Boosts Customer Loyalty and Patient Satisfaction

Welch, Shari J. MD

doi: 10.1097/01.EEM.0000413878.74433.70
Quality Matters


“The Profitable Art of Service Recovery” sounds like it may not have much application in health care, and it is true that it was intended for the business world's service industries when Christopher Hart and colleagues wrote it in the Harvard Business Review in 1990. Nonetheless, it started a movement that is now arriving on the health care scene.

The strategy is predicated on the idea that having zero defects is an unobtainable goal in any service industry, including health care. But service failure has correlations with customer loyalty, malpractice risk, and patient satisfaction. Errors are inevitable, of course, but service recovery holds that dissatisfied customers are not. A good service recovery program can turn angry and frustrated patients or family members into loyal ones, and create more goodwill than had things gone smoothly. Customer satisfaction actually improves over baseline when recovery methods are used.

Airline, hotel, and rental car executives have realized the power of service recovery. “You can truly turn the customer into an ambassador for the brand,” said JetBlue President David Barger in a USA Today interview. (See FastLinks.) The hotel industry in particular has embraced service recovery strategies. Hampton Inn budgets 0.5 percent of its total revenue to dissatisfied guests, and has found that $7 of new revenue is generated for every dollar spent on service recovery. The Ritz Carlton provides $2000 for every associate to spend solving customer's complaints. The hotel industry has shifted its paradigm from focusing on the cost of pleasing a customer to the value of doing so. That paradigm is based on interesting data.

  • For every customer who complains, 20 do not complain but are unhappy (missed opportunities).
  • Ninety percent of dissatisfied customers will not return.
  • It takes 10 years to change a poor customer service image.
  • It costs 10 times as much to attract a new customer as to keep an old one.
  • Ten percent of revenue is lost to poor customer service in most industries.
  • The average “wronged customer” will tell 25 others about the bad experience.

In health care, the data are similar.

  • Seventy percent of patients who receive deficient care will not patronize that facility again. Insurance may mitigate the effects of poor customer service.
  • Seventy-five percent of dissatisfied health care consumers talk about it, and they tell nine family members or friends.
  • Press Ganey estimates that moving patient satisfaction scores from fair/good to good/very good equals $2.3 million in annual revenue from repeat customers.

Yet health care and emergency medicine in particular have been slow to embrace service recovery. Most EDs do not have an organized service recovery process that incorporates complaint management and quality and safety data. Opportunities to improve service are missed daily. The primary strategy in service recovery is to avoid the complaint in the first place, but there is little chance to deal with them without foolproof systems in place to track and manage patient complaints tenaciously.

A robust service recovery program would identify the opportunities, and break customer silence. (I use the word “customer” here because the ED has many customers: patients, family members, and other providers.) It must also anticipate the need for recovery and have a well-articulated road map for service recovery.

An opportunity is any problem that health care employees in close contact with the customer can discover and resolve. Employees who are empowered to be creative in solving issues in real time find this rewarding, and often keep service problems from escalating. This means creating opportunities for employees to engage in service recovery and rewarding them for engaging in it. It also means not skimping on training, particularly communication training. Marriott rewards staff for reporting service-related comments to management. Could your ED give movie tickets to staff members who bring service quality issues to the attention of ED leadership?

Most customers will not speak up, despite how often it appears they do in the emergency department during peak times. This has led to efforts to make it easy for customers to convey their dissatisfaction such as toll-free numbers, comment cards, and follow-up calls. Maine Savings Bank rewarded customers themselves for bringing service issues to the attention of the bank. Could ED visitors and their families receive some token of appreciation for their suggestions regarding service quality?

Service lapses occur in predictable areas in the ED. The potential for problems occur wherever complex processes are utilized with high staff interaction. Problems can be predicted as well in new services or operations and in areas with high staff turnover and inexperienced staff. The best programs get ahead of problems by aggressively trying to capture them. Could your ED survey patients, family members, and staff in real time about a new service, and provide cafeteria coupons or vouchers in return?

Airline and hotel executives say they have empowered their front-line people to give freebies to unhappy customers, including vouchers for discounts off future tickets and for free meals and movies. Hilton Garden Inn, where service recovery is stressed as strongly as the frequent stay program, allows front-desk employees to give away up to one free night without management approval. Could we find something akin to this in the emergency department, and empower staff to use it for service recovery? Free lab tests or x-rays will never work, but movie tickets or parking vouchers could help recover a service encounter that has faltered.

Next month: More details on setting up a service recovery program for your department.

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Dr. Welch

Dr. Welch

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  • Read “The Profitable Art of Service Recovery” for free by registering with the Harvard Business Review at
  • The interview with JetBlue President David Barger is available at
  • Read all of Dr. Welch's past columns in the archive.
  • Comments about this article? Write to EMN at
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