Understanding the relationships between clinical quality, patient satisfaction and financial performance: Evidence from Swiss hospitals

Understanding the relationships between clinical quality, patient satisfaction and financial performance: Evidence from Swiss hospitals

For years, hospitals have been under increasing pressure to be economically successful. Their goal is not only to provide the best possible care for patients but also to operate efficiently and optimize costs. A case-based reimbursement system ensures standardized revenues in many countries, which means hospitals can only increase profits by reducing costs. The resulting pressure to cut costs can negatively impact clinical quality and patient satisfaction. Furthermore, it is unclear how clinical quality and patient satisfaction directly and indirectly affect financial performance. It is posited that, in a free-market economy, good service quality increases customer satisfaction and loyalty, and therefore, reduces price sensitivity, leading to increased profits over time. This study aims to investigate whether this causal chain applies to the healthcare sector, thus determining whether better clinical outcomes and higher patient satisfaction lead to increased profitability in hospitals. Furthermore, it examines how the relationships between client outcomes, patient satisfaction, and profitability work in the highly regulated healthcare system.

This thesis consists of three studies (papers). The first study utilizes a systematic literature review to identify gaps in the literature and gain insights based on previous studies. It demonstrates that good and efficient clinical quality reduces costs and thus increases profits. Additionally, it finds that higher patient satisfaction positively affects patient loyalty and increases the hospital's standing in the area. Both lead to higher revenues due to the increased utilization of hospital facilities.

The second study examines the relationship between clinical quality (patient safety adverse events) and costs, using Swiss national data from 2019 covering all patients and their costs. The calculations used include propensity score matching methods and regression analyses. The core findings of the second study indicate that the examined patient safety adverse events were responsible for about 2.2% of inpatient healthcare costs and that an adverse event could generate up to CHF 137,967 excess costs per patient. Patients with an adverse event incurred costs that were 2.4 times higher, stayed 7.8 days longer in the hospital, had a 2.5 times higher readmission rate, and had approximately a 4.1 times higher mortality rate.

The third study investigates the relationship between patient satisfaction and financial performance. Therefore, an aggregated data set per hospital (2016 – 2018) was analyzed. The primary results of the third study demonstrate a positive relationship between hospital costs and patient satisfaction, which was strongest in hospitals with few emergency patients. It also found that patient satisfaction can predict patient revenue but not operating margins.

The studies demonstrate that clinical quality and patient satisfaction impact financial performance and should, therefore, be considered by hospital management. Recommendations for practice are that management should consider several moderators and should more extensively monitor the key figures discussed in this paper. Theoretically, this thesis improves the understanding of the effect mechanisms in classic service and marketing literature and how they can be applied to the healthcare sector. It explains unexplored relationships and evaluates important research gaps, providing added value for operational hospital management and the health economics literature.

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