Transcription:

Bill Klaproth: This is a special podcast produced for the 26th Annual Healthcare Marketing and Physician Strategies Summit, HMPS, as we speak with session presenters and keynote speakers. With me is Rob Grant, Executive Vice President, Chief Strategy and Innovation Officer, and Dave Griffith, Vice President of Analytics and Insights, both with Mercury Healthcare, formerly known as Healthgrades. Rob and Dave did a session at HMPS '21 called A Pragmatic Approach to Patient Lifetime Value.

Rob and Dave, thank you so much for your time. It's great to talk with you. So lifetime value is a retention measure, but not all retention is equal. There's gender. There's age. There's life transitions and other attributes. All of those things impact potential LTV. So, Dave, let me start with you. How do you research this? How do you research to understand the elements with the greatest impact? And then how do you determine the key value levers?

Dave Griffith: One of the things that is a foundation to the way we approach this is that it's all empirical-based. So what I mean by that is it's all based on information that we have about a patient and their journey. So at Mercury Healthcare, we work with thousands of hospitals where we have a good history of their EMR data and the financial data related to it. So when we're thinking about the economic value of patient relationships, we have the benefit of being able to look at any number of health systems data, if you will, and looking back at their history. So what is the retention associated with patients that started a relationship in the past and then what's their likely re-engagement rate overtime? And then also what's the pattern of services that they're utilizing and the financials related to that.

So when we start this off, we didn't want to take the point of speculating or trying to forecast something. We're literally looking back at the actual kind of patterns that we're seeing across the health system and then associating those values within different periods of time. And then ultimately, we take that, those insights, and we extrapolate to the future. So for example, if you've got, you know, a 30-year-old patient, we're going to know that a 30-year-old patient on average has these mix of services. They have this kind of retention rate over a period of time, then we know people that are 40-year-olds and 50-year-olds and 60-year-olds. So we're basically taking an individual client's pattern of engagement and the financials that they have. And then we're pooling that across all of our clients and then looking for a schematic pattern, if you will, then really using that as the foundation to create this whole notion of lifetime value. So it's very data-driven, very empirical-driven.

Then as part of that, when we did that research, we had to kind of identify, well, what are the real, I think, as you called it in your question, kind of the levers? And really at the highest level, there's two key levers. One is what's the mix of services that an individual is going to have overtime, but then also what's the likelihood that they're going to, again, stay engaged with the system and retain that relationship. And when we say retain, we're only talking about are they having recurring visits, right? Those are the highest levels, right? It's kind of the depth and breadth of the relationship.

But one of the things that we found was that the nature of retention seems to be the biggest driver of value. So ultimately, even if a patient has likely utilized and has need for different services, if they're not doing business with a particular health system, there's no value obviously back to that health system.

We're going to talk about benchmarks in a quick moment, but really having an understanding of what those retention rates are is super important. And if those things can be improved even modestly so, it has an absolutely huge impact on lifetime value.

Bill Klaproth: Absolutely. So it sounds like, Dave, job one is doing the research to understand the data and to really understand those retention rates. So that's job one. You have to do that first. And then as we talk about retention rates, Rob, what are good retention rates? Are there benchmarks we should be looking at?

Rob Grant: Yeah. So what we've done is we've looked at overall benchmarks from this. If you look at your entire health system in totality dating back five years, the average benchmark is 43% retention, which again if you look hospital by hospital, it might be lower or higher than that. But then it's getting into what are the reasons why? Beause there might be certain things with more transient populations in certain markets than others, so they can have an effect. But then also beyond even all of the service lines, we break that down to benchmarks within each specific service line, say orthopedics versus cardiology, and then also subservice lines within those service lines to really kind of nail that retention and then understand the reasons behind each retention rate and what other impacts there could be per market and why they're different.

Bill Klaproth: Right. Obviously, we can have varying retention rates based on service lines and other things you were talking about. So once we understand this and we have this information, Dave, let me ask you this then, how do you take this information to understand the insights and refine it and then accelerate your growth strategies? What do we do with this information once we have it?

Dave Griffith: Yeah. Great question. So one of the things that we wanted to do as part of the way we look at this too, is try to kind of demystify this whole notion of lifetime value because it has a very kind of futuristic black box kind of orientation to it. So one of the things, when I talked about looking empirically at your recent history and then taking those insights and then extending that to the future is that we've created kind of more strategic planning like dashboards. And part of the reason we do that is, to Rob's point, you can look at those benchmarks and then look at that. How does it differ by, say a different region that you're in or by a different demographic or by like a service line or subservice line? So getting granular to really identify where is the biggest opportunity or the biggest leakage area, right? Where do we need to kind of plug the gap to find improvements?

But as part of that too, then there's an opportunity then to be able to do kind of what-if planning. "So what if, all else being equal, we did improve that retention by this increment? What are the benefits to our organization?" Let alone the benefits to the consumer, you know, patient, for getting better health outcomes. So really making the data more interactive and putting the information in the hands of the clients, so ultimately they can understand the opportunity. It's not just a theoretical exercise. It's a real pragmatic exercise.

Bill Klaproth: Right. And when you talk about increasing your retention rate, can you put a dollar amount on that too, Dave? Like if we increase our retention rate by 5%, that means this much more revenue for our health system? Is that correct?

Dave Griffith: And it varies by demographic and by service line. Typically, if you can improve that five-year retention rate, which is kind of the benchmark that Rob had conveyed, your LTV will typically go up about 4%. That has huge implications. So for instance, if there's a cohort of patients that have 100 million dollars of value based on our approach, if you can just improve that by 5%, that 100 million can now be 120 million. Now, you can start to think about what are the things that I can do as an organization to better engage with that patient to realize that benefit of that 20 million.

Bill Klaproth: Absolutely. Yeah. So this is really important. So Rob, can you maybe fill in the gaps and give us an example of a health system that has taken this pragmatic approach, if you will, to patient lifetime value?

Rob Grant: Sure. I think for the current moment in time, there's many health systems that are looking at and evaluating retention and lifetime value, so I think it's still early. But during our session, we actually included Adam Rice from CommonSpirit and Suzanne Sawyer from Johns Hopkins to give their perspective on how they're looking at it. Adam is actually able to get some budget allocated towards lifetime value and retention, which was interesting.

But some of the stats that we showed in the presentation were sort of really eyeopening to all of us in that, if you have an interaction with a patient and then you don't engage with that patient again in one year or two years or three years, or you do in a combination of first or second or third year, the retention rates of that individual patient overall over that three-year timeframe are dramatically different. And again, we covered that in the session. But just some of the insights that we're getting from the data that we're now finding are helping hospital systems really look at all of this and saying, "Okay, how should we now be looking at allocating our budgets?" But again, I think it's definitely a new concept in how to make it practical and then how to apply budget towards it.

Bill Klaproth: So, if you don't engage with a patient, you said, you know, one year, two years, three years, your retention rates dramatically fall, it sounds like. So you're just creating the point of constantly trying to stay in touch and market to that individual, so you don't go a three-year span without any engagement. Is that right?

Rob Grant: Yeah. It's not even so much this market to them, but how do you just stay engaged with that individual patient. And the example that we had on the slide with a certain level of engagement, you can see an average of an 8% retention with that patient, which is dramatically different than a multi-touch engage with them over a period of years, it could be as high as 54%. So, again, the disparity of 8% to 54 is something that again was quite shocking to all of this as we're reviewing the data.

Bill Klaproth: Right. So continual engagement, sounds like that's kind of where it's at. You constantly have to reach out and be engaged with your consumer as well so those retention rates don't fall.

Rob Grant: Yes. Correct.

Dave Griffith: I was going to interject too. It's certainly engagements that are going on, ongoing, right? But part of it is understanding, in the context of retention, some of those communications maybe more transactional, right? Or they may be more relationship-based. So part of it is again really recognizing that there's metrics that need to be established and monitored. So new KPIs I think will shed light into the opportunity, because not all communications are going to be created equal.

So it's important to measure and monitor. And then although we've referenced a five-year benchmark, you really can't afford to wait to Rob's point. If someone really doesn't engage with you over the next two years, the likelihood of them coming in in year three of the relationship is extremely low. So we had an example of that, that really kind of magnifies. This whole notion of retention isn't a long-term concept. It's really an ongoing engagement in really tracking and measuring things that's going to make a big difference.

Bill Klaproth: Absolutely. Well, retention is such a big thing. As they say, it's easier to keep the people you have than to go out and find new people. So Dave and Rob, thank you so much for your time. As we wrap up, I'm just looking for any final thoughts. Dave, anything you'd like to add as we wrap up?

Dave Griffith: Yeah, I would just say, you know, it's definitely a shift in healthcare as we kind of start to think about relationships and starting to think more longitudinally about engaging consumers and patients in different ways. So not like there's no magic pill, but I think the whole notion of retention and lifetime value is really important concepts to help us kind of think longer-term about kind of value and ways to kind of maximize the relationships. So it's an exciting journey and, you know, like Rob said, we're just kind of getting started, but it's all about looking at the data first, identifying if there's opportunities or are there problems and then coming up with an action plan.

Bill Klaproth: And Rob, final thoughts from you. Any last thoughts on retention and lifetime value?

Rob Grant: From my perspective, I've talked to about a dozen or so health system leaders, and that could be CEO and chief marketing officer. And I asked them, I said, "Do you have any idea on what your retention rate is across all of your service lines by service line?" And the universal answer was no, they didn't have the data. They didn't know exactly what their retention rate was. And then they quickly move to, "But what are the benchmarks? What should we be looking at? What is good?" So there's just real opportunity here to present the benchmarks, to look at the data and then to see, as Dave was mentioning, tracking and measuring overall performance, because I think right now it is a really big gap in the industry to understand this more fully.

Bill Klaproth: And well, hopefully with yours and Dave's work at Mercury Healthcare, we will start to close that gap. Dave and Rob, thank you so much for your time today. This has really been informative and insightful. Thank you so much.

Dave Griffith: Thank you.

Rob Grant: Thank you.

Bill Klaproth: And once again, that's Rob Grant and Dave Griffith. And for more information, please visit healthcarestrategy.com/summit. Thanks for listening.