Customers Respond to Hospital Retail Upgrades

John Lawn

NPD data shown in these charts covers YE 2004 through YE 2007 and was polled from over 4000 panelists and are projected to represent the entire U.S..<br>Select image to enlarge

Hospital cafeterias have been moving rapidly towards a more commercial retail model. New consumer data from NPD Group shows that progression is having a marked effect, with the overall customer experience in hospitals improving at a notable rate over the past four years.

“Between 2004 and 2007, hospitals have shown a five point gain in the percentage of customers who rate the overall cafeteria experience as ‘excellent,’” says Kyle Olund, senior product manager for NPD Group's CREST Onsite data service.

“While hospitals' scores still lag behind those of commercial restaurants, they score higher than noncommercial cafeterias overall and showing the greatest increase of all categories of establishments,” she says. “In 2004, sixteen respondents out of 100 rated their hospital cafeteria experience as ‘excellent’ and by 2007, this had increased to 21 out of 100.” (Fig. 1)

When asked to rate specific attributes, the largest point gains have been in the quality and variety of food offered. (Fig. 2)

“We believe it is especially significant to see the increase in the variety of foods offered because that tends to have the weakest score in noncommercial venues,” Olund says. “It is always a challenge because so many customers eat at the same location several times a week.”

Still, hospitals' progress is slowing. “In 2007, the percent change improvement dropped to just .2 percent. While it is impossible to show a direct cause, my hunch is that this is due to pricing increases,” she says. (Fig.3). “In the last year, visitor satisfaction continued to go up, but employee satisfaction remained flat.

“Although other data we collect shows that customers may see the offerings as a good value, they may also see them entering a price range that's harder to afford. It is not unlike what we are seeing in commercial venues right now.”

A bedrock of patient satisfaction

Jan Wood, Nutrition Services Administrator for Premier Health Partners in Dayton, OH, says semi-annual internal surveys her four-hospital group conducts show results similar to NPD's in terms of increases in customer satisfaction, and attributes that to updated facilities and menus. (Among other upgrades, Premier has employed several manufacturer-branded outlets in its food courts).

“Employee satisfaction is very important to our administration — it is seen as the bedrock of patient satisfaction and of quality and financial outcomes. So we have been willing to put attention and financial resources towards this goal.”

Wood says check averages have increased about three percent a year on average and that “increased food costs this year in the seven to eight percent range are making this a struggle right now.”

When a menu price increase is necessary for “standard” menu items, “we work hard at communicating the reasons for the change, using newsletters, email and other means,” she says. Increases in non-standard items take place in the course of menu rotations, and are not so obvious. “Three times a year we update the menu, putting in all new entrees and starches. But our philosophy is to keep retail prices as low as possible relative to street pricing.

“Our surveys regularly ask how customers perceive the value they get in our cafeterias and we report this data to senior administration,” she adds. “On the patient side, similar data supplements what they get from the new H-CAHPS (Hospital Consumer Assessment of Healthcare Proviers and Systems) surveys, which do not ask questions about nutrition services.”

Savvier survey takers

“I think another factor operators should consider is what I call the ‘Quint Studerization’ of the hospital environment,” says Tom Cooley, director of hospitality and nutrition services at Temple University Hospital in Philadelphia.

“With all of the emphasis on raising survey scores and getting into the top quintiles, everyone in a hospital becomes more savvy as far as surveys ar concerned. They realize that the only survey score that really helps a rating is a ‘5’.

“Employees will give you a ‘5’ if they like you and your service. But if prices go up, they might withhold a top score, using that as a way of sending a message.”

Cooley says that across-the-board price increases have largely become a thing of the past and that it is more typical to now increase prices on an item-by-item basis based on real cost increases in real time. He agrees that by offering more variety and bringing in new offerings, operators have been able to increase check averages without raising the price of standard items so often.

Cooley also says that a movement away from straight line serveries to cafés with scatter systems and concept stations have increased customer satisfaction significantly.

Cooley notes that pricing sensitivity can be relative. “If you're always trying to keep prices down, you may not realize what some customers are more than willing to pay. Our sushi plates run almost twice our typical check average and still move very well. We've had similar experiences with display cooking stations and meal bundles.

“Until we offered them, we didn't appreciate that some customers would spend more without complaining. So there is an opportunity to get customers to higher price points as long as choice exists.”

Sales at Temple's café leveled off in May and now are down slightly, he says. “The café is just as full, but there are more brown bags — people supplementing a partial meal from you with items brought from home. What is worrisome is that even if check averages and sales decline, those customers will still use all of the condiments, paper goods and other items you have to put out.”

Cultivating creativity

Check averages at Utah Valley Regional Medical Center have been increasing at rates close to those reported by NPD, says Director of Patient Support Services Laura Watson.

“With all the media coverage on managing healthcare costs, I believe customers have become more realistic in terms of understanding that our food cannot be subsidized as it may have been in the past.

“I think hospital foodservice departments are learning to use their chefs' skills and budgets more effectively to do more creative things with their menus,” she adds. “People are sometimes reluctant to fill out surveys, so when we introduce new offerings we use that opportunity to both communicate what we're doing and ask for feedback on the change.”

“We implemented select increases in March and will likely have to do so again this fall,” she says. “We try to deal with customer dissatisfaction with increases by proactively communicating our message and ensuring there are always value offerings available for those who can't afford an increase.”

Watson agrees that survey-taking in the hospital environment has become an issue employees are very aware of. “In terms of patient care, it is never acceptable to be less than ‘top box’ in terms of survey ratings,” she adds.