Wall Street and EHR Customer Satisfaction

I was recently reviewing the results of the KLAS 2011 mid-year survey, in which EHR users rated their respective vendors and products. Having spent some time on Wall Street early in my career, I could not help but notice a striking correlation between customer satisfaction and company ownership. The three top-ranked EHR companies—and five of the six top-rated companies—are privately held, while the bottom three—and eight of the nine lowest ranked companies—are publicly traded.

At first, I attributed this finding to sheer coincidence, but as I thought more about it, I realized that the correlation, while striking, is not surprising. Beholden to Wall Street, publicly traded companies seek to satisfy investors with short-term profits. They may be motivated to cut costs to generate higher net income for investors, and their ability to reinvest in ways that will promote future growth can be constrained by these outside interests. One common way to manage costs is to locate support offshore in call centers 8,000 miles away, where technicians read from a script in attempting to answer customers’ questions—cost-saving for sure, but detrimental to customer satisfaction.

Privately held companies, on the other hand, are accountable first and foremost to their clients. Free to take a long-term view of their business, they invest heavily in research and development. They also invest in their technical support teams—funding adequate staffing levels and ensuring that they receive ongoing training to keep them at the forefront of technology. The result is often lower turnover and a more experienced, higher-quality staff, which in turn results in superior customer service and happy clients.

4 thoughts on “Wall Street and EHR Customer Satisfaction

  1. If the source was something other than the screwed up mess of a “research” company that KLAS is, then I’d like the data better. However, intuitively I agree with the idea. Private companies are more beholden to the customers than public companies who are more beholden to their investors. It’s a rare public company that this is not the case.

  2. we totally agree with this survey, truly private sectors behold customers better than public firms.

  3. Evan’s comments are right on the mark. There’s an inherent conflict between customer service and generating the highest margins possible. Sure, forward-thinking company owners or even the rare VC might see the value of keeping existing customers happy, but Wall Streeters only care what this quarter brings. Now, it’s possible that if the company doing the IPO is an independent subsidiary of a large, well-funded tech firm, that larger firm would be willing to invest to maintain the strength of its overall portfolio, but even then I wouldn’t count on it.

  4. This analysis makes sense and it does not. The drive for profits trumps everything. Chase provides poorer service than that of your local credit union. The ma and pa hardware store may work harder than Home Depot. However, the second half of this hypothesis suggests that because these private companies have higher satisfaction because ultimately they are more competitive in their internal business processes (R&D, human capital and better investments on technology).

    Companies become publicly traded as a source of financing because commercial paper, bonding and trade credit no longer align with its strategic objectives or liquidity. Its quite a stretch to assume the correlation of financing through a stock issuance is the causation of a company which is not competitive as private peers. If this article is true, then all these private companies are in fact doomed to fail – eventually their success will lead to an IPO which will make them unsuccessful. A paradox.

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