Hospital systems in the U.S. are at a crisis point. Among the many changes ushered in with the new health care law is the shift to value-based purchasing, which ties a system’s Medicare and Medicaid reimbursements to the quality of the services it provides. For many systems, the mandate will now be to improve clinical processes and ensure a high-quality patient experience — an outcome highly dependent on the commitment, dedication and skills of a hospital’s employees, who have an enormous impact. In fact, with a potential 2% loss in reimbursements for hospitals that cannot meet specific patient satisfaction and quality-of-care outcomes, the link from employee actions, to patient experience, to financial results, could not be more direct. Losses amounting to millions of dollars for many hospitals and systems that receive half or more of their funding from government reimbursement are possible. It is a make-or-break moment for financial sustainability.

In other industries, this service-profit chain (first articulated in a classic 1994 Harvard Business Review article and recently updated) has been recognized for decades. Now, hospitals have little choice — and much to gain — from embracing it themselves. As Towers Watson’s research with clients shows, when hospitals create an engaging and high-performance-oriented work experience, they not only improve patient satisfaction, but also quality-of-care outcomes. Both are core criteria in meeting incentive goals under value-based purchasing.

Currently, however, creating such an experience is a challenge for many hospitals. In Towers Watson’s most recent global workforce study, less than half (44%) of the overall U.S. hospital workforce overall was highly engaged. That leaves a large proportion of employees across all workforce segments feeling somewhat disconnected from their hospital system and its goals, and unsupported to some extent in doing their jobs well. The study also shows a strong relationship between employees’ level of engagement and their likelihood to remain with their employer, with just 17% of the highly engaged hospital workers interested in other employment options, versus 43% of the disengaged group. Improving engagement therefore carries another important advantage for the many hospitals already competing to find and keep a dwindling supply of people with critical skills, especially in clinical areas.