Do Online Patient Reviews Impact Revenue?

In 2010, Yelp was starting to gain substantial traction in certain metro markets as a trusted place for consumer reviews. Many physicians said, “for restaurants I’m sure it’s great, but no patients actually trust Yelp for advice on how to choose doctors.”

Fast forward five years. According to Yelp’s own statistics, by the end of the second quarter of 2015, over 83 million reviews had been written on Yelp. The website RateMDs boasts over 2 million unique patient reviews on its website, and a slew of other medical specialty sites are popping up to try and grab market share.

What is the impact of patient reviews on your medical practice and your bottom line? 

Michael Luca at Harvard Business School published a research paper titled, “Reviews, Reputation, and Revenue: The Case of Yelp.com.”

As Luca writes in his abstract, “I investigate this question using a novel dataset combining reviews from the website Yelp.com and restaurant data from the Washington State Department of Revenue. Because Yelp prominently displays a restaurant's rounded average rating, I can identify the causal impact of Yelp ratings on demand with a regression discontinuity framework that exploits Yelp's rounding thresholds.”

His findings were eye opening:

1. A one star increase on Yelp led to a 5% to 9% increase in annual gross revenues.
2. A consumer’s response to a restaurant's average star rating is affected by the volume of reviews.
3. Yelp’s “Elite” reviewers (consumers on Yelp that the company has anointed with a preferred status based on their volume and quality of reviews) have a more direct influence on consumer opinion, i.e. having badges of authority (even without an explanation of why the reviewer has earned that badge) impresses readers of their content.

Perhaps what was most interesting about his study’s findings was that chain restaurant market share actually decreased in markets where Yelp had increased penetration—meaning that consumers trusted Yelp reviews of independent restaurants (on average) more than the heavy marketing and branding spend that large chain restaurants bring.

For smaller, independent practices this should come as heartening news as larger provider organizations invest more in television commercials, billboards, and radio ads. Because as much as the incumbents invest in these expensive channels, the ability for a smaller competitor to compete effectively against them by having a well-executed review strategy could level the playing field.