A Comprehensive Strategy for Physician Network Referral Management

For hospitals with large employed physician networks, we commonly see referral management/patient referral capture as an issue. Out-of-network referrals lead to decreased productivity, declining market share and lost practice and hospital downstream revenue.

Drivers of Referral Leakage

Poor performance in referral capture is driven by one of two issues:

1) Providers Directly-Referring Out. This most frequently occurs when providers deliberately refer out due to previously established relationships, access issues, or quality concerns with in-network providers and/or resources. This can also occur accidentally when employed referring providers are confused by who is part of their network, and who is not. Front office staff also contribute to the leakage; when tasked with making a referral, they take the path of least resistance to securing a referral appointment.

2) Patients Self-Referring Out. This often occurs when a competitor has built a strong brand or market presence and is able to influence patient perception. Recommendations of friends and family, including those solicited via social media, also play a role. This can show up as the patient asking for a non-employed provider or ignoring the provider’s referral and making their own choice. And, more and more, payers are getting involved in the decision-making process, influencing where patients receive care.

These issues are exacerbated by the lack of a “right-to-win” position for the organization’s referral service line. Contributors to this include: 1) not having a full-range of care available, 2) quality issues with providers and services, 3) timely access problems, 4) lack of convenient access for the patient, 5) referral roadblocks for the referring provider, 6) poor public perception of service offerings and 7) lack of cost competitiveness.

A comprehensive referral management strategy will address all drivers of referral leakage.

Building a Comprehensive Strategy

An effective Physician Network Referral Management program focuses on three components:

1) Getting the Right Data. Comprehensive data detailing the referral patterns of employed and independent providers is critical to identifying opportunities for improvement. Too often, organizations move forward without data or use incomplete data sets pulled only from their own EMR, which end up showing only a portion of the referral pattern picture. Developing a comprehensive baseline of current performance is crucial to uncovering improvement opportunities and driving strategy creation.

2) Developing a Prioritized Plan. With the right data in place, a comprehensive strategy will focus on baseline improvement. Strategy should prioritize improvement opportunities based on strategic and financial importance. Building an action plan to address “right-to-win” issues is important, as well, as no amount of provider engagement will influence providers to refer to poor quality services and those difficult to access.

3) Building a Program for Effective Engagement and Execution. Many struggling organizations are haphazard in their approach to provider engagement and outreach. With the right data on hand and a prioritized strategy in place, a systematic approach to provider engagement must be developed. This includes the translation of strategy into tactics and building the right internal team to execute the plan. Frequently, this appears as a high-functioning physician liaison program that systematically engages providers about the issues that are resulting in patient leakage.

Organizations with these elements in place show significantly better referral capture outcomes in competitive markets than organizations that are missing one or more of these components.