The Impact of Referral Management on Value-based Care

Abhinav Shashank
Tue 15 Aug 2017
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Did you know one-third of all the patients never follow through their referrals? Or that most healthcare organizations lose about 30% to 60% patients on account of inefficient referrals? If by the year 2020, value-based care is expected to be the dominant payment model, no health system can afford losing more than half of their revenue to poor leakages and its ramifications.

How do poor referrals translate to reduced revenue?

Patients referrals are instrumental as a revenue generator for any healthcare organization. When patients don’t appear for their referrals, healthcare organizations lose money because these missed opportunities reflect as increased no-shows, reduced staff efficiency and a poor patient experience of care, for those who never received the care they were prescribed.

Let’s take an example. One large, value-focused hospital calculated that each case that was referred to them generated a little more than $11,000 in revenue. Another study suggested that physicians contribute no less than $1.4 million to a hospital’s revenue. It’s easy to see how even a little leakage might have a significant effect on a hospital’s bottom line.

The causes of network leakages

Imagine a person, somewhere in his mid-40s, gets severe spasms of pain in back suddenly. He runs off to see his PCP, and the PCP does one of the two things- either he redirects the patient to the front desk and advises him to find a specialist, or digs into his professional memory and pulls out a trusted name- which may or may not be in the network. Either way, it’s quite a task to extract the specialist’s name, their schedule and contact info to be pulled from static, paper-based files. And this is just a preliminary roadblock, out of many:

  • Poor communication between patient and providers: The process of scheduling a referral is a long one and can be frustrating for the patient, and they may give up on the appointment. It’s important that providers explain the importance of referrals to the patients and the outcome of their appointment.
  • Exchange between providers: Providers too need a better medium of communication among themselves. Without that, they tend to reach out with the closest tool they can find- their phones. However, as texting patient information isn’t compliant with HIPAA and is illegal, there needs to be a better, quality communication between providers.
  • Better workflows: Providers are limited by static reports, paper notes and all. They don’t offer live scheduling, nor do they offer providers any opportunity or space to modify or reschedule appointments, assign specialists or keep track of patients.

Beyond these, there may be other reasons why patients may leave the network:

  • Seeking a second opinion
  • Services not available in the network
  • High out-of-pocket expenses
  • Referred specialist at a considerable distance

Plugging the leakages

True, the one-key solution would be to implement a strong referral management solution. One that incorporates articulated data, performs seamless data exchange and care coordination. It all boils down to analyzing and understanding the behavior of patients both inside and outside of the network across practices, physicians, and locations.

An effective referral management that contains revenue needs to have two things:

One, quality tools for providers. When it comes to patient’s health, the process of care has to be at its finest. Providers need to have robust tools that not only allow them to exchange patient health information smoothly, but also provide customizable search and scheduling functionalities. The inclusion of analyzed patient health data also gives providers an insight into what kind of treatment would work best, so that they can eliminate the guesswork and address specific needs of the patient.

Two, providers have to stop looking at individual needs of the patient and focus on creating an overall healthier life. Designing care plans for patients requires a joint effort from primary care physicians as well as their specialists. The key is to improve patient-physician interaction and tie all the pieces together to give patients what they need- the utmost care. If they’re engaged, they will want to come back to their PCP and trust the specialists.

Effectively tracking the network

The definition of ‘effective’ may vary from person to person; but all would agree on one thing- a referral management solution should help patients and providers make an informed choice. Health IT, population health management strategies are necessary to be in place to create a holistic approach to care delivery.

Starting off with identifying the right data sets and analyzing them to identify referral patterns can help providers understand the strength, weakness and yield more revenue opportunities. The providers would have documented resources, connectivity across the network and an understanding of healthcare needs of patient population- all the resources needed to prevent revenue leakage through referrals made outside of the network.

The road ahead

Healthcare costs are skyrocketing and this expenditure is only going to increase in the next decade. And that’s why it’s vital that there be a justified focus on keeping patients within the network and reduce those leakages. Improving referral management isn’t just about plugging leakages, it’s about building loyalty, nurture the relation with patients and lead them to a better healthcare- one where no one settles for less than 100%, quality, patient-centric care. Every dollar counts, every life matters!


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Tags: Accountable Care, Healthcare
Abhinav Shashank
The Impact of Referral Management on Value-based Care

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