About one-quarter of physician referrals in the United States go to specialists who are out-of-network, which can be very costly for health systems and medical providers. This ‘referral leakage’ occurs when patients seek out or are referred to an out-of-network physician by a healthcare provider.
Although referral leakage can’t be avoided at all times, the reasons for it include patient preference, convenience, lack of knowledge about specialists by physicians, provider reputation and personal relationships between doctors and other providers. The statistics below show what an expensive problem it is for providers:
- The cost of referral leakage for U.S. health systems is estimated at $78-$97 million of annual revenues for every 100 affiliated providers.
- Patient leakage reduces as much as 20 percent of a health system’s revenue each year.
- Each lost appointment or referral no-show can cost a health system an average of $210.
- Most health systems lose on average of $200-$500 million per year to competitors.
In addition to lost revenue, referral leakage decreases the ability of a provider to coordinate patient care because of the lack of communication between providers. Separate EHR systems or simply an unfamiliarity with the out-of-network provider can hinder a coordinated care plan that harnesses a data-driven and value-based care approach to treatment.
Referral leakage also has a negative effect on payers. It can affect their relationship with both providers and patients. They agree to customized discounts for providers in their plans because they expect members will utilize the services of that provider. When a patient goes to an out-of-network provider, the provider costs are higher for the payer.
Putting together a strategic plan to reduce referral leakage can assist providers in sustaining growth and increasing profitability. It doesn’t have to be a complex process, but rather a combination of straightforward steps.
1. Online Appointment Scheduling
One way to ensure improved communication is by employing technology to make it easier for patients to schedule an appointment or contact a provider online rather than having to wait on the phone. This can even be accomplished by having a more up-to-date website through which patients can communicate or obtain information. Either way, payers, patients and providers all benefit when the communication process is consistent for all departments.
2. Physician Collaboration
Another method for reducing referral leakage is ensuring physicians are knowledgeable about all of the qualified specialists within their network. By staying up-to-date on what specialists and treatment options their patients have available in the network, physicians can refer them with confidence. Research shows that this can reduce out-of-network referrals.
3. Expanded Specialty Offerings
A third way to address referral leakage is by making sure a health plan boasts qualified physicians in a wide range of specialties for referrals. This eliminates the need to refer to an out-of-network doctor because there is no one in-network with that specific specialty.
4. Trackable Referrals
Finally, providers can utilize technology for a refined and trackable referral process. Technology such as electronic health record (EHR) systems or automated follow-up systems not only contain data that can be analyzed to see referral trends, but also help coordinate care more effectively. Having a designated referral coordinator for a provider can help proactively manage the process before sizable revenue is lost.
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