How Blockchain Can Automate Referral Management

By Lynn Carroll, Chief of Strategy & Operations, HSBlox
Twitter: @HS_Blox

Referrals are a routine part of daily business for provider groups, but too many of these organizations lose business due to outdated, inefficient processes for managing referrals.

Physician practices typically handle referrals through a tedious combination of paper, phone and email-based communications that exact a toll on staff and physicians, costing time and money. The consequences of the manual, error-prone referral process can be serious and wide-ranging: delayed care, unscheduled appointments, lack of transparency for care team members, duplicative tests and procedures, and burned-out, frustrated clinicians.

As healthcare transitions to a system that rewards value over volume, it becomes incumbent that all parties within the care continuum maximize any available opportunities to enhance the quality of patient care while reducing costs. Seen in this light, automation holds strong potential to streamline the referral process by enabling nearly effortless data sharing among care team members, eliminating the need for many of the resource-heavy communications between different provider groups, patients and payers.

Distributed ledger technology (DLT, aka blockchain), offers an ideal means of automating the referral process because it offers secure, real-time data exchange between disparate entities, lessening the likelihood of errors, discrepancies and missed connections.

Delayed care, missed appointments, unrealized revenue
The customary process of referral management involves numerous discrete steps of communication via faxed paper documents, email and phone calls. The physician practice receiving the referral must coordinate and share clinical and financial data with the office of the referring physician, relevant payers, plus the patient and any important care team members.

Following is a brief example of the workflow associated with a typical referral: First, a primary care physician (PCP) decides to refer a patient to a particular specialist and informs the patient, initiating the referral. Next, the PCP (ideally) tracks the referral and ensures that it is carried out, which depends in part on the patient’s ability to obtain an appointment with that specialist. Then, the PCP’s office sends relevant patient data, such as lab tests and imaging results, to the specialist. After the patient visits and receives care from the specialist, another information transfer must occur – in this case, the specialist shares her findings and recommendations with both the patient and PCP. The last step involves what’s often referred to as “care integration,” in which the PCP and specialist discuss and agree on a care management plan and each party’s role on the care team going forward.

Years of research have established and quantified the negative effects this labor-intensive, manual referral process has on patients, providers and payers. A study in the Milbank Quarterly described the current situation accurately and succinctly: “There are breakdowns and inefficiencies in all components of the specialty referral process.”

Perhaps the greatest illustration of these breakdowns and inefficiencies is that between 60 and 70 percent of referrals go unscheduled, according to the Annals of Internal Medicine. Those unscheduled appointments can lead to delayed or unobtained care, in addition to a considerable amount of unrealized revenues that could have further strengthened physician practices’ finances.

Another significant weakness of existing referral processes centers around transfer of information, or more specifically, lack thereof. Many referrals include no transfer of patient information at all, and for those that do, key data required to make decisions is often lacking, according to the Milbank study.

Overall, the deficiencies associated with the manual referral process lead to several adverse effects on patients, providers and payers, including discontinuity of care, delayed diagnosis or treatment, duplication of testing, and increased risk of malpractice suits.

Why DLT smart contracts are the best approach for referral automation
However, by automating the referral process, many of the issues cited above can be mitigated. Most challenges associated with today’s referral process stem from poor communication – missed or unreturned calls and faxes, lack of coordination between practices, insufficient patient data and the like.

By driving unparalleled transparency and highly secure data sharing among disparate entities, DLT smart contracts are uniquely positioned to alleviate the communication-based problems associated with referrals. Think of DLT as an immutable ledger of referral transaction records. Each participant in the referral process has an exact copy of this ledger, creating a decentralized single point of truth, so as a result, all participants are aware of any changes to it. Thus, physicians are no longer left wondering whether a patient obtained needed care, prescriptions or tests.

Reduced network leakage
For provider groups, network leakage – when a patient leaves one provider’s network to see a physician in another network – has become a growing concern. While the cost of network leakage differs by provider, the revenue impact can be “significant” and accumulates over time, according to HSG Advisors. However, by automating referral management, provider groups can be confident that patient referrals remain in-network, which also contributes to better control over patient care.

Like many manual processes in healthcare, referral management suffers from inefficiencies that increase costs to medical practices and divert much-needed resources from patient care. However, automating the process can lead to reduced network leakage, increased time and money savings, and enhanced patient care. Due to its ability to facilitate easy, secure data exchange while maintaining a decentralized single version of truth, DLT smart contracts are the optimal technology to automate referral management.