Understanding Referral Leakage – Identifying Preventable Versus Expected

TamarahAlexanderBy Tamarah Alexander, Hayes Management Consulting
Twitter: @HayesManagement

Drip. Drip. Drop. That’s the sound of leakage. How are you managing your organization’s outgoing referral population? Are you measuring and tracking the number of outgoing referrals? How well is your organization managing the coordination of patient care? Understanding why patients are seeking services outside of the proverbial footprint of your organization is crucial to your success. When evaluating the details, it is important to know the “why”: why are patients being referred outside the organization or why they are choosing to leave the organization. Understanding the “why” will help you to identify service gaps and begin offering the services that meet the needs of your patient population.

There are many reasons why a patient may leave your organization, including:

  • Services are not available within your organization
  • Patients are seeking a second opinion
  • Patient preferences like scheduling and location are not being met
  • Scheduling obstacles – patients are unable to schedule with the right provider at the right time
  • Financial reasons – out of pocket expenses may be too high
  • Provider is out of their insurance network
  • Patient/provider dynamic – Patient did not feel as though they were able to communicate or connect with the provider

The critical step to tracking and understanding these reasons is to ensure that your system/software is able to capture and report the details of the outgoing referral. In order to do this successfully, your   practice management system should have the following capabilities:

  • Ability to identify the referred to provider as “internal” (within your organization/network) or “external” (outside your organization/network)
  • A mechanism to capture patients leaving your organization (referrals to external providers)
  • A way to capture the source of the outgoing or external referral (i.e. provider name, provider location, etc.)
  • The reason or basis for external referrals (i.e. lack of provider availability, lack of specialty, etc.)
  • A reporting mechanism and output to identify the specific reasons for leakage

Once your data is captured, it needs to be reviewed. Each organization is different as far as who reviews the data, from the Chief Financial Officer to Chief Operating Officer, to accounting to accounts receivable, and/or strategic development.

No matter who reviews the reports, it’s important to look at several key measures to determine if there is:

  • A specific specialty and/or service deficit
    • Based on patient and organization’s geographical area
    • Based on organizational options
  • Scheduling obstacles or access issues
  • Provider networking opportunities
  • Financial implications based on insurance coverage
    • For example, what is the percentage of leakage for patients with PPO coverage versus HMO or Managed Care?

Once you understand the leakage, steps to repair the “drips and drops” can be seriously considered, implemented, and measured. With objective data, you can educate providers on their referral patterns. Understanding the business of referrals will give providers and patients the ability to make a more informed decisions regarding the coordination of patient care which gains the trust of the patient. After all, patients will always need the services of a specialist and despite the competitive nature of the healthcare, doing what is right for the patient is what matters the most.

This article was originally published on Hayes Management Consulting and is republished here with permission.