Most health system executives have referral leakage on their minds. They wonder why their patients seek care elsewhere, especially after they have spent millions of dollars to draw them to their facilities through ad campaigns, purchased high-end equipment, and invested in employed medical groups that lose money in operational isolation.
Perhaps we should reconsider our use of the term “referral leakage.” It implies that patients are somehow confined. Confinement is one of the top reasons the public largely rejected HMOs. In contrast, in acknowledgement of patient consumerism and demand for choice, emerging payment models are often based on “attribution.” Attributed PPO patients may vote with their feet, and they often self-refer. The concept of referral leakage implies entitlement—and having a sense of entitlement may be a part of the problem.
Fundamentally, referral leakage is a failure to be perceived as the best provider in a competitive environment. As inpatient volumes decline—thanks to our advances in taking better care of patients in the outpatient environment—system executives are intent on increasing market share to back-fill beds in their most expensive asset: the hospital.
Here’s the problem: Every other system in the market is trying to do the same thing. Unless a market is growing demographically, relative system growth is a zero-sum game. Therefore, systems must not only convince patients to try them, but they must provide such superior service and value that those patients willingly stay—all while other facilities continually try to lure them away. The process of creating patient loyalty can be thought of as “keepage,” a term that invokes responsibility rather than blame.
We sometimes think, perhaps too simplistically, that referral leakage is primarily a matter of provider and staff loyalty—that patients would stay within a system if only providers referred patients to other in-network providers.
We may also hold the belief that patients will surely go where their doctor refers them. No matter how loyal a physician is to a system, his or her highest priority is serving the patient, and adherence to this principle is a sound keepage strategy. The loyal physician may recommend an in-network provider when a referral is indicated, but if the patient wishes to go to an outside provider for any of the reasons discussed below, the physician faces the concern that if he or she presses too hard, the patient may be lost altogether.
Let’s explore the root causes of what we call referral leakage and the associated strategies of keepage each suggests. They fall into six categories:
- False attribution
- Distance and geography
- Limited access
- Poor service
- Non-competitive quality
- Lack of provider familiarity
When do we suppose patients are “ours” to lose? When they have seen affiliated providers? When they have had care, testing, or a procedure within the facilities of the system? We need to make a distinction between “family” and “visitors.” In some cases, systems should simply be grateful that a patient visited its facilities in an urgent situation due to convenience, but they should not expect them to continue to receive ongoing care within that system when the patient is perfectly satisfied with his or her regular neighborhood provider.
In other words, these patients should not be viewed as leaking, because they never were “ours” in the first place. Patients are often cemented to other systems for reasons as obvious as their spouses work for competing organizations. Also, increasingly, patients are financially bound to other institutions by benefits plans that disincentivize out-of-network utilization with higher copays. This suggests the counter-strategy of incentivizing network utilization for employees through benefit redesign.
Distance and Geography
At some geographic distance from a system’s facilities or affiliated provider offices, inconvenience becomes more important to the patient than the quality of care. It is difficult to get patients to come back to a facility that’s eight miles from their homes if they live right across the street from a hospital or doctor’s office they perceive to be of equal value.
Sometimes, the issue is not distance, per se, but psychological or cultural geographical boundaries—illogical though they may be—such as a mountain, a river, or even a street that is associated with a change in socioeconomic status.
Generally, people will go further to get subspecialized care and procedures, making the geographic reach of a system relative to the seriousness of the condition. This problem requires a re-thinking of the service area from which keepage should reasonably be expected. A system should consider the proximity of its “centers of excellence” to other “centers of excellence” that compete for patients in its secondary and tertiary markets. A system must create a compelling reputation for quality and service to draw patients past the midpoint between such centers for tertiary and quaternary care services.
Access is fundamental to keepage. It is difficult for a system primary care provider or other team member to refer his or her patient to an in-system provider who cannot see the patient for six weeks when an out-of-system provider may be able to see him or her that afternoon.
If a system is concerned with leakage, it must improve access to in-network specialists and facilities, including investing in weekend and evening hours and an adequate number of providers to meet demand. There is a cost to this investment, but it must be weighed against the revenues associated with keepage.
If patients have choices, they will not stick with a system where they believe they have been treated poorly. It only takes one episode of indifference, a rough or condescending tone, an unreasonable delay in a waiting room, a dirty bathroom, a botched bill, or a perceived lack of compassion to cause some patients to never return. The corollary to this observation is that rude and sloppy providers are known throughout the system. One cannot expect personnel in one part of the system to refer patients to providers elsewhere in the system who have reputations for poor bedside manner or follow-up. The solution for this problem is to take patient satisfaction and its improvement seriously, and to require providers and personnel with poor service skills to attend remediation services.
Ultimately, it means being willing to let go of individuals who cannot or will not improve, and to recruit their replacements. This may be done directly with employed providers, but systems should consider creating clinically integrated networks that have membership requirements and that provide and compel participation in similar remediation services.
Primary care providers and others will (and should) refer patients to providers and facilities where they believe they will receive the highest-quality care. If in-network referrals are to be expected, it is incumbent on the system to ensure, to the extent possible, that its specialists, services, and facilities are second to none—at least in the local market. It benefits the system to institute a method of measuring the quality of its providers and facilities, so it can objectively demonstrate that its quality outcomes are better than its competitors.
Lack of Provider Familiarity
This factor may be the most amenable to improvement. An increasing trend of primary care providers staying exclusively in the office environment and using hospitalists for inpatient care means they no longer mingle with specialists during daily life, as they once did on the floors and in the doctors’ lounge of hospitals. A physician who never comes to the hospital may simply not know who is and who is not in-network or what specialized services they provide.
Systems themselves struggle with how to define whether a provider is in-network because doctors are often on the staffs of multiple hospitals.
This problem can be attacked by various means. The first is to create an accurate physician directory. Web-based directories can be updated in real time, which is essential, and they cannot be misplaced like printed directories. In addition to creating awareness about other in-network providers and the services they offer, forums must be created to foster interaction between providers.
This can be done in the form of a quarterly social. Organizations should create venues and mechanisms for in-network doctors to get to know each other personally. Systems may also leverage EMRs and health information technology to make it easy for in-network providers to find and refer patients to other in-network providers by loading them into a pre-populated referral database.
System administrators must think carefully about which patients are theirs to lose, even as they work to improve provider access, service, and quality. Rather than focusing on referral leakage, which implies that system providers and staff are not referring patients to other network providers, systems should focus on keepage, or the fundamental principles that will make patients want to go where they are referred.
Much of the problem is a lack of awareness of, and relationship with, other providers in the network. Actively updated directories, referral databases that make it easy to refer in-network, and frequent provider mixers and other channels of communication are high-yield investments that can retain patients within the system of care.