- Referral leakage costs the average U.S. hospital an estimated $40-60 million annually
- Causes of referral leakage are varied, but many are preventable
- The right Clinical Collaboration Platform (CCP) supports real-time communication that allows providers to build stronger relationships and establish in-network referral patterns
Health systems are large, multi-disciplinary ecosystems where specialty providers must coordinate effectively via referrals to deliver optimal patient care. According to The Millbank Quarterly, 1 out of 3 U.S. patients is referred to a specialist every year.
And nearly 70% of providers are now employed by hospital systems according to the Physicians Advocacy Institute. With that in mind, you might think that health systems are able to keep most of their referrals in-network.
Cost of Leakage
Well, think again. Referral leakage, sometimes referred to as patient leakage or network leakage, occurs when a patient leaves a hospital’s network in favor of out-of-network providers.
In 2018, Sage Growth Partners interviewed 100 health system executives about referral patterns in their networks. On average, these executives estimated that their system loses about 14% of their annual revenue due to patient leakage. See the table below for details.
Still, others estimate the cost closer to 20% of annual revenue. Regardless of the exact percentage, referral leakage is a well-documented challenge for health systems that has significant financial impact. Consider that 14-20% of annual revenue equals $40-60 million for the average U.S. short-term acute care hospital.1
More importantly, transitions out-of-network can often inhibit provider coordination, undermining patient care.
What Causes Referral Leakage?
In most competitive markets, a certain amount of referral leakage is unavoidable. But in many cases it can be prevented with proactive effort. Some of the most common causes of avoidable referral leakage include:
- The continued use of communication methods that are not responded to right away such as fax, email, and EHRs. With these methods, referral requests are more likely to sit in the “inbox.”
- A lack of knowledge about which providers are in-network, or how to contact them.
- A lack of clinical context or information provided by the referring provider.
- Scheduling issues such as limited specialist availability, arduous scheduling processes, or leaving the scheduling up to the patient.
- Established provider relationships and habits that span across network lines.
Plugging the Holes
A Clinical Collaboration Platform (CCP) is a solution that combines secure messaging, voice, video, and alerts into a single platform to streamline clinical communication workflows.
CCPs help plug the holes of patient leakage by giving providers a much easier method to coordinate referrals. CCPs support real-time communication that allow providers to build stronger relationships and establish in-network referral patterns. When choosing a CCP, consider the following characteristics that will enable your organization to coordinate referrals most effectively.
- Cloud-Based. It’s essential that a CCP be able to scale easily to all of the system’s owned facilities, as well as its affiliated partners that are part of normal referral patterns (EMS, physician practices, surgery centers, post-acute care, home health, etc.).
- Active Directory. Health systems are large and complex. A CCP needs to integrate with your organization’s Active Directory and allow easy searching of providers by specialty, location, and other defined parameters necessary to find the most appropriate referral destination.
- Role-Based Messaging. Sometimes it is difficult to determine the right person to contact from a directory. CCPs also need to support role-based communication when it is unclear who to contact. Traditionally this has applied to on-call specialists – for example, compose a message to the “on-call cardiologist” without having to know who that is. Similarly, this framework can be applied to other roles – for example, compose a message to the provider or staff member currently coordinating “cardiology referrals.”
- Cross-Org Experience. Not all referrals come from within the network – many come from affiliated community partners. A CCP partner should have experience enabling collaboration across organizations, and be able to demonstrate how it works to share only the information desired and how it protects that information securely.
- Robust Analytics. A robust data reporting capability is required to effectively diagnose where the referral process is working and where it is breaking down. For example, a CCP’s reporting platform should be able to show which providers are messaging in-network vs. out-of-network, and which providers are signed out and not reachable for referrals.
1Definitive Healthcare, based on average net patient revenue of $303 million across 3,136 short-term acute care hospitals (most recent year of data available for each hospital).