Skip Navigation

3 Keys to Preventing Referral Leakage

Through the work we do at Healthagen, we know the importance of managing population health and the key role physicians play in driving care continuity. A seemingly routine task during a physician’s day – referring patients to specialists and other care providers – now is being viewed more closely by hospital systems to improve patient management and volume.

Physicians, in many cases, do not consider network affiliation when referring patients to their colleagues. But network affiliation can have huge implications for both the patient’s quality of care and the hospital system’s bottom line.

One study of referral data showed that only 35% - 45% of adult inpatient care remained within a health system, which means that over half of a health system’s patient population receives care out of their own network. Out of network can mean two things:

Outside of a health care system. This occurs when physicians refer patients to a competitor hospital or provider, or when a patient chooses to see a physician/specialist outside of the system. By law, physicians are not allowed to conduct referrals based on their own personal financial gain. But from a system-wide perspective, shifting care out of network can yield higher cost lower quality and gaps in care. This is especially important for organizations participating in accountable care organizations (ACOs), since they are responsible for total patient and have a stake in the patient’s whole health vs. episodic care.

Outside of an insurance provider network. Insurance companies contract with providers and health systems to help lower rates for their members. Within a health plan, the cost difference between an in-network vs. out-of-network provider is usually substantial, with the out-of-network provider requiring higher deductibles, copays and coinsurance. If a patient is referred to a provider that is out of their insurance network, they are faced with either A. paying much higher costs or B. trying to find an in-network provider on their own. Both options lead to dissatisfied patients who are less likely to follow up on the care they need.

Preventing patient “leakage” out of network requires data, analytics and insight that can help health systems in three main areas: Patient Retention, Network Optimization and Network Growth Planning.

Patient Retention

  • Understand patient behavior in and outside of health care systems’ networks across services and procedures, physicians and practices, and geographies
  • Quantify and track patient retention with web-based solutions
  • Educate in-network providers about their referral patterns

Network Optimization

  • Identify opportunities to improve retention across service lines, providers and geographies
  • Identify where patients are receiving care out-of-network
  • Improve physician awareness with reporting tools

Network Growth Planning

  • Evaluate provider groups prior to integration
  • Identify the right markets and providers to build clinical integration networks

Equipping health systems, especially ACOs, with the tools needed to optimize their referral networks is key to building a sustainable health care system. By focusing on patient retention, optimizing networks and planning for growth, health systems can take a step in the right direction.

Categories: Accountable Care, Care Coordination


Hugh Ma

Share Your Thoughts