Referral leakage, also occasionally referred to as network leakage, occurs when a healthcare provider directs a patient to receive care outside of their affiliated hospital network.
This phenomenon can detract from the patient’s overall care experience in numerous ways:
- Medical records may not transfer seamlessly, leading to gaps in information
- Patients may not schedule appointments due to confusion about who initiates the process
- Duplicate tests may be ordered if the new provider doesn’t have access to prior results
- Out-of-network care can lead to higher out-of-pocket costs for patients
- Lack of follow-up and coordination can result in worsened health conditions
In addition to being detrimental to the patient experience, patient referral leakage can also result in substantial financial losses for healthcare organizations and disrupt the continuity of patient care. Consider this:
- The average cost per claim for MRI, CT, PET, mammogram, ultrasound and cardiac testing is approximately $1,500.
- If one provider refers these tests externally four times per month, it could result in an annual revenue loss of $72,000.
- When this figure is multiplied by a group of 100 providers, it increases to a potential loss of $7.2 million in revenue.
By comprehensively understanding the causes and consequences of referral leakage, we can develop and implement strategies to mitigate it, thereby ensuring that patients receive coordinated and efficient care within our network.
What causes patient leakage?
Referral leakage can occur due to several factors, including ineffective patient retention initiatives, a lack of physician expertise within the network, negative patient experiences or difficulties in scheduling appointments.
Specifically, providers may refer patients to external organizations due to:
- Cost of care: External facilities may offer more affordable rates or better payment plans, affecting referral decisions.
- Geographic preference: Patients often choose healthcare providers that are conveniently located near their home or workplace.
- Provider satisfaction: Factors such as quick turnaround times, established professional relationships and high-quality diagnostic images can influence referral choices.
- Service availability: The absence of internal services or scheduling constraints may require referrals to external facilities.
- Workflow inefficiencies: Complex or time-consuming internal referral processes can result in providers opting for external referrals.
Why reduce referral leakage?
Addressing referral leakage is critical for healthcare systems for multiple reasons — it not only helps improve revenue but also enhances patient care continuity and strengthens patient-physician relationships. Reducing referral leakage affects:
Revenue impact
Referral leakage can result in significant revenue reduction. When patients are referred outside the network, the organization loses potential income from services that could have been provided internally.
Patient retention
Keeping patients within the network ensures continuity of care, which can improve patient outcomes and satisfaction. High referral leakage rates may indicate issues in care coordination or patient satisfaction.
Care coordination
Effective management of referrals within the network enhances care coordination. This ensures patients receive timely and appropriate care, reducing the risk of medical errors and improving overall health outcomes.
Resource utilization
By minimizing referral leakage, provider groups can better utilize their resources, including specialists and facilities. This can lead to more efficient operations and better allocation of healthcare resources.
Market share
Reducing referral leakage helps maintain and grow the organization’s market share. Keeping patients within the network strengthens the organization’s position in the competitive healthcare market.
What are best practices to address patient referral leakage?
We support hundreds of hospitals with operational oversight and data analytics to improve revenue cycle performance and patient experience. Through those partnerships, we’ve crafted proven strategies to monitor referral patterns and leakage rates, identify trends, understand patient needs and improve retention and care delivery.
These strategies include:
- Analyzing feedback: We use feedback from patients and providers to determine causes of leakage, such as negative experiences or scheduling difficulties.
- Identifying resource gaps: We assess whether internal providers have adequate availability for referrals and identify any gaps in resources or scheduling.
- Focusing on the highest rates: We aim to address high referral leakage rates, particularly those exceeding 20%, to enhance care coordination and patient satisfaction.
Once strategy is set, we’ll recommend and help implement best-practice procedures to reduce referral leakage. This might look like:
Software optimization
- Structuring and configuring referral workqueue
- Setting required fields in the ordering process
- Optimizing provider preference lists and network levels
Documentation and training enhancements
- Creating and distributing templates to all employed providers listing in-house services and specialists, including service/specialist names, phone numbers, locations, and hours of operation
- Establishing e-learning platforms and referral tip sheets for providers and staff
Analytics and reporting improvement
- Reporting identified missing services to C-suite leadership
- Implementing reporting tools and processes to be followed by managers to improve referral monitoring
- Adding tasks to end-of-day checklists
Getting started
At every stage, client systems can support and partner with us to help their organization engage with the initiative:
- Immediately, start conversations with leaders, practice managers and providers about the importance of referral retention. This proactive measure can help raise awareness and set the stage for more effective collaboration.
- Up front, share existing referral retention initiatives and reporting.
- Over time, adopt Ensemble’s best practices around referral leakage, allowing our teams to collaboratively work towards identifying the gaps and inefficiencies that cause this trend.
Implementing these strategies helps organizations retain more patients within their own networks, enhancing both patient care and financial stability.
The bottom line
Addressing the underlying causes of referral leakage will ensure patients receive consistent care within one network. By adhering to best practices procedures, we’ve proven that it is possible to reduce referral leakage, improve patient care and retain revenue within a healthcare system.
