How Can You Improve Referral Management at Your Practice?

Healthcare is in a new era of consumerism, where patients know they have choices for their clinical provider. In this climate, the idea and implementation of referral management is increasingly important to the business of healthcare.  Referral management isn’t a new idea. Specialists have been aware of their primary care referral pipeline and we’ve been talking about how to manage it for at least a decade. The real question is: What are you doing to improve referral management?

How Well Are Healthcare Providers Managing Referrals?

If you had to place a thumbs up or down on your referrals management process, how would you rate it? Referral workflows and the data these processes yield can be poorly documented and difficult to understand. One study looked at the workflows around physician referrals and found:

• Just over one-third of patients fail to follow up on the referral you provide them, which could indicate they are missing the critical care they need
• Of those that see the referred specialist, approximately 40% do not follow through after the first visit

This is a loop that simply isn’t closing in many cases, and it ultimately affects the quality of care your patients receive. Up to one half of doctors don’t even know if their patients end up seeing the specialist they’ve referred them to.

From a business perspective, health system referral leakage can average 55 to 65%, costing these providers up to $971,000 per physician per year. For a system with 100 ambulatory providers, the annual losses are staggering. 

One of every three patients ends up going to a specialist, so your practice likely sends out referrals dozens of times a week. Who are we referring to? The study showed:

• 43% of referrals go to doctors that the referring physician does not know well
• 17% of referrals so to specialists that the referring doctor has never met

Referral relationships matter, both for the patient and your practice. How can your team make appropriate referrals if they don’t have a relationship with that provider? Your patients trust you to make an appropriate referral to a specialist. While your doctors could never be expected to personally know each doctor or ancillary in their referral network, a basic understanding of insurance, cost, and location should be considered for the patient.

However, managing this is extremely problematic. So much so that 63% of referring doctors are dissatisfied with their current referral workflows. Why? In part because our processes often rely on 1970s fax machines to send out referrals. 

It’s shockingly true; 89% of healthcare providers are still faxing 75% of all healthcare communications—including referrals. This, despite the fact that 90% of medical practices and 95% of hospitals now have an electronic medical records (EMR) platform. The problem is that the EMR platforms are not standardized to communicate well with each other. Even EMR vendor Cerner admits, “For this to really be optimized, the entire healthcare landscape must be open and collaborative.” 

Medical Group Management Association (MGMA) polled their members in 2019 and found the fax still in play for:

• Records sharing
• Referrals
• Communicating lab results
• Payer communications
• Pharmacy communications

This, despite the plethora of digital patient referral software products on the market. There are certainly security consequences of maintaining any paper-based system, including one to track referrals. 

What Are the Benefits of Improving Your Referral Process?

If you take steps to improve the physician referrals process, there are benefits to both the patient and the practice. This can include:

• Improved operational efficiency
• Improved referral tracking for better patient care follow up
• Increased likelihood that the patient will schedule with the referred doctor
• More accurate and complete transfer of patient data
• Reduced appointment wait times for patients
• Reduced healthcare costs 
• Reduced paperwork
• Reduced referral leakage 
• Saved time for the medical staff
• Secured personal health information (PHI) transmission (and increased compliance)

Healthcare Financial Management Association (HFMA) characterizes high-performing referral networks as having:

• Good two-way communication between doctors
• High-quality referrals to appropriate, caring specialists
• Efficiency in partnering with the highest quality, lowest cost healthcare providers
• Easy patient access to the referring provider practice
• A process of continuous referrals improvement

But obviously, we face some challenges in achieving a high-performing referral network. For example:

• Knowing if the referral is even necessary and understanding what the clinical approach will be from that doctor where you referred the patient
• Maintaining strong communication between you and each referred doctor
• Establishing referral consistency between doctors in your practice
• Focusing on cost as part of the referral process; for example, why would you refer your patient for a hospital endoscopy that costs twice as much as in an ambulatory surgery center?

What steps are necessary to overcome these challenges? Is technology the answer to these problems?

How Can You Improve Healthcare Referral Management?

Improving healthcare referrals not only benefits your practice but improves patient satisfaction and builds the relationship between your practice and the specialty provider. The goal is to create a closed referral loop process for referral completion, patient correspondence, and feedback from the referred doctor.

The American Association of Family Physicians (AAFP) published a guide listing six simple steps even the smallest practice can undertake to improve their referral management process. They recommend the following. 

Improve Internal Office Communications 

Specifically, between the referral coordinator in your practice and the referring physician. Typically, the doctor fills out a form either on paper or electronically. The medical secretary schedules the appointment, again, either digitally or manually. In small practices, the secretary may receive something as informal as a sticky note, although this is becoming rarer. 

AAFP recommends, at minimum, a patient referral form required for every referral with the date, diagnosis, referring doctor, urgency of referral and reason. 

Engage the Patient in the Referral Process 

Make this simple by facilitating the referral appointment scheduling right at check-out. The AAFP says, “When a patient interacts directly with the referral coordinator in arranging the date and time, the likelihood of compliance is increased.”

Facilitate the Referral Appointment

Complete a referral form from the specialist. Note that each specialist may have a different procedure for you to follow in order to smooth the flow of information. 

Understanding these requirements will ensure that the correct patient data flows from your office to the next step in the patient care chain.

Track the Referral Results 

Doing this manually is often quite difficult, however, many practices are still engaging in this activity. To do it properly, you must follow the consult letter results after the specialist appointment. However, if the patient fails to follow up with the appointment, there is often no way to know that continuity of care has not been preserved. This transfers the burden of following up to the patient, however, the referring doctor must participate in this process. 

Many EMRs have the ability to tack referral steps but even a simple calendar tickler process and an Excel spread sheet can flag the referral coordinator to follow up on the specialist appointment if they haven’t heard anything after the date has passed.  

Review the Data for Referral Process Improvement 

AAFP recommends looking closely at the following metrics:

• The time to schedule a specialist appointment
• Number of days from the patient appointment in your practice to their specialty appointment 
• Number of patients that missed appointments over time
• The time between the patient specialist appointment and your receipt of the consult letter

This information can yield valuable details that could greatly improve the patient experience. It can also reduce the frustration your staff may feel when trying to coordinate patient care.  

Seek Out Patient Feedback on Your Process 

Ask your patients if they were satisfied with:

• Their ability to get their specialist appointment in a timely manner
• Their experience with the specialist, including follow-up instructions

Asking for feedback can also help you strengthen the relationship with your referral network if you take the time to find out more about their process and how they’d like to interact with you and your patients. 

Alternatively, you may consider a digital platform to take on some of these processes.

Is a Healthcare Referral Management Platform the Answer?

Today, referral management doesn’t have to be as paper-centric and laborious as it has in the past. There are standalone referral management software platforms and modules to attach to your current EMR that can automate some of these processes to save you time. Technology may help us solve our patient referral snarl—although, we should acknowledge that mantra was chanted early on in our EMR implementation.

Modern Healthcare says, “Technology can help reduce friction in workflows and act as a lever to support a highly-efficient, high-performing referral processes to keep patients in the networks you have worked so hard to build.” However, the Institute for Healthcare Improvement points out, “The most important lesson…is that health IT on its own cannot fix the referral process. We absolutely need to improve the current technology for managing referrals, but equally important is having standard processes by which all clinicians in a practice make and track referrals and optimize communication with other clinicians and with the patient.”

IHI brings up a particularly good point. One of the biggest benefits of referral management software is the level of standardization they bring to a recognizably inefficient and often manual process. The data these systems capture can create an outcomes-driven culture in your practice that pushes toward performance improvement in patient care coordination. 

This is exactly what we need to address consumer demands for more convenient, efficient processes in healthcare. In turn, this data will also provide real-time insight into the effectiveness of your referral relationships. Analyzing the accepted insurance, cost, location, and quality of your referrals will help you provide a much better patient experience.  

How can a referral management platform help the average practice? There are several quantifiable benefits:

• Reduction in referral leakage that causes patients to leave your system, saving thousands if not millions in lost revenues
• Elimination of bottlenecks within the care continuum that frustrate patients and providers
• Improvement in care follow-ups and completion rates so that your patients are getting the treatment they need and deserve
• Improved care utilization between our practice and your specialty network by distributing referrals more evenly among providers

HFMA says, “Healthcare provider organizations require data and analytics to break down these barriers that stand in the way of developing a high-functioning referral network.” That data will help you improve patient satisfaction as well as your own efficiency and health outcomes.

Referral management tools offer a convenient hub where you can track a patient’s progress in the care continuum. The data you capture will go a long way toward helping you understand where your referrals are going and how these processes are handled by your network. While these tools won’t completely solve the complex nature of the patient care paradigm, they may be a good start toward a better practice of medicine for your business.

What’s Next for Your Physician Referrals Program?

Many healthcare providers complain that the system is fragmented and overly complicated—and it is. However, as a clinical provider or even an office administrator, you have a responsibility to recognize your own contribution to a disjointed healthcare paradigm. 

Last year, a survey showed that nearly 40% of providers are losing a minimum of 10% of their patient revenues to referral leakage. Another survey showed 92% of providers say they have room for improvement in their referral management processes. 

If you’re reading this, there is a good chance that your practice should take a hard look at how you currently manage your physician referral process. Fortunately, there are enough best practices along with new technologies that can help you improve.