How Every Value-Based Care Organization Can Optimize Their Referral Process: Part 1

The right referral can make all the difference when it comes to a person’s treatment and quality experience. When faced with the need to see a specialist, a patient’s Google search yields results based on search engine optimization, not necessarily because that provider is the best fit. Sure, they could rank highly because of their reviews or because they are renowned in a particular geographic area. But comprehensive referral management depends on more criteria than that.

Over the next several weeks, we will discuss four essential components of optimizing your referral management process:

1. Building the right network
2. Leveraging data to make the right match
3. Closing the loop with the patient
4. Measuring the quality and financial impact

Defining the Networks

Each part of the process relies on the next, and when choosing to automate referrals, there is a significant payoff for both the provider and patient. The foundation begins with identifying providers already in networks and building these networks. A group of practices, primary care physicians (PCPs), specialists, and facilities that are part of a health plan’s network are considered in-network. A preferred network is a differentiated list of specialists and facilities that are not in-network but represent an informal agreement that they will refer patients to them if needed. Specialists and facilities are added to the network for various reasons; there could be an established relationship already, their positive reputation may be known from others, or, the most important one, they know that they will provide high-quality care at a lower price point.

When laying the foundation for a preferred network, you need to consider both contracts and data. In our experience, at least five years’ worth of data should be gathered to compile an accurate, longitudinal view of a patient’s care journey and current status. If contracted with the Centers for Medicare & Medicaid Services (CMS), you will only have access to your organization’s claims data. However, bringing on a data partner allows you to fill in the gaps with commercial claims data and other clinical information to compile the full picture of cost, quality, access, and network loyalty.

The Importance of Building Referral Networks

Leakage, lost revenue, less precise care management, and less opportunity for relationship-building all contribute to the importance of building secure referral networks.

“Leakage” is the term used when a patient continues their care outside of the network their primary care physician (PCP) or another provider belongs to. While no physician can discourage a patient from leaving the network, having a comprehensive list of referrals ready for additional specialists can help them to stay. Having recommendations to share based on the patient’s needs is ideal, and that comes from developing referral patterns that simplify the process for the physician. We will discuss the criteria you should use for selecting a patient’s referrals in our next installment.

The potential loss of revenue is a significant factor in mitigating leakage. We often refer to articles like this 2014 JAMA analysis to illustrate the loss of revenue if a patient goes out of the network: if a primary care physician averages 1,000 referrals per year and 40% of them are out of network, 400 ​of those people times their average cost per year at $5,000 equals an average downstream revenue loss of ​$2​ million. In 2020, these numbers have only grown, and it can be detrimental to the patient in their long-term care as well. When a patient remains in-network, their care story is generally better-documented and better-managed if they need more supervision, and it is less likely that information falls through the cracks.

Another reason to maintain a secure network is the relationship-building element between patients and their providers. The more a patient sees a particular physician, the more they experience their treatment style and witness the commitment to their care. That commitment is strengthened further with follow-up appointments and other ways of demonstrating thoughtful care coordination.

Next time, we will discuss how to make an ideal referral match for a patient based on specific criteria and data-based insights.

Robert Harris manages Lightbeam’s referral management solution.