Reversing Patient Outmigration and Physician Referral Leakage

Reversing Patient Outmigration and Physician Referral Leakage

Address Blockages and Pinpoint Opportunities for Growth

By Jennifer Keller

Retaining and improving bottom line profits is a key priority for healthcare planners and strategists. Often when considering how to grow, patient outmigration and physician referral leakage are top of mind. Patient retention and well-maintained physician relationships are key to maintaining a strong financial standing, especially for rural hospitals.

“25% of rural hospitals nationwide are at a high risk of closing unless their financial situations improve. Of these hospitals, 82% are considered highly essential to their communities,” according to an annual Guidehouse analysis.

Many hospitals within close proximity to large U.S. cities are facing a serious financial challenge: patients who outmigrate to urban hospitals. This can happen due to patient preference or a physician referral, but it’s leading to lost revenue either way. 

It’s important to note though, this is not solely a rural hospital concern. A strong physician relations strategy is needed in many large urban areas to ensure you don’t lose patients to the large competitor right down the street.

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The need to build good relationships with local patients, strengthen your physician network, and help patients receive care faster with the most appropriate specialist is a universal goal for every hospital - rural or urban.

In this post, we’ll discuss three key strategies to addressing these concerns so you can build a patient outmigration and physician referral leakage program that works.

 

1. Establish a Well-defined Service Area 

Outmigration is when a patient leaves your service area and receives care outside your network. So it’s key to begin this discussion with a clear service area definition in mind. Doing so will address the question of where most of your patients are coming from. 

You can find our strategy for defining a service area in this post.

We recommend that you define your service area by ZIP code. You can begin by gathering four pieces of information: 1) patient origin by ZIP code, 2) market share of the top 85% of patient origin ZIP codes (if available), 3) population by ZIP code, and 4) the physical location of the ZIP code on a map. We also recommend that you incorporate address-level patient data when it’s available and create a custom market service area based on this data.

The market service area shows where patients come from regardless of random geography boundaries—counties, ZIP codes, census tracts. Large populations are included in your service area by using standard geographic boundaries like ZIP codes. Overlaying the market service area approach with the ZIP code approach helps you visualize the difference.

A well-defined service area assists with outmigration planning. It also helps you to understand who your true competitors are by service line, which is key when developing a physician referral leakage strategy.

2. Construct a Clear Map of Physician Referral Patterns

Physician leakage occurs when physicians refer patients to competing hospitals or providers outside of their network. This means patients you want to capture through your system are referred outside of your system. 

Consider this scenario: a person goes to their primary care physician, and that physician advises the patient to see a cardiologist. Instead of that patient being referred to a cardiologist within the same network, the patient is referred to one outside of that network and goes to a competitor. 

As mentioned earlier, this can happen anywhere. Lots of competitors are across the street from each other! 

The key to intercepting and addressing these out-of-network referrals is a clear understanding of when and where the leakage is happening. You can then develop a plan for interrupting those patterns and keeping that business within your own network. 

This can be done using All-Payer Claims Data, which can shed light on referral patterns and patient migration through the care continuum.

As described in this post, 837 submit APCD can open the door to longitudinal analysis of patient patterns. Each one of a patient's claims is linked to all other claims for the same patient. These related claims can then be summarized and analyzed to answer questions about referral patterns, leakage, shared patients, and more. 

Viewing this data with the right tool, such as Stratasan’s Analytics Platform which makes it possible to analyze APCD, planners and strategists can access a longitudinal view of their market and identify referral patterns that spark concern. Equipped with this insight, hospitals can work to correct the issue of physicians sending patients to the competition, and find ways to encourage referrals within their own network.

3. Set a Cadence for Monthly Tracking

Once you’ve correctly mapped your service area, and you’re connected to data that can identify referral patterns, the next step is establishing a pattern for regular tracking. 

Stratasan’s APCD will provide a view of what’s happened in the past, and can help you establish a foundation from which to move forward. You’ll be able to track the financial impact of outmigration and establish reliable metrics to measure success as you improve your physician referral patterns. 

Stratasan’s APCD updates 90 days post-close of the month, so you can expect to keep a close eye on what’s working and identify where your strategies aren’t making an impact. Every outmigration event has a direct impact on the bottom line since any procedure performed at a competitor’s facility will represent a lost revenue opportunity. With monthly check-ins, you can expect to quickly connect your progress to a positive financial improvement. 

 

The Takeaway

Patient outmigration and physician referral leakage is a real concern for hospitals of all sizes and locations. There’s no one-size-fits-all answer to it, but there are tools and strategies that can help you identify where it’s happening and create a plan of action. 

Stratasan’s APCD, accessible through our Analytics Platform, offers claim-level detail to a universal data-set. It delivers transparent, more simplified answers for creating a plan to address these issues. If you’d like to learn more, schedule time to review a specific physician or market with one of our experts today.

Article by Jennifer Keller, Director of Content Strategy for Stratasan

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