Patient Leakage Costs Most Healthcare Facilities 10% of Revenue

November 07, 2018 - Healthcare organizations are losing revenue because they are failing to properly mange referrals and patient leakage, a new survey shows.

Forty-three percent of over 100 executives recently surveyed by Sage Growth Partners for Fibroblast said their healthcare organization is losing more than 10 percent of revenues because of patient leakage.

And another 19 percent of healthcare leaders are missing out on more than 20 percent of patient revenues because of patients seeking care beyond their network.

Just as alarming is the fact that 23 percent of the survey participants reported not knowing how much revenue their organizations are losing because of patient leakage.

“To survive, today’s healthcare organizations must navigate both the fee-for-service and the value-based world. That means they need to grow revenues while demonstrating better value to payers and taking on more risk,” the survey report stated.

“At the same time, as organizations manage larger networks of physicians and facilities, they stand to lose considerable revenue and control when patients are referred to other networks or to poorer performing providers within their own network,” the report’s authors continued.

With patient leakage contributing to significant revenue loss, healthcare executives are prioritizing better referral management. Eighty-seven percent of respondents said reducing patient leakage is very or extremely important at their organization, and another 12 percent said it is moderately important.

Despite executives valuing patient referral management, a significant portion of hospitals, medical groups, and physician practices do not formally track patient leakage. About 23 percent of survey participants said their organization does not monitor and report on patient leakage.

But even leaders who do track patient leakage do not fully understand how to reduce the number of patients seeking care beyond their network, the survey showed.

Approximately 20 percent of all respondents stated that they do not understand where and why patient leakage occurs.

Only about 47 percent said they understand the patient leakage problem moderately well, and just one-third said they manage leakage very or extremely well.

Management of patient leakage may be lacking at most healthcare organizations because many providers and leaders within the hospital or practice have a hand in referral management, but few actually own the management process, the survey uncovered.

The majority of respondents (67 percent) reported that more than one staff member oversees patient leakage.

CEOs are the most likely to manage patient leakage, with 10 percent of executives saying the responsibility falls on the healthcare organization’s leader.

Another 9 percent also said the CFO oversees patient leakage and 8 percent said the Chief Medical Officer, or CMO, is responsible for managing patient referrals.

The C-suite may be primarily responsible for overseeing patient leakage and other referral management processes. But the survey showed that the responsibility ranges across a wide-range of titles, and everyone from office management to medical group leadership and Marketing Vice Presidents to the C-suite are involved in the management process.

Technology may also be an issue with patient leakage and referral management, researchers observed.

Solutions for tracking leakage are not currently standardized, so healthcare organizations are using their EHR systems. Most organizations (38 percent) use the EHR system to manage referrals and track patient leakage.

However, respondents who use the EHR as a solution to patient leakage are not satisfied with the technology. Nineteen percent of executives are not at all satisfied with their EHR system’s ability to track patient leakage, and most leaders (57 percent) are just somewhat satisfied with the EHR’s patient referral management capability.

Other patient referral management solutions are out there for healthcare organizations. Hospitals, medical groups, and physician practices can implement third-party vendor solutions or outsource patient referral management to a third-party.

Outsourcing is not currently a popular strategy for healthcare organizations. Only 2 percent of executives said their organization outsources referral management to a vendor.

More healthcare organizations are using their EHR system or an in-house solution (16 percent) to track patient leakage and manage referrals. Another 34 percent also use a combination of approaches.

While keeping patient leakage and referral management in-house is currently the primary approach, more hospitals and practices are planning to invest in vendor solutions in the near future. Approximately 19 percent of executives said they plan to purchase a patient referral management solution in the next one to two years.

Although, 81 percent of respondents had no plans to invest in a third-party solution.