Referral leakage is a costly problem for the U.S. healthcare system. Here’s why and what we can do to solve it.
Each year, healthcare organizations grapple with staggering losses from referral leakage. Each time patients go out-of-network for care, the results are predictable—patients often face escalated costs and poor experiences, while healthcare organizations face substantial revenue losses. It’s clear that there is a double bottom-line to preventing referral leakage, so how can we make headway in preventing patients from falling through the cracks?
As we’ll see, the answer has a lot to do with provider data.
Costs quickly add up
Even a cursory glance at the stats around referral leakage is enough to see telltale symptoms of a healthcare system in crisis. Notably, for example:
- Over 40 percent of healthcare executives reported losing 10 percent or more of annual revenue, and 19 percent reported losing over 20 percent of annual revenue due to referral leakage.
- For each lost appointment or referral no-show, the cost to a health system is about $210 on average.
- On top of that, most health systems are already losing anywhere from $200 to $500 million each year to competitors.
Taken together with the efficiency of U.S. healthcare delivery overall, the picture is grim. Our healthcare system is in no position to lose out on this revenue and the opportunity to drive improvements in quality, efficiency, access, equity, and more.
It all starts with provider directories
Provider directories are a logical place to start in any analysis of referral leakage. After all, these are essential points of entrée for connecting patients to in-network care. But there’s just one problem: Critical as these directories are, they’re all too often out-of-date. Provider data is constantly changing, creating round-the-clock inconsistencies that are hard to monitor and maintain. Studies have found that as much as half of the data in provider directories is inaccurate. It’s no surprise then that physicians estimate that 1/3 of out-of-network referrals are avoidable with more information about in-network providers.
The ultimate result of all of this is a frustrating, disappointing, and confusing patient experience, which can lead to issues with patient retention. Research shows that patient experience can have five times the impact on brand loyalty in the context of healthcare as it does in the realm of consumer decision-making.
Add to that the millions of dollars in lost revenue annually, and it’s clear that healthcare organizations need better insights to help inform convenient, high-quality, and cost-effective referrals.
The way forward
The good news is that there are opportunities to improve provider directories and do so in a way that optimizes referral management processes and translates to bottom-line gains. For example, a real-time, seamless layer of reliable provider information can enable a digital front door that earns patients’ trust. Patients can schedule their appointments without confusion about provider affiliations or insurance networks.
All told, these new technologies hold tremendous potential—and they might be the catalyst for far-reaching improvements that would make a world of difference, both for the U.S. healthcare system and the patients we serve.
Learn more about the impact of provider data
We’ve broken down the myriad ways in which provider data inaccuracies can increase inefficiencies, erode patient loyalty, and generate a welter of other adverse outcomes. These are crucial challenges to take on. So how can we close the loop on referrals while improving the quality of care and patient experiences?
In our latest white paper, we take a closer look at referral management processes and the outsize impact of inaccurate provider data. We also explore the vital role of performance data in informing high-quality referrals and how provider and performance data affect the patient care journey.
Download the white paper to learn more about how accurate, comprehensive data can drive better patient experiences and improved health outcomes.