Healthcare Technology Blogs by Innovaccer
Network Leakage

Improving Network Performance by Efficient Network Tracking

Healthcare organizations are aiming to thrive in the new value-based care world, and are coming up with new strategies to improve and sustain their revenue growth. Healthcare organizations are deploying new strategies and partnerships with community providers and developing accountable networks to provide quality care to each and every patient. However, these network affiliations, if not conducted properly can have serious implications on both the patient’s quality of care and the hospital system’s bottom line. A study conducted on referrals showed that only 35%-45% of adult inpatient care remained within a network, implying that over half of a health system’s patients receive care out of their network.

 

Out of network can mean two things:

  1. Outside of a healthcare system: This happens when a patient is looking for or is being sent for care outside of their current network or health system. This often results in higher cost and lower quality especially for accountable care organizations (ACOs), since they are responsible for the total patient care and have a stake in maintaining the continued patient health versus just providing episodic care.
  2. Outside of an insurance provider network: Insurance companies often get into contracts with providers and health systems to help lower episodic rates and overall costs for their members. If a patient is referred to a provider that is out of their insurance network, they either pay the higher (non-discounted) cost or move entirely out of network and try to find a provider on their own. Irrespective of the outcome of that episode, patients tend to not follow up on the care they need.

 

Why does it happen?

A study shows that for a hospital with 100 affiliated providers, total leakage costs the health system between $78M to $97M per year, attributing for about 55-65% revenue loss. Here are some reasons behind these alarming statistic:

  • Dissatisfaction with referrals: Referrals play a critical role in quality clinical care, and therefore it has become one of the most scrutinized processes when it comes to managing care. 63% of referring physicians are dissatisfied with existing referral processes, right from breakdowns in communication to poor continuity of care, resulting in diminishing quality of care.
  • Misalignment between preferences: Study shows about 20-40% of patients don’t follow up on their doctor’s referrals to specialists due to various reasons like unavailability of specific services, geographic reasons, or maybe just a second opinion. Patient no-shows, delayed or cancelled appointments cost U.S. healthcare $150 billion every year and are detrimental to value-based care.
  • Gaps in knowledge: 3 out of every 10 tests are reordered because results can’t be found, patient charts are incomplete, and there is a lack of optimal communication between the PCPs and specialists. These gaps and miscommunication in addition to causing patient harm are the reason behind delayed or inappropriate treatment, increased length-of-stay in the hospitals, etc.

 

The Case for Referral Management

All the organizations need to have an effective referral management to make sense out of their unconnected data, ensure that there is clear communication between physicians and patients and transparency in all aspects of care:

  • In-Network Provider Affiliations: One of the major challenges is the recognition of providers within a network. By bringing visibility to provider affiliations across a network at the point of the referral a provider is able to make a sincere decision and combat patient leakage.
  • Match Patients to Providers: Patients need to be matched with providers according to their scheduling and location, the out of pocket expenses and most importantly for quality-driven care and focusing on improving outcomes and increasing satisfaction for both the patients and providers.
  • Provider Ranking: An effective referral management system has the capability to lay out providers based on diagnosis, cost, quality, and plan which helps in successful matching and also sorting out providers according to provide the best care.
  • Cost-driver analysis: One of the most important characteristics of referral management is that it helps in analyzing the overhead costs a healthcare organization incurs. A comprehensive cost-driver analysis helps providers in understanding why a chunk of their organization was doing well but fails to sustain growth.

 

Patient leakage can be Curbed

With healthcare costs rising alarmingly, it’s vital that providers focus on strategically addressing patient referrals. Keeping patients within the network is one of the most important aspects of optimizing networks and planning for growth. Referrals are complex, but ultimately it’s all about the patient receiving the care they need. Referral management hence is a critical component when it comes to evaluating the financial risk associated with a population and plugging existing leakages that will bridge the gap between providers, utilize resources and grow the referral volume that is normally lost. Once these wedges are bridged, healthcare systems can focus on patient retention, build a sustainable healthcare system, and drive better, value-based health outcomes.

 

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Abhinav Shashank

Abhinav Shashank

Chief Executive Officer & Co-Founder - Innovaccer.

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