Many hospitals across the country are being squeezed financially by rapid changes occurring in the industry, some resulting from financial triggers generated by the insurance industry and others from government mandated quality measurements and other controls. With nearly 60% of the healthcare dollars already controlled by the Federal government, it is not surprising that further downshifts in the Medicare and Medicaid payment structures will have a major impact on the industry.We are seeing consolidation of hospitals and physicians in many markets – the larger markets with more competition are shifting faster than the rural markets. Doctors are being employed at a rapid rate and not just primary care physicians (PCPs). Cardiologists, neurologists, neurosurgeons, the specialists that have always been “free agents”, are seeing employment as a viable option to the irritants (and financial instability) of everyday practice management. And they are seeing employment as the insurance factor that “food will always be on the table”!
As doctors become employed and aligned with a given hospital, the hospital hopes to generate new patient volumes by mandating control over the physician’s referral patterns – requiring them to choose an ABC specialist for patient referrals. In other words, the doctor employed by ABC hospital will have to refer to the specialist at ABC hospital and the doctor (and perhaps the marketer) will see his/her annual incentive bonus driven by service line volumes rising (or falling).
So today, the Chief Marketing Officer should ask the question: where does the patient referral start? How can I flow chart the business “chain”, so I can try to direct the patient volumes? When an attending neurosurgeon on staff admits a brain tumor patient to the ICU following a craniotomy, do we know how that patient came to use that particular surgeon? Or when a cardiac surgeon successfully implants a heart valve into a patient and the patient returns to his community PCP for follow-up care, do we know if that PCP is negotiating a contract with our competitor for employment and may never refer to us in the future? Referral patterns will be disrupted when an employed physician is told by his new employer where his cases must go. Are we as marketers ready to face this threat?
It is crucial that marketing departments acquire the information to know where their hospital business is coming from. This can only be tracked by knowing how that patient was referred (or chose) to a that particular admitting MD. These patterns may vary significantly by service line, as the consumer’s ability to choose will also vary significantly by service line. To understand your hospital’s vulnerability, you must know the percentage of new patients coming from referring MDs (vs. friend referral, ER, location, insurance, etc) and then discover who these referring MDs are and can they become aligned to you? Which community MDs do you want to engage as partners?
To get started, choose the top 5-6 revenue-generating service lines with the greatest margins for your hospital. To flow chart your business, talk to a large sample of new patients being seen by a specialist in a particular service line and ask:
- How did you decide to seek a doctor at this practice? ER, RN referral, MD referral, Internet, location, friend, insurance listing, reputation, or other?
- Before you visited this doctor, did you see another doctor for the same condition?
- Was this a PCP or specialist?
- If specialist, what type?
- Did this initial physician suggest that you see our specialist for this condition?
- Did your initial physician give you other options (other than us) of where to go for this condition?
- Did the doctor recommend a specific doctor by name? Or simply the hospital?
- Before choosing to visit us for this condition, did you investigate other options? How? Why did you decide on us?
If you have a Call Center, which is run and operated by Marketing, ask your patients about the call center. How influential is it in your community?
As you undertake this exercise for each service line, you will find significant differences. The percentages will vary by type of referral. Get to know your business better! Talk to your patients!
What challenges do you face with hospital-physician consolidation? We’d love to hear from you! And call Frederick Swanston if you need any help getting started.