How to Increase Your Practice Income through Referrals

Patients follow your advice for continued medical care needs.  Its not just anecdotal information any longer. The National Bureau of Economic Research studies the impact of physician recommendations, price and geography on a patient’s choice of provider, and their conclusion – what you say matters.

Overwhelmingly, patients sought services from the providers, physician, hospital, ancillary, based on the recommendation of their physician irrespective of price, or geographic differential.  Transparency, the doctor next door, the big bill board, the advertising, the bottom line is that patient’s trust their physician.  While the reality is that not everyone will follow your recommendations, but the majority will.

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This means you have power of the purse, power to influence the economics of others.

The only way that you can use this information is to understand what your referral pattern means to others.  You probably already know what it means to clinical labs that grovel (and at times to too far) in seeking your specimens, but have you thought about your impact on others? The specialist, the hospital?

The best way to understand your role in others income is to measure it, that is estimate it.  Turn to your EHR/PMS to see what reports it is capable of running.  If your system can, take a periodic run of your referrals, and where they go.  Not its not going to be in your system, but you can estimate the economic value of your referrals in a crude way, by assigning a dollar value to an office visit and if to a proceduralist, an estimated value of their work, surgery, colonoscopy, etc.  Need a data source, you google Fair Health and see what the rates are on the average for these services. For hospitalizations, just use the average of $10,000, which is the average for a hospital stay in the US.

The value of this information is to understand the economic power that you and your referral pattern command.  Not that its your money, but your decisions mean income to others.

Now with this information consider if the revenue you are producing for others is being respected by them. 

For example, if you continually make referrals to Dr X and he never sends you a consultation report, then perhaps for the betterment of your patients, you should consider another physician to receive your largesse. Similarly, if there is a receiver of the bulk of your referrals, that makes your life more difficult by not taking patients with insurance A, again consider a conversation about it with them, and after they balk at accommodating your patients, slip into the conversation the estimated value of your referrals, if not the dollars the number of cases referred. A reminder may be even necessary to the physician when their office staff won’t accommodate a patient of yours that is in more immediate need of their services.

Specialists, with few exceptions (Allergy, dermatology ophthalmology) are largely in the wholesale business, that is their business is based on referrals, from you and from other referral sources.  While the specialist may command a certain higher stature by virtue of their specialty, they are dependent on your referral for survival.  This means that you have the clout to impact their responsiveness to you and your patients. 

Don’t be afraid to use it.