Most providers recognize the value of primary care providers to the medical services referral path. In many markets, there is a direct relationship between a healthcare system’s primary care presence and its market share.

At a Glance

A referral tracking system can help a health system achieve five strategic objectives:

  • Track referrals to and from employed physicians.
  • Improve clinical outcomes and patient satisfaction.
  • Identify physicians who are specialists of choice—and those who are not.
  • Enhance and refine the medical staff development planning process.
  • Improve the accuracy of utilization and financial forecasts.

Hospitals and health systems can derive many benefits from tracking the referrals of their primary care physicians. These benefits range from enhanced ability to manage population health to keeping more physician referrals within a healthcare system as shown in the sidebar on page 85. Despite these potential benefits, however, many hospitals and health systems have been slow to develop comprehensive primary care referral tracking capabilities.

Organizations often do not recognize the benefits of primary care referral tracking, in part because little research has been done to establish referral volume and pattern norms. To help substantiate the value of tracking primary care referrals, we conducted a study examining primary care referral volumes and patterns using billed claims data and referral data from athenahealth for the period from July 1, 2011, through June 30, 2012. The study analyzed the referral volumes and patterns of primary care providers, focusing on more than 1,000 physicians who practiced family medicine, internal medicine, pediatrics, and obstetrics and gynecology (OB/GYN).

The study’s findings underscore the value of understanding patient referral patterns—and the potential of referral tracking data for use in developing strategies to build market share, succeed under value-based payment models, reduce costs, and improve patient satisfaction.

Study Findings

During the study period, participating physicians collectively had more than 2.5 million patient visits (measured as evaluation and management [E&M] encounters) and made more than 200,000 consultation referrals and nearly 350,000 diagnostic referrals.

Overall, study participants referred 8 percent of patient visits for specialty consultations. The frequency of consultation and diagnostic referrals by specialty is shown in the exhibit below.

Exhibit 1


Consultation referral rates. Consultation referral rates varied widely among specialties, ranging from 2.0 percent for OB/GYN to 11.1 percent for family medicine. Among referrals for consultation, five specialties were the most frequent recipients:

  • Gastroenterology
  • Orthopedic surgery
  • Physical therapy
  • Dermatology
  • Ear, nose, and throat

Diagnostic referral rates. Referrals for diagnostic services were more frequent than referrals for consultation services, as expected. Family practitioners most frequently

referred patients for X-rays and mammograms; internists referred for X-rays and electrocardiograms; pediatricians referred for X-rays and ultrasounds; and OB/GYNs referred for ultrasounds and mammograms.

Regional differences. We also examined the data from a regional perspective. In general, primary care physicians in the Northeast (9.8 percent) and West (10.3 percent) referred in higher proportions than their peers in the South (6.2 percent) and Midwest (8.1 percent). We attributed the higher referral rates in the West and Northeast, in part, to a higher market penetration of HMOs, which typically require a referral for specialist access. We attributed lower referral rates in the South and Midwest to the prevalence of rural areas, which may provide less access to a broad range of subspecialty physicians, ostensibly leading primary care providers to practice a broader scope of medicine out of necessity.

Other correlations. We further considered how various aspects of a physician’s practice might influence referral patterns and volumes, including the median patient age of the physician’s active patient base, the physician’s productivity level (based on both work relative value units [wRVUs] and patient visits), the physician’s collections-to-wRVU rate, and the physician’s coding levels (coding index). Although correlations between these variables and the physician’s referral rate varied across specialties, it was found that a low case collections rate was negatively correlated with the physician’s referral rate in several specialties; that is, the lower the collections rate, the more frequently referrals occurred. Lower collections rates are linked to Medicaid and self-pay populations, who tend to wait until their conditions are more severe before they access care.a The higher referral rate may reflect the effect of patients’ delays in seeking treatment.

In internal medicine, there was a statistically significant negative correlation between the median age of an internist’s patient base and the referral rate. In other words, higher referral rates were associated with a young 65, possibly because many of these patients have already been diagnosed with chronic conditions and have established relationships with specialists. Conversely, younger patients could be encountering these medical issues for the first time and thus would be in need of an initial referral.

Illustrating the Impact of Referrals

The downstream value of a specialist’s business, particularly business of a surgeon, has been quantified in previously published studies, including a periodic study on physician inpatient and outpatient revenue conducted by the physician search and consulting firm Merritt Hawkins. By incorporating the more elusive component of the equation—the volume of new patients that primary care physicians drive to specialists—planners and other managers can develop a comprehensive forecast of the anticipated direct and indirect impact of their employed and affiliated primary care providers. These referral rates, combined with data from a typical billing and clinical management system, may be used to measure the effect of a primary care physician’s patient volume and referrals on specialists’ patient volume and revenue.

As an example, consider a family practitioner’s referrals to an orthopedic surgeon. The typical family practitioner generates referrals at a rate of 11.1 referrals per 100 patient visits. The data set used in this study showed that the typical family practitioner conducts 4,100 patient visits per year, or approximately 451 patient referrals.b

The top five specialties and services receiving those referrals are shown in the exhibit below.

Exhibit 2


In theory, then, the typical family practitioner will generate about 37 referrals to orthopedic surgeons per year. Equipped with this knowledge, the health system can then mine its medical billing and clinical management system to calculate the visits, procedures, surgeries, and diagnostics projected to be yielded by those referrals by examining historical service utilization by new orthopedic patients. For example, based on billing data for a group of orthopedic practices in the study, 37 referrals to an orthopedic surgeon translated to 74 office visits, 59 in-office diagnostics, and the other diagnostic utilization shown in the exhibit below.

Exhibit 3


Developing or Improving Primary Care Referral Tracking Capabilities

Health systems should mine their own data to precisely define referral and downstream measures that meet their needs. For example, the number of new patient referrals required to generate 10 arthroscopic knee surgeries can be determined by analyzing CPT code utilization data. The number of referring primary care physicians needed to generate the volumes required to support an MRI scanner also may be determined by querying the billing and clinical management system.

This extrapolation of downstream utilization from the initial referral provides service line managers with a means for forecasting diagnostic and facility demand as well as demand for specialty physicians. Healthcare leaders should encourage and foster relationships between primary care providers and specialists who will be frequent utilizers of their facilities and ancillary services. 

In addition, inherent in healthcare reform is an expectation that providers will reduce waste and excess capacity while increasing the efficiency with which they use existing facilities and equipment. In the past, hospitals and health systems have primarily added services and recruited physicians for competitive reasons, with community demand factors being a distant second. Anticipated utilization by the “captive market share” (i.e., patients of employed and affiliated primary care providers) is often not on the radar. As the patient panel approach gains traction in the marketplace, health systems should understand and be able to predict the utilization and demands these panels will put on resources. Success under new payment models will require increasingly precise resource management. 

To reap the benefits of the primary care referral tracking, hospitals and health system leaders must have in place a system and processes for tracking referrals that can help their organizations accomplish five key strategic objectives.

Effectively track referrals to and from the health system’s employed physicians. The ratios identified in our study suggest the direction and volume of referrals made by primary care providers. A health system can refine those numbers by incorporating local market factors in its analyses of referral patterns. For example, a physician network in the retirement community of St. Petersburg, Fla., will exhibit different referral patterns than a physician network in the college town of Bloomington, Ind. When implementing referral tracking, hospitals and health systems should choose a system carefully and ensure that users receive the necessary training. Even a first-rate system will not produce accurate data and intelligence if its users do not adhere to a consistent, comprehensive approach in creating referral records.

Improve clinical outcomes and patient satisfaction. Whether or not a health system is pursuing patient-centered medical home certification or attesting for meaningful use, the case for tracking referrals and understanding referral patterns is strong. Referral tracking improves clinical quality by documenting consultation and testing orders, monitoring patient adherence with those orders, and ensuring that appropriate feedback is received from physicians to whom referrals were made, all of which promote safe and well-coordinated care. In addition, patient satisfaction is enhanced as physicians improve their ability to objectively assess the specialists to whom they refer. They then can slow or stop referrals to specialists with whom patients frequently indicate dissatisfaction.

Identify physicians who are specialists of choice—and those who are not. Primary care referral tracking provides the means to identify affiliated providers who seem to be repeatedly missing out on referrals and determine the root cause, which could be clinical quality issues, service quality concerns, or simply a lack of awareness among referring physicians. To help physicians become specialists of choice, health systems should create a relationship development plan and develop tactics that facilitate primary care physicians’ interactions and communications with specialists’ offices. A simple example is to designate a phone line for referring physicians to use when accessing the specialist’s practice. Efforts should focus not only on improving but also on sustaining referrals from primary care physicians.

Enhance and refine the medical staff development planning process. Medical staff development plans are often based on community demand or (sometimes ill-advised) competitive strategy for various specialties. Referral data can enhance and refine a health system’s planning process by enabling the organization to project how many and what types of specialists its employed and affiliated primary care physicians are likely to support. The “build it and they will come” approach does not hold up in today’s increasingly competitive healthcare market. If a competitor across town has the loyalty of most primary care physicians in the area, it doesn’t matter how many cardiologists a health system recruits; the referral volume will never be there.

Improve the accuracy of ancillary service and facility utilization forecasts. When forecasting for new facilities or new equipment, health system planners typically consider and include community utilization factors in the analysis at a macro level, but they all too often fail to account for the chain of referrers required to support these services, and whether those referrers are aligned with the health system. Better utilization forecasts also lead to improved accuracy of financial forecasts and ROI calculations.

Putting the Data to Good Use

As Albert Einstein said, “Information is not knowledge.” Primary care referral data, nomatter how consistently and accurately tracked, are of no use unless they are assessed and the results are used to make improvements to the referral practices of the health system’s primary care physicians. Tracking and assessing your health system’s referral data positions you to improve clinical quality, market share, efficiency, and overall financial performance. So why aren’t you doing it?

Ashleigh Finley is vice president of business analytics for Halley Consulting Group, Charlotte, N.C.

The author would like to acknowledge the contributions of William Reiser and Sarah Montijo to this article.


The Value of Primary Care Referral Data

Primary care referral data can provide hospitals and health systems with the intelligence needed to project utilization and costs, determine where relationships need to be strengthened to increase physician and patient satisfaction, keep referrals within the system, and more. Following are some of the most significant benefits that hospitals and health systems can gain from developing primary care referral capabilities.

Managing population health. Primary care referral data can help a hospital or health system forecast the utilization and costs associated with managing patient populations. Understanding the volume and direction of referrals facilitates reliable projections of utilization by medical specialty, which is particularly important for organizations that are exploring participation in accountable care organizations or other population health management models.

Meeting quality and compliance standards. New healthcare delivery and payment models emphasize and reward a focus on quality. Critical to improving quality is ensuring coordination of care for the patient, which is accomplished in part through referral tracking.

Determining the right medical staff complement. When building physician recruitment plans, it is important to consider how many specialists an affiliated/employed primary care base can support. Armed with this information, a health system can ensure that its recruitment plans, and consequently its medical staff specialist supply, are properly calibrated to meet market demands.

Anticipating ancillary service utilization. Tracking clinical laboratory and other diagnostic orders can help a health system project future demand for ancillary services and thus determine when it is appropriate to add new services and equipment. Referral data improve the accuracy of utilization projections.

Forecasting facility utilization. Combining referral data with patient utilization data from the electronic health record and billing systems can enable a hospital or health system to predict facility utilization based on its complements of affiliated primary care and specialty physicians.

Improving the feedback loop between referring and referred-to physicians. The coordination and tracking of patient care is a key component of care quality and, in turn, for risk-based payment eligibility. It also is required for patient medical care home certification. The need to improve communication is clear: One study estimated that the typical primary care physician coordinates care with 229 different specialists in 117 different specialty practices.a

Identifying system referral leakage. Studying the referral patterns of primary care physicians allows a healthcare system to pinpoint referral leakage, where patients are being referred to specialists affiliated with competing health systems when they could just as well be referred to the same type of specialists within the health system. Often, referral leakage is the result of primary care physicians’ dissatisfaction with the service quality or clinical quality of the health system’s specialists. Leakage can be stopped and reversed by identifying specialists who are not meeting the needs, wants, and priorities of referring physicians and their patients. Addressing the causes of referral relationship issues is the first step in helping these physicians become specialists of choice.

Sidebar Footnote

a. Pham, H.H., O’Malley, A.S., Bach, P.B., et al.,  “Primary Care Physicians’ Links to Other Physicians Through Medicare Patients: The Scope of Care Coordination,” Annals of Internal Medicine, Feb. 17, 2009.


Publication Date: Thursday, August 01, 2013

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