Why Are Medical Referrals So Important?

It’s a usual day, several in-patients are under your care, many scheduled patients are already seated in the waiting area and the ambulance has brought in an emergency case. On top of this, a pile of paperwork promises to cut your lunchtime in half. In between, scheduled patients come in and some of them need to be referred out. While Patient referrals can be time-consuming and tedious, they are an imperative process in healthcare operations.

Theoretically, the referral process is simple – if the initial diagnosis concludes that the patient needs special care or medical guidance then the patient’s primary provider will suggest providers or schedule an appointment with a specialist. The patient fulfills their end of the bargain by going to the specialist and getting treated.

In practice, the provider may only suggest a specialist because they know them and checking for availability and getting an appointment with the specialist is easier said than done. Even if this criteria is met, the patient may end up going to another specialist, or not get treated at all. 

There is more at stake here than just a few missed appointments. Statistics show that the number of medical referrals are on the rise in the US and with referrals gaining importance, is it critical for both the patients and the practice. Following are a few reasons why referrals are important:

Care Outcome: In an industry under transformation from fee-based to performance-based, the medical outcome and patient experience will continue to become more important, a trend most visible in an Accountable Care Organizations (ACOs) setup. ACOs are responsible for the health of the population they serve and shares the cost of care with Medicare. If the cost of care exceeds the preset limit and/or the quality is not up to the standard then it could affect ACO reimbursement. Most of the time the referring provider does not know about the cost of the specialist or the quality of care.

Revenue Management: Referring a patient could be a risky gamble from a revenue management perspective. It is often observed that the only revenue inflow from a referral is for the specialist. Once a primary provider refers a patient out of his practice to a specialist, the patient is out of the provider’s control. The patient may further be referred to another specialist or even to a rival hospital system. Even if the provider has sent the patients to the right specialist, the patients have been going to another specialist unbeknownst to the provider. Ultimately, the provider’s practice is losing future revenue without even knowing.

To Refer Or Not To Refer: A patient is referred to a specialist when a provider determines a reason for specialist care or the complexity of the patient’s condition is beyond the range of the primary provider. While issuing referrals appears straightforward, the parameters that would necessitate the initiation of referrals are vague at best. Wrong decisions on referral can cause serious problems for the provider.

How big a problem? Consequences range from unwanted costs to legal action. Wrong referral leads to uncalled expense, if the primary provider refers to a specialist whose capabilities cannot fulfil the patients requirements. The patient’s conditions could worsen because of the primary provider’s delay in facilitating the needed treatment, and the patient in question can file a legal case against the provider.

Our healthcare system relies heavily on referrals. For quite some time the healthcare sector favored specialty over primary physicians (evident in the disproportion of primary providers we have) but evidence now compels us to look at the care delivery pyramid and amend necessary changes for better care delivery and efficiency.

The importance of referral is that it is not just the next step in care delivery, but for patients who may need desperate treatment, an efficient referral could lead them on the path to recovery.