Sprung a Leak? The Cost of Referral Leakage

Roughly one third of all patients leave their primary care physician with a referral in hand. For Medicare patients, that number goes up to half [1]. And every time a patient walks out with a referral, thousands of dollars are on the line, and, unfortunately, there are many ways for the referral to go wrong.

So, just how great is the cost of referral leakage?

Let’s take a look at cardiology and a typical heart failure patient for example. A practice will realize approximately $3,600 for the initial implant and first year of follow-up care. Each subsequent year of patient management will yield in the range of $1,600 in professional service compensation. Multiply this by 20 years for a patient that stays within the same program and the yield is more than $34,000 in compensation [2].

Statistics show that on average 10 out of every 1,000 patients that are 65 or older will encounter CHF [3]. The cost of losing those 10 patients could cost an individual provider more than $340,000. The losses for 100 primary care providers come to a staggering $3.4 million.

Seamless care coordination is essential to population health management of patients and the financial stability of the practices that serve them. With better data and analytics, referral leakage can be prevented; something that is particularly critical for health systems operating on a fee for service basis or with value-based reimbursements. Keeping referrals within a targeted set of high-quality specialists not only reduces risk but it optimizes outcomes. Patients are satisfied when their specialist is covered in-network by their insurance provider and practices keep their customers while ensuring long-term stability for their business.

Learn more in our guide: Convenience Drives Change: The Future of Referral Management.


[1] The Milbank Quarterly http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3160594/
[2] EP Lab Digest http://www.eplabdigest.com/articles/Assessing-Lifetime-Value-LTV-Patients-Lessons-Dairy-Farmer
[3] Emory Healthcare http://www.emoryhealthcare.org/heart-failure/learn-about-heart-failure/statistics.html