The Exponent

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From Volume to Value: Implications for Referral Development

By: Randy Risser | November 17, 2016

The business of healthcare is changing. Health systems are gearing up to adapt to a new value-based healthcare environment, driven by the Affordable Care Act (ACA). The ACA wants to reimburse providers and hospitals based on quality and outcomes, rather than the quantity of procedures and tests. This is a shift from volume to value. No one really knows exactly how this will play out, but if this movement maintains momentum, the economics of healthcare will no longer be defined by the volume of patients we see or by how many tests and procedures we order. Rather, it will be about cost containment and clinical outcomes—fewer errors, lower readmission and infection rates, and quicker recoveries—just to name a few. In theory, this is a great thing; however, it is triggering a major restructuring of the way patients are cared for throughout the continuum, which could change how some of us receive patients.


In an effort to reduce costs and be accountable for the health of the patient, clinically integrated networks (CINs), accountable care organizations (ACOs), and high-value (narrow) networks are forming, while at the same time, hospital-owned practices and health systems are making greater efforts to manage leakage. Within these networks you’ll find the full continuum of care, ranging from primary care to specialist to the hospital—and everyone else in between. As a result, providers will be encouraged to refer patients to other providers participating in the network. That likely means that the traditional approach of physician liaisons or marketing representatives managing grassroots relationships with physician practices may not generate the patient volumes it once did. Depending on your position in the market, these models may necessitate the creation of new referral development strategies.


Shriners Hospitals for Children in Greenville, SC is an independent specialty pediatric hospital with an absence of its own primary care network to feed referrals. So for us (who have been dependent on the traditional approach), this new environment has the potential to affect our patient volumes in the very near future. This, in turn, puts our mission of serving children at risk. For that reason, we are attempting to effectuate a strategy of leveraging our superior quality metrics, brand recognition, and expertise to forge partnerships and affiliations with health systems, CINs, ACOs, and health plans. Implementation of this strategy requires a top-down approach, as opposed to solely relying on the traditional bottom-up organizational flow.


This means that conversations must be initiated at the C-suite level. These conversations are intended to demonstrate the value, expertise, and positive image we’re able to bring to the network. In some cases, the health system or network may not offer the services we provide, or it may have limited resources, which restricts its ability to meet demand—causing outmigration to competing systems. In that case, we are also attempting to help them fill that gap and prevent leakage. Over the course of these discussions it’s critical that we establish relationships, agree on a care philosophy, and determine compatibility of cultures. If we’re successful, we’ll come to a mutual agreement on how to better serve the population we are managing.


I’m not at all advocating the abandonment of the physician liaison or marketing representative role, because I think it’s still a critical component of the overall strategy. In fact, I firmly believe professionals working in the field will always produce the best market intelligence, which in turn will allow health organizations to manage relationships more effectively and have greater opportunities to identify and resolve problems. But if these new models prove to be a successful mechanism to control costs and improve the health of the population being managed, this sort of physician outreach won’t be the primary lever to drive patient volumes in the future. In my view, participation in these developing networks must be an important strategic initiative in this new value-based environment.