Redefining Patient Leakage: Hospitals’ most misunderstood, overlooked, yet critical problem.

7 July, 2016

[Part 1 of our 3-Part Series: Re-defining and Re-addressing Patient Leakage]

There is no context in life where a leak is a good thing. What’s even worse is not when leaks go unfixed, but rather, when leaks go ignored because they are ignored as leaks entirely. Oh, that? That’s just an extra faucet a storm decided to install in our ceiling…

Most providers and doctors consider patient leakage to be a term purely synonymous with doctor referrals. The typical definition goes like this: “Leakage is used to describe situations where primary care physicians refer patients to providers outside their system, rather than staying within their network.”

Is this all there is to the patient leakage story? What about that dripping sound over there?

The problem with healthcare’s common definition is that it is an oversimplification of the term. Yes, doctor referrals is a big piece of patient leakage, but it’s not the only contributor.

In business development, “leakage” refers to any generated lead that goes on to purchase one’s product or service from another source. This is closer to a true definition, and a scarier one for providers and doctors because it has widespread ramifications.

Patient leakage, however, is both, and yet neither of those two definitions. Let’s redefine.

One important nuance is that patient leakage is post-conversion; hence, the term, “patient.” So, in this way, it is slightly different from the traditional business development term, which is about lost leads, but it is similar to that definition because leakage should encompass all possible leakage contributors, rather than just one.

Patient Leakage needs to be redefined as any instance when a converted patient is lost to a competitor.

With this definition, providers and doctors can successfully differentiate which contributors that are within their control, and which are outside of their control, like a patient’s relocation, or change in health insurance. Only then can patient leakage be accurately addressed.

Why is Patient Leakage such a huge problem?

Saying that physicians are key to a hospital’s bottom line would be obvious, but really, physicians make a lot of money for their hospitals.

On average, each physician, including primary care and specialists, generates $1.5 million in revenue for their hospitals annually. Breaking down this number further tells us why leakage is such a massive lost opportunity. Primary care physicians (PCP) average $1.4 million in revenue, while specialists average $1.6 million. We won’t even mention orthopedic surgeons (ahem: $2.7 million annually).

Again, this opportunity is typically viewed merely from a referrals perspective, which is still important. If a PCP refers a patient to an out-of-network specialist or (yikes!) surgeon, that’s a lot of lost dough. But what about the PCP who keeps his or her patient coming back to… that PCP? What would it take to not leak one’s own patients?

When one also considers the massive investments into converting consumers to patients (which we considered so important we dedicated an entire series to it), leakage becomes not only missed opportunities, but wasted resources. If patient conversions are the only objectives of providers’ and doctors’ marketing/sales funnels, then this can be ignored, but it should not be. Getting patients “in the door” is commonly trumping nurturing loyal customer relationships, and modern patients are taking notice.

What’s next: identifying top patient leakage contributors & inspiring patient “keep-age”

There are myriad ways patients can leak to other systems, and many of them should not keep providers and doctors up at night as they are out of their control. There are, however, two massive leaks that providers and doctors have the capability to at least slow considerably, if not stop completely.

Without going down the road of proposing re-organization or further hospital consolidation as solutions (how can one leak if there’s nowhere else to go?), this blog series will tackle the following two leakage buckets, and provide advice on how to slow them.

  1. Doctor Referrals - One health referrer’s 2009 data showed only 35-45% of adult inpatient care revenue goes to the partner hospital. This is less of a leak and more of a deluge. More often than not, patients are getting unintentionally leaked due to direct actions by their physicians. Doctors will often refer patients to their most trusted professional connections (why wouldn’t they?), without considering whether they are in their same hospital system or not. Alas, yet another patient leaks out of the system. The problem is one-part systems-related, and another-part philosophy.
  2. Lack of Care in Patient Experience - Our recent blog series dug into the pre-visit patient experience, stating that 75% of patients are frustrated with their patient experience. Patient leakage occurs, however, in the during-visit and post-visit patient experience. Studies evidence the lack of care received in these phases of the experience, but one really does not have to look too far from their own lives to know this one to be an issue. The mishandling of patient data, lack of follow-ups, and pricing transparency gaps are tips of the iceberg. All of these issues are symptomatic of the “just get the patients in the door” philosophy, which is eerily similar to a Walmart on Black Friday. Building loyalty after they are in the door is the key to patient keep-age.

Stay tuned for our next post on Doctor Referrals!