May 2013

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May 2013

Why Hospital-Based Physicians Need Better Referral Marketing

Well more than half (60%) of all physicians are now employed by hospital-owned practices. If you are one of those physicians, you may already know that many hospitals fail to use the power of effective marketing to promote and build relationships between their employed doctors, or to fully gain their referrals.

There are a number of reasons why hospitals need to market and communicate more effectively to employed physicians. Merely hiring physicians and specialists does not guarantee that the hospital will inherit their referrals. And financial incentives for physicians can be risky investments, since they do not change physician behavior as much as hospitals would like.

Hospitals are supposed to coordinate patient care without concern for local market domination. Instead, they often buy practices and hire the physicians hoping the hospital will simply gain the physicians’ referral streams automatically. Unfortunately, that is not always the case. Without good marketing and communications aimed at building relationships among those physicians, hospitals often miss critical opportunities.

Missed referral opportunities for physicians and hospitals

Often, the hospital’s employment contract requires you to keep your referrals within the hospital system as long as the system’s skills are sufficient. But what if there are specialists or services in the hospital system that you, as a newly hired physician, are unaware of? You may refer out unnecessarily.

Of course, as a hospital-employed physician, you should know what your healthcare system offers and which specialists within your system offer what services. Also, if you are personally annoyed or put off by the hospital’s policies, services or staff, you might refer out despite what your contract says.

We saw one published case study where a multi-hospital health system found that over 60 percent of its urology referrals were going to competitors. When they researched the problem, they found that the source was a single hospital-employed PCP who disliked the hospital-employed urologist and found him unresponsive to his requests. So the PCP referred those patients out.

If, for example, you have a successful orthopedic practice that competes with the local hospital, and that hospital ends up buying your practice, the hospital will likely consider it a win for them. The hospital will assume it is also getting your established referral network.

Yet without solid communications and effective marketing from the hospital, PCPs and other referrers in the community might stop referring to you altogether. Perhaps they prefer a different hospital that is geographically closer – or one that is perceived in the community as offering higher-quality care.

Perhaps the referring private practitioner simply dislikes the notion of hospitals buying up private practices and hiring the specialists who own them. Perhaps the referring practice would rather refer to other independent practitioners. It’s an “Us against Them” mentality. After all, many solo practitioners perceive that hospitals actually pressure their employed physician specialists into promoting the hospital’s most costly imaging procedures or admissions quotas.

Perceptions about hospital quotas, coercion and the law

The New York Times recently reported that federal regulators are looking into the high numbers of hospital-physician employment contracts. They’re looking for violations of laws that specifically prevent hospitals from rewarding contract physicians for admitting more patients, ordering expensive diagnostics or performing more procedures for higher reimbursements – all of which drive up healthcare costs.

Hospitals have been known to include graduated bonuses for such activities in their physician contracts. And some hospitals have disclosed that they are indeed under federal investigation. If a hospital improperly pressures physicians to admit more patients or perform certain procedures, they are in fact breaking the law.

Conflicts of interest

When a hospital buys up private practices and employs physicians,it must compete against all the other private practices still in the community. This creates a major conflict of interests. That’s because hospital-employed physicians still need referrals both from the hospital and from the other community physicians. And the hospitals must still market to private-practice physicians in the community for their referrals, testing and new patient admits.

Of course, in a perfect world, it would not be that way. In a perfect world, all of the hospitals and all of the private practices and all of the hospital-employed physicians would have exactly the same shared vision and mission.

In a perfect world, good hospital management wouldn’t be about gaining market share or market domination. It would be about the quality of patient care instead of the quantity. It would be about giving patients the most effective care to achieve the best possible outcomes at the lowest possible cost.

Replacing greed with accountability

Fortunately, many hospital systems are taking steps to improve coordination of care and make themselves accountable for care. Whether you or the hospital is officially an ACO, you are likely preparing for a future where reimbursements reflect more than just greed-induced productivity.

Because, while physician acquisition might add productivity, it might also hinder care coordination and increase costs. We should all be prepared for a future where reimbursement is based on quality care, controlling costs, patient satisfaction, disease prevention and results.

To reach that future, we must all do a better job of sharing data and making good connections with patients, communities and each other. In other words, it’s all about more effective marketing and clear communications.

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