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3 Strategies That Can Make or Break a Hospital's Physician Referral Efforts

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May 15, 2012

Written by Sabrina Rodak
Beckers Hospital Review - Business & Legal Issues For Health System Leadership

Physician referrals are a key component of hospitals' and health systems' patient volume. Healthcare organizations need to form relationships with physicians to create a strong and consistent referral pattern. Hospitals and health systems should include building a physician referral base in its strategic plan as a means to achieve high quality and gain revenue. Daniel Weinbach, executive vice president of integrated marketing firm The Weinbach Group, shares three strategies hospitals and health systems should use to succeed in attracting physician referrals.

1. Focus marketing efforts more heavily on physicians.
While greater transparency in healthcare has enabled patients to become more involved in choosing their healthcare provider, the majority of patients still choose a hospital based on their physician's referral. Therefore, hospitals should spend a greater percentage of marketing resources on attracting physicians. Currently, however, many hospitals are instead focusing on marketing to consumers. "Hospitals' budgets reflect a disproportionate emphasis on consumer-directed tactics," Mr. Weinbach says. "Reallocate your hospital's marketing resources to more significantly address physician outreach."

Current marketing environment is focused on consumers
Hospitals' current consumer-focused marketing campaigns are due in part to the increased competition and a "me too" approach to advertising, according to Mr. Weinbach. For example, many hospitals create billboards advertising their emergency department wait times or other features. Once one billboard goes up, competing hospitals often feel compelled to follow suit. This pattern of copying other hospitals' advertisements, however, reduces the effectiveness of the tactic. "So many hospitals are doing the same thing, so it is very difficult for consumers to differentiate one of these hospital's wait-time billboards from the next. It becomes invisible and useless as a mechanism for attracting patients," Mr. Weinbach says.

In addition to reducing the effectiveness of advertisements, hospitals one-upping their competitors in consumer-directed marketing can "leave the hospitals depleting their financial resources," he says. Marketing primarily to physicians will thus be more effective in targeting those who choose a hospital and will yield a greater return on investment. "Referring physicians can send ten, fifteen, twenty patients [over a year]. That's far more valuable than a single patient who uses the hospital's resources once and maybe never again for ten, fifteen years," Mr. Weinbach says.

Physician-directed marketing is a strategic issue
Deciding to refocus marketing resources on physicians requires a shift in the hospital's strategy; it requires hospitals to recognize the value of referring physicians and the importance of building a relationship with them. The tactics the specific ways the hospital will reach out to physicians, such as face-to-face meetings or the use of collateral materials are less important than adopting and understanding the physician-directed strategy, according to Mr. Weinbach. "It's less about tactics and more about the strategic decision to invest in physician outreach with the kind of intensity that they have previously or more recently dedicated to their consumer-facing marketing," he says. "Oftentimes hospital marketers get caught up in the tactical part of the equation instead of thinking at the strategic level. Every hospital has a list of tactics they like best, and every ad agency has tactics it likes best. That's the easy part. The hard part is the institutional shift to say we have to refocus our energies on physicians on the source of business."

2. Address the conflict between employed and independent physicians.
Healthcare reform's drive towards coordination of care as well as reduced reimbursement has driven an increase in physician-hospital alignment, including physician employment by hospitals. Hospitals that employ physicians and are seeking referrals from independent physicians must acknowledge and address the inherent conflict between the two groups, according to Mr. Weinbach. "Hospitals have to reconcile the fact that the physicians who don't work for them perceive these [employed] physicians as potential competitors," he says.

Communicate a stance on referrals to independent physicians
Hospitals should develop a policy towards accepting referrals from employed and independent physicians and making outbound referrals to the same physicians. They should then communicate this policy in a clear and consistent manner. For example, Mr. Weinbach says a hospital could adopt a policy that it will try to balance outbound referrals to employed and independent physicians. Or, the hospital could designate the employed physicians as the primary referral drivers and independent physicians as secondary. In contrast, a hospital may decide to work solely with its employed physicians. The Cleveland Clinic, for instance, has an employed physician model, according to Mr. Weinbach. "While many physicians refer their patients to Cleveland Clinic, you'll rarely find the health system making outbound referrals to community doctors. When inquiries come in for services, they direct those to their own doctors. It's a strategic decision that certainly hasn't hurt their referral relationships," he says.

3. Recognize what physicians want most.
Hospitals' websites typically prominently feature their awards and their performance compared to other providers. When marketing to physicians, however, hospitals should focus more on ways the hospital will meet the physicians' needs and less on the fact that the hospital was ranked number one for performance in a certain specialty. The hospital can still mention its ranking, but should do so in a way that addresses the physician's needs. For example, Mr. Weinbach says instead of telling physicians that the hospital has the "best" or "newest" technology, it should tell physicians that it has new technology and will make that technology easily accessible to the physician and his or her patients.

Operational issues affect physicians' referral patterns
Physicians referring patients are also concerned about operations at the hospital how quickly the hospital schedules patients, how accurate and consumer-friendly its billing service is and how fast the hospital can send the physician test results. These operational issues are what may persuade a physician to refer to one hospital over another. "Physicians want to know where to park, how the nursing staff is going to take care of their patients, how many hospitalists are on staff, how well [they] will be kept in the loop," Mr. Weinbach says. "The practical issues that affect the daily ease of being a physician for one hospital or another are the things that are important and often overlooked when it comes to referring-physician relationships." Focusing on the physician experience in addition to the patient experience could thus improve a hospital's relationship with local physicians and boost referrals.