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WSJ Article on MD Referrals & Leakage: Beware of Premature Conclusions

15472823 - doctor talking to her male senior patient at office

The Wall Street Journal (WSJ) recently published an article entitled The Hidden System That Explains How Your Doctor Makes Referrals. The article discusses aspects of how physician referrals are made and how hospital systems are concerned about potential “leakage” of referrals to competitors.

After reading the article, I suspect many readers would walk away with the impression that hospital systems strong-arm employed physicians into making referral decisions that are against patients’ interests.

My beef with the article is that it guides readers toward premature conclusions. In doing so the authors make implicit assumptions, oversimplify complex issues, and miss opportunities to provide relevant context.

Here are 5 issues that are addressed in the article. I’ve posed these issues as questions and will address how the WSJ article might lead readers toward premature conclusions for each.

1) Are physicians critical of referral pressures from hospital systems?

2) Is price the most important consideration in a referral decision?

3) Do hospital systems have valid clinical interests in being involved with physician referrals?

4) Do hospital systems have valid economic interests in being involved with physician referrals?

5) If there weren’t pressures from hospital systems, would physicians make referrals based on patients’ best interests?

Let’s take these one at a time.

1) Are physicians critical of referral pressures from hospital systems?

The WSJ article quotes five different physicians that are critical of referral pressures from hospital systems. A reader would probably walk away thinking that these physicians represent the broader physician universe.

Not so fast.

From the Kyruus 2018 Referral Trends Report:

  • 84% of respondents indicate that their health system has requirements around referring in-network
  • 79% say they fully or strongly agree that it is important to comply with these health system requirements
  • 77% say it is important to keep patients in-network for care coordination

The roles of physicians are changing. The stereotype of a solo Dr. Marcus Welby is giving way to physicians as team players.

2) Is price the most important consideration in a referral decision?

An extensive portion of the article is devoted to documenting and discussing how excessive hospital prices for various tests and services “can mean higher costs for patients and the employers that insure them…the same service often costs twice as much or more when delivered in a hospital setting.” To the authors’ credit, the article presents unique and enlightening data from the Health Care Cost Institute.

After going through the article, though, a reader might conclude that price should be a primary factor in physician referrals.

While price is one important factor in referral decisions, it’s not the only one. Writing in JAMA, Dr. Nitesh Choudry and colleagues list 18 questions frequently considered by physicians when making referral recommendations. Examples of relevant considerations include physician expertise, physician availability, patient preference, patient insurance, IT system interoperability, and many others.

3) Do hospital systems have valid clinical interests in being involved with physician referrals?

Readers of the WSJ article might reach a premature conclusion that the answer here is “No”.

One of the biggest criticisms of U.S. healthcare has been that patients confront a disjointed, fragmented non-system. As noted above, there are many considerations and trade-offs in a referral decision.

There are many reasons why it could be in patients’ interests to remain in-network, e.g.:

  • Assuring continuity of care
  • Avoiding surprise bills from out-of-network providers
  • Assuring the optimal flow of data among the referring physician, the specialist, and the patient. Are the health IT systems interoperable?
  • Assuring a unified workflow between the referring physician, patient and specialist. For example, is there a collaborative care agreement in place?

The process of physician referrals is complex, nuanced, and evolving. It’s often described as “broken”. An infographic from the Institute for Healthcare Improvement provides useful background and context to understand “What Could Go Wrong”.

Infographic (FULL SIZE): Closing the Loop: Safer Ambulatory Referrals

4) Do hospital systems have valid economic interests in being involved with physician referrals?

Again, a reader might reach a premature conclusion that the right answer is “No”.

That conclusion, however, would not be grounded in reality and is remarkable given that the WSJ is a business publication.

Hospital systems have a fiduciary responsibility to be fiscally solvent. ReferralMD documents that “referral leakage costs American hospital systems over $150B a year“.

What business would want to refer its own customers to competitors, even if you can make a case that the competition is less expensive?

To be fair, the issue raised about excessive hospital pricing is legitimate and concerning — but it’s a distinct issue. It’s also worth noting that there are many initiatives underway to address this issue, for example Medicare’s recent rules creating site neutral payments and consumer access to hospital price information.

5) If there weren’t pressures from hospital systems, would physicians make referrals based on patients’ best interests?

A reader of the WSJ article might conclude that the answer here is “Yes”.

It’s not that simple. The problem here is assuming that what’s in patients bests interests is objectively determinable AND that physicians know the right answers.

The science of medicine is imperfect. There are many things we just don’t know and evidence on the efficacy of existing treatments often is thin.

Physicians are people, too. They have limited knowledge of specialists in the community. They might be basing referrals based on incomplete knowledge. They have personal relationships and friendships with specialists. They might be making a referral simply because they don’t have the time to care for a patient themselves.

The Upshot

The question we should be asking is “How can we best align the interests of patients, physicians and hospital systems in referral decisions?”

The answer sometimes might be to make a referral outside of the hospital system — but let’s not jump to premature conclusions.

 

This work is licensed under a Creative Commons Attribution-Share Alike 3.0 Unported License. Feel free to republish this post with attribution.

3 Comments

  1. epatientdave on January 18, 2019 at 7:40 am

    Hi Vince – long time!! Too long.

    This is a great and informative post. I’ll just add a few spice points …
    ____________

    1. “77% say it is important to keep patients in-network for care coordination”: if I understand correctly, this is due almost entirely to the lack of interoperable data — for instance the data about me at Beth Israel Deaconess (an hour from home) is not readily available to the Dartmouth-Hitchcock hospital located at my exit off the highway. This caused me WEEKS of delay recently.

    And I’m not talking about my detailed oncology reports from 12 years ago – all I was trying to do was schedule a colonoscopy! (DH couldn’t get at the BID referral, and the combination of bureaucracies caused the delays.)

    When someday we have interoperable data (which I hope will be accelerated by adoption of FHIR) it will be interesting to see to what extent that changes. (Note that I’m carefully avoiding asserting any prediction – just pointing to the root cause of the care coordination problem.)
    ____________

    1a. A great example is that when I need a follow-up CT, my docs strongly prefer that I get it within their system, instead of at a cheaper independent place like Shields MRI that has newer, higher powered machines. The reason? Interop. The BID system isn’t able to import the images from Shields.
    ____________

    2. FWIW, I’ve been told repeatedly (perhaps by a dozen docs) that when their practice or their small hospital got sucked up into a big network, they were told in no uncertain terms to stop referring to their favorite partner place.

    (Readers, I did not just say “Vince’s post is wrong.” I just said what I said.)

    An important example in my family history is that after my wife’s bilateral knee replacements a few years ago, we went to a rehab place not in the surgeon’s network, because he’s used them for years, they know his methods and protocols, and they carry it out dependably.
    ____________

    3. Great question at the end: “How can we best align the interests of patients, physicians and hospital systems in referral decisions?” I’ll just point out that to the extent that physicians’ and hospitals’ interests are NOT aligned with patients’ interests, it rings alarm bells for me.

    I know everyone’s fighting for financial survival in this system these days, which leads to all kinds of decisions that might have gone differently if interests had been aligned with what best serves the person whose needs are the source of the industry. Every other incentive is what they call perverse. 🙂 (And I hear docs saying that, too, not just patients.)

    Again: I don’t want the hospital that saved me, nor the hospital near me, to go out of business! I really don’t. I just want to keep the pressure on for everyone in the care industry to ACTUALLY care, and work together to get the job done, not first serve their parochial interests.

    Great to be in touch here … btw, this spring is the tenth anniversary of my Google Health post. We should throw a party. 🙂



    • Vince Kuraitis on January 18, 2019 at 9:52 am

      ePatient Dave – thanks for your thoughtful comments!

      1) You suggest that much (or all) of the problems around care coordination go away once we have interoperable data. Excellent point!

      I’d agree that some of the problems could be minimized, but I think there’s still a lot of room for discussion.

      Let’s make a distinction between “interoperable data” and “interoperable workflow”.

      For the past 20 years we’ve been focusing on interoperable data. IMO the issue of interoperable workflow is just dawning and will turn out to be an even bigger challenge.

      Many thought leader groups have attempted to address the quality issues around care coordination in physician referrals, e.g., the Institute for Healthcare Improvement (Berwick) cited in the post.

      The terminology varies, but the thought leader groups suggest the need for an explicit “collaborative care agreement” among all participants involved in physician referral recommendations. Think of a collaborative care agreement as a written (software coded), fluid, longitudinal understanding about the patient’s Dx and Rx.

      So, even if referral participants can exchange data, will they be able to establish a collaborative and ongoing workflow on a patient’s behalf? TBD. And given EHR vendors and providers proclivity to follow the letter-of-the-law rather than the spirit-of-the-law, I think some skepticism is justified.

      2) You note that you know physicians who have been “told in no uncertain terms to stop referring to their favorite partner place”. You further note that “Readers, I did not just say ‘Vince’s post is wrong.’”

      I worded my blog post carefully, and I also didn’t say that the WSJ story is “wrong”. The thrust of my argument is that the issues around physician referrals are controversial and debatable, and that readers should not reach premature conclusions.

      …and how would you respond to the Kyruus data that 79% of physicians say they fully or strongly agree that it is important to comply with health system referral requirements?

      3) We agree on REFRAMING the issue as “How can we best align the interests of patients, physicians and hospital systems in referral decisions?”



  2. pheski on January 23, 2019 at 7:01 am

    The WSJ article is gated and I have not had the opportunity to go to my local public library to read it there. The Kyruus report is available. I cannot find the question they used to claim that 77% believe it is important to refer in-system for purposes of coordination. The phrasing here would be important in assessing the response. Compare these two questions: (1) “Would care coordination be an important benefit to in-system referrals?” and (2) “Is referral in-system important in order to achieve care coordination?” Care coordination is absolutely important and I would say so in a questionnaire or survey. My personal experience was that I was able to achieve excellent coordiantion with some clinicains outside my system, and some of my patients suffered chaotic processes and a lack of coordiation after referral to some physicians in my system. In other words, sometimes referral outside the system was the best way to achieve coordinated care.

    I think your article expresses much of the complexity of the issue.