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Top Hospitals Use this Recipe to Serve Up New Patient Volume

2013-06-18 Bricken McKenzie, FACHE, FACMPE
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As healthcare consultants, we deal with healthcare organizations on a daily basis.  Every facility we speak with has the same problems: 1) Procedures or inpatient stays are being denied for medical necessity, 2) Reimbursement for services rendered is decreasing, 3) Competition has increased and overall patient volume is down. No healthcare facility will survive in this new environment without an understanding of how to increase patient referral volume and improve the business processes related to Medical Necessity –specifically the processes of clinical documentation and progressive treatment.  This paper will explain how referral-based hospitals and specialty clinics can grow patient volume, and then properly manage the status or treatment of the patient to ensure full reimbursement for services provided.

The best place to begin is to ask how a patient chooses to visit your facility and what influenced that patient’s decision. There are considerable reasons that they show up at your door: consumer advertising, specialty physician relationships with primary care, location, or hospital employment/affiliation. Many hospitals rely heavily on traditional consumer marketing such as ads, billboards, and social media to lure patients. While consumer marketing serves a purpose to build the overall hospital brand, quite often administrators don’t think to invest time and money in what is truly driving patient volume; referring physicians.  The most effective way to tie all of the marketing efforts together is to create a targeted physician outreach team with talented liaisons. This is not a new concept to some of the forward-thinking healthcare organizations across the country (some have employed physician liaisons for years).  Organizations that are most effective use a tiered outreach approach and a new strategic technology called MDreferralPRO. 

Use the Proper Tools

The forward-thinking healthcare organizations that use liaisons to promote their services commonly face the same challenges ­­– a lack of strategic direction and inefficient reporting mechanisms. Currently, the majority of physician liaisons spend approximately 40% of their time determining which physicians to target and how to provide meaningful reports to administration. The Strategic Outreach Solution, MDreferralPRO, eliminates this inefficient use of time. This new technology allows physician liaisons to truly focus their outreach efforts on being face-to-face with those community providers that are currently/ potentially referring patients to the facility they represent. MDreferralPRO houses provider information (referring or not) so that liaisons can focus their efforts on the specialties that are important to their facility. This program is web-based, which allows physician outreach teams to be completely mobile.  It also concentrates referral data to provide appropriate reporting for administrators and physicians. MDreferralPRO utilizes a proprietary strategy which focuses on the importance of referring specialties, trending of referral data by individual provider, and the last time the referring physician was visited by the liaison (and whether that visit was good or bad).  When physician liaison teams use MDreferralPRO, they can operate the tiered outreach approach (discussed below) more effectively by creating a strategy that focuses on the specific needs of both the hospital and specialty clinic (or referral-based entity).

Double the Ingredients

Many hospitals have hired physician liaisons over the past few years to provide communication and education to referring sources within the community. And while effective, this technique does not have optimal results because its focus is on building the hospital by selling its services to local referring providers. Here’s the question: “what physician types refer your healthcare facility the patient cases which generate the highest revenue?” The answer differs from facility to facility, but generally speaking it would be the specialty groups.  Physician outreach programs normally sell the hospital’s services to high revenue-generating specialty physicians. The problem with this approach is that the specialty physician may already be sending all qualifying patients to the hospital for procedures.  This outreach effort does not help drive more patients to the specialist, so patient volume remains stagnant at the hospital.  If 10% of a specialty physician’s patients qualify for a procedure at the hospital and the specialty physician sees 100 patients per week, then 10 patients would go to the hospital for that procedure. If a physician outreach team could use the tiered outreach approach and go out to referring physicians (primary care) in the community, promote the services of this particular specialist, and increase his weekly patient load to 150, then that would lead to a 50% increase in the utilization of the procedure at the hospital. By driving new business to the specialty physician, a hospital not only increases its volume, it also creates a high level of loyalty with the specialty physician. This tiered outreach approach does not take away the need for physician liaisons to stay in constant communication with the specialty physicians in the community; it just presents a new technique that builds additional patient volume for both hospitals and specialty practices.

Serve up the Right Amount

Through the tiered outreach approach and the effective use of MDreferralPRO, a hospital or specialty clinic can increase the amount of new patient volume to their facility. The key, at this point, is to ensure that the healthcare organization capitalizes on the revenue potential of this new patient. The term “medical necessity” is a legal term used by insurance companies to determine whether reimbursement for a particular procedure or patient stay is justifiable. The term does not necessarily mean that the judgment of the physician is incorrect.  A denial, however, does mean that the appropriate criteria (processes) for justifying reimbursement were not met. Reimbursement denials for “medical necessity” are having a profound effect on healthcare organizations of all sizes and continue to be an easy target for audit contractors across the country. The CPT criterion for  “medical necessity” is found in Local Coverage Determination (LCD) documents on the Centers for Medicare and Medicaid Services website ( and the “inpatient status” criterion is defined by third-party companies (Interqual, Milliman, etc.).

“Medical Necessity” in the procedure (CPT) world is largely considered the act of matching an appropriate diagnosis code with a particular procedure code. The small print on the LCD documentation is much more specific about the requirements needed to meet “medical necessity” for a given procedure. Components of “medical necessity” incorporate the need for appropriate documentation of patient diagnosis (not just on the 1500), procedural order (with appropriate signature), and failed attempts at progressive treatment. Documentation that does not support any of the above components can lead to a reimbursement denial for “medical necessity.” Progressive patient treatment has been a recent focus of audit contractors because these contractors understand how difficult it is for a hospital to ensure that a specialist has met all of the criteria for a specific procedure. A very basic example of this would be an orthopedist who schedules a total knee replacement without trying interventional methods first: physical therapy, injections, etc. Specialty groups must be aware of the need for progressive treatment before performing high-level procedures and the negative effects of improperly managing this protocol. It is vital to the sustainability of our healthcare organizations to drive volume through a tiered outreach approach, but volume without effective processes does not positively affect the bottom-line.


Please the Health Inspector

Now that our tiered outreach approach, using MDreferralPRO, has driven the new patient to the specialty physician and that physician has met all of the “medical necessity” criteria to refer the patient to the hospital for an inpatient stay or procedure; what must we do as a hospital? For procedures, the hospital must make certain that signed orders with appropriate documentation of diagnosis be received before a procedure is performed. For inpatient stays, the water gets much muddier. Two years ago we were talking about the need for Case Management/ Utilization Review to understand which patients qualify for inpatient status and which ones go to “observation.” Though this is still a hot topic discussed nationally; the focus has shifted to clinical documentation improvement (CDI) to properly capture the acuity levels of the patients presenting to the hospital. The CDI focus is not only to get physicians to document patient encounters more effectively, it is also to build channels so that attending physicians evaluate the documentation provided by the admitting physician. This shift occurred because hospitals across the country realized that a large number of patients placed in “observation” status presented to the facility in much worse shape than when they were seen by the attending physician hours later. Providing an effective documentation “bridge” for attending physicians allows for more accurate status placement and fewer medical necessity denials.

Expect a Packed House

Using MDreferralPRO to create a tiered outreach approach is necessary for healthcare organizations to drive new patient volume. Though driving patient volume alone worked well in the “cost plus” days of old, today’s healthcare environment requires organizations to understand the “medical necessity” components associated with each stay or procedure in order to receive full reimbursement. The culture of today’s healthcare organizations tends to be one of survival.  We believe the forward-thinking facilities that can mix increased patient volume with effective business processes will thrive in the current environment.