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Patient referrals can be lucrative for hospitals

March 17, 2012

Hospitals for years have employed physician liaisons to drum up patient referrals by visiting doctors’ offices and persuading them to use their services over competing facilities.

But as the health care industry continues its rapid change, the role of liaisons is becoming even more integral to hospitals. Experts say that’s particularly evident in Indianapolis, where Community Health Network, St. Francis Medical Group, Indiana University Health and St. Vincent Health—a lot of networks for any size city—compete fiercely for patients.

As the networks expand outside the Indianapolis area through acquisitions of smaller hospitals, physician liaisons are hustling to be first to call on new stables of doctors and sway them to refer patients.

Referrals for such services as surgeries and imaging, which smaller hospitals typically lack resources to perform, can be lucrative for the parent hospitals.

“It enables them to subsidize the services that lose money,” said Ed Abel, a hospital accountant at Indianapolis-based Blue & Co. LLC. “Surgeries are one of those services that they generally make money on as opposed to lose money.”

IU Health and St. Vincent, the largest of the four networks, each have seven physician liaisons.

IU Health has 19 locations, including three in Indianapolis, while St. Vincent has 14. Together, their footprint spans the state and includes such communities as Goshen, Hartford City, Lafayette and Kokomo in the northern half, and Bedford, North Vernon, Paoli and Salem in the southern portion.

St. Francis typically employs two liaisons who stay within the metropolitan area visiting hospitals in Indianapolis, Mooresville and Plainfield. Still, St. Francis boasts 60 primary care doctors.

Physician liaisons historically made “sales calls” to doctors outside their networks in the hope of luring business to their hospitals. But as the acquisition binges consolidate physician practices, liaisons increasingly call on physicians recently brought into the networks.

The aim is to brief the docs on services a large hospital chain can provide while continually following up to gauge satisfaction, said Kyle DeFur, president of St. Vincent Indianapolis.

“You always want to grow your market share,” he said, “but you want to make sure they’re happy with your services, as well.”

Federal law prohibits hospitals from paying doctors to admit patients, though hospitals’ paying salespeople to influence doctors can produce similar results, experts say.

Physician liaisons target specialists who bring in patients for services with high profit margins, including orthopedics, cardiac care and cancer care. But the sales calls also extend to internists and primary care doctors.

One of the drivers of physician liaisons is that many family doctors no longer visit their patients in the hospital, because most hospitals have full-time physicians, called hospitalists, who care for patients. As a result, hospitals have fewer opportunities to interact with doctors to inform them about their specialty services.

Jennifer Baron spent three years in the field for IU Health before becoming its director of physician liaisons. A big part of the liaison’s job is in fact educating doctors about services as hospitalists have become more prevalent, she said.

“These programs do have a sales aspect to them; that’s been a big piece of what we do,” Baron said. “But another big piece is the feedback we get. It’s been invaluable to improve our services.”

IU Health and St. Vincent liaisons might connect with hundreds of physicians within their systems alone. Add out-of-network doctors to the mix and they can spend most of their time on the phone or on the road making sales calls.

Dr. Isaac J. Myers, president of St. Francis Medical Group, likened liaisons to recruiters.

“Having knowledge of the medical field is important, and the customer service side is huge,” he said. “To some degree, you’re a mentor for that doc.”

A trend emerging among hospitals nationwide is hiring former drug and medical-device sales reps to visit doctors’ offices. Major cutbacks at pharmaceutical firms are helping fuel their hiring.

Baron said IU Health has several liaisons with pharmaceutical backgrounds on staff. Though she has no opinion on whether they’re better suited for the job than anyone else, she acknowledged that their experience with physicians is a plus.

Simply employing a physician liaison should be foremost in the plans of hospital networks, said St. Francis’ Myers.

“Not having one is definitely a gap in your system,” he said.•

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