Use The Data


Market to Referral Sources with the Best ROI.

By Michael Connors, PT, DPT, PhD

We all utilize similar metrics when tracking marketing success such as number of referrals from a referring provider. While this is a good way to track the overall number of referrals from a specific referral source, we can also examine quality versus quantity. How often do you analyze the payer mix or revenue generated from a specific referral source? If you are only counting numbers of referrals from a specific provider, you may be missing an opportunity to better manage your business. You need to manage your referrals the same way you manage your expenses. When you do, you will see the true return on investment (ROI) from each of your referral sources and be in a position to prioritize your marketing efforts to best maximize your ROI for referrals.

So, how to begin? First, identify your top 10 referral sources. This should be an easy exercise as this is driven by total number of referrals over a specified period of time. I suggest a time period of at least a month, but a quarter is even better to examine larger data points over time.

Many of our electronic medical record (EMR) platforms provide a mechanism for identifying the top insurances and revenue generated from a specific referral source for a specified period of time. You need to find that mechanism in order to analyze the payer mix (insurance types) you receive from a specific referral source and the subsequent revenue generated from those referrals. From this data, you can easily discern those referral sources that result in a higher revenue per episode and those that result in a lower payment per episode. Using this data, you can efficiently and effectively manage your marketing activity to best result in an optimum ROI based off your marketing effort.


When you analyze this data, you should take into account a few different points of view. First, you should not bite the hand that feeds you. If you have a referral source that feeds you well and occasionally sends you a referral that does not help to drive your bottom line, I would recommend taking those referrals to help meet the needs of that referral source. Second, if you have a referral source that sends you half of your referrals that exceed your cost per visit in terms of reimbursement and half that fall below that amount, you have a great opportunity to discuss value and appropriateness of referrals based on value with your referral source. Lastly, if you have a referral source that only makes referrals that fall below your average cost per visit, then you need to make a difficult decision. Do I continue to see these patients, or do I educate this referral source that these specific referrals do not help to keep my doors open? explaining that, in fact, these specific referrals are making it difficult for me to do business.

These are difficult but important discussions to have with referral sources. You should not be seeing a number of referrals in your practice that don’t at least cover your expenses. If you want to stay solvent, you should only be seeing patients in your practice whose payments will add value to your bottom line and cover your expenses.

Mike Connors, PT, DPT, PhD, is an editorial board member and regional director for Greater Therapy Centers in Dallas/Fort Worth, Texas. He can be reached at

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