Referral Quality Over Quantity


How to use data to guide your way to better referrals

By Sarah Baumann

We all know that referrals are critical to run a thriving therapy practice.

However, not all referrals are created equal. A referral who completes their plan of care is worth $1,000 while a referral who is a no show is worth far less. If you’ve fallen into the trap of focusing efforts on increasing the quantity rather than the quality of your referrals, you could be wasting time and resources. Instead, leverage patient data to make more intelligent decisions and boost the efficiency of your referral program.

Why the focus on quality rather than sheer quantity? Because this will pay the biggest dividends in the long run. While increasing your number of patients is a good starting point, if those patients cancel, have an insurance plan you don’t accept, fail to pay their portion of the visit cost, or don’t adhere to the prescribed plan of care, you’re potentially increasing your workload without increasing your revenue.

What’s the best strategy to increase the number of quality referrals to your practice? Read on to learn how to use business intelligence data to increase your revenue from referrals, decrease your referral management workload, and minimize the time you spend managing your business, so you can put time back into your patients.

Bring a SOAP Mindset to Referral Management

When you’re thinking about how to improve the quality of your referrals, think of referral management as a patient who needs a treatment plan developed. Subjectively, you have made the decision that you need to attract new patients to your clinic. Objectively, you have determined that your practice needs to bring in a certain number of new patients per month in order to meet your annual financial goals. Now, you need to assess the number and type of patients you need to attract. Once this is done, develop and follow a plan to bring those patients in the door.

Define Your Perfect Patient

Define what your perfect patient looks like. This can include many factors, from their insurance coverage and ability to pay out-of-pocket expenses to their cancellation rates and willingness to leave a positive review on social media or refer you to friends and family.

Sounds straightforward, right? But who will collect the necessary patient data? And how will you make sense of the data? For most practices the tedious process of collecting data is already being done by their electronic medical record (EMR). So, you have the data, how do you make sense of it all? For a growing number of practices, the answer is automated business intelligence (BI) software and tools. With the right BI tools, you can tap into a wealth of data in your EMR system to help define what the perfect patient looks like. Some questions to consider when determining your perfect patient are:

  1. What are the insurances of each of your most successful referrals from the last six months? What is your average cost per visit? What is your average margin for each of your top insurance payers?
  2. What is your cancel/no-show rate for your initial evaluations? What is your cancel/no-show rate in general? What percentage of your patients schedule visits for their entire plans of care at the end of their initial evaluation?
  3. What percentage of patient balances do you collect up front? Do you have a way to estimate coinsurance or deductibles before treatment based on insurance type?
  4. What is your Net Promoter Score? Do you monitor patient reviews on social media, or through a patient engagement platform? Do you have a way to associate patient outcomes with patient satisfaction?
  5. What percentage of your referrals are from patients or word of mouth?

Once you know what your perfect patient looks like, take an objective look at each of your referral sources and benchmark them against the data described in the preceding list. Consider these two situations:

  • A local physician sends you 30 patients a month, but all the patients they referred have high-deductible plans and don’t pay their balances.
  • You sponsored a water station at a marathon, and all 15 of the referrals from the event came to all of their scheduled appointments and referred your practice to three of their friends and family.

As you can see, when you look at the data it all starts to make sense. Even though the physician sent you more patients, the event you sponsored provided you more quality patients and could generate more revenue for you in the long term. Plus, it was free of the added administrative costs associated with chasing down outstanding patient payments. Without the ability to benchmark and understand what a good referral looks like, it’s likely you could be focusing on the wrong referral source based only on quantity, rather than quality.

Develop a Plan, Engage Your Team, and Use Metrics to Drive Accountability

Once you establish the data needed to identify a quality referral (your ideal patient), the next step is to develop daily, weekly, monthly, and annual benchmarks for members of your team. Create or use an actionable dashboard so you can track your team’s progress toward those benchmarks. Engage your entire team in improving your metrics and help them understand their role in improving finances, patient care, and outcomes. Even better, let your team in on their progress and reward them when a goal is met. This can help ensure everyone will work together and understand their own role in working toward the goal.

For example, the cancel/no-show rate is often considered a “front desk” metric, but reducing cancellations is a true team effort. When it comes to cancellations and no shows:

  • The front desk is responsible for having a welcoming, engaging, and informative attitude. They can help by carefully setting patient expectations about financial policies, explaining the possible treatment plan, and working with the patient to set appointment reminders that are most effective for that patient.
  • The therapist is responsible for working with the patient to establish a plan of care that the patient understands and is committed to follow. They can help by making sure that the patient is engaged in their treatment and fully understands the goals and timeline of that plan of care—the why and how behind the treatment.
  • The billing team is responsible for the patient’s financial experience with your clinic. They can help by making sure they have all necessary payment and insurance data in the event a patient calls to request their balance. This service will go a long way in ensuring your patients remain satisfied at your clinic and complete their plans of care.
  • The owners and administrative team are responsible for ensuring that the culture of your clinic is collaborative and welcoming. Patients want to come to a clinic where employees fully understand and are invested in their roles and understand the impact that they have on patient care.

Using data, having clear goals, and engaging your entire team in meeting those benchmarks can improve patient outcomes and patient reviews, resulting in increased revenue.

Set Goals and Use Benchmarks to Drive Better Referrals

One of the most common mistakes people make when they realize the power of data and employee engagement is to try to do too much at once. Don’t drown yourself in data points—tackle one piece at a time. Whether you use these steps to craft referral goals or general clinic goals, they will help to not overwhelm you and your staff.

  1. Step one: Identify your goals.
  2. Step two: Identify the metrics that are associated with your goals.
  3. Step three: Identify metrics for each role in your business that impacts your goals to create a cohesive workflow. Be reasonable about the number of metrics that each role is tracking and streamline your focus.
  4. Step four: Develop monthly, six-month, and annual key performance indicators to help you track progress toward your goals.
  5. Step five: Document and roll out your key performance indicators, clearly explaining how they will be monitored and tracked and how each role will be measured to ensure their success.
  6. Step six: Regularly review progress toward those goals and be transparent with your team so that they understand their impact.
  7. Step seven: Make the patient the focus and ask yourself how your actions are benefiting them. When you focus on quality referrals and deliver exceptional care, your patients and business should be successful.
  8. Step eight: Celebrate successes, no matter how small. This will keep your team enthusiastic and engaged.
  9. Step nine: Treat failures as learning opportunities. Identify and address the root cause, then move on.

A focus on quality rather than quantity of referrals makes business sense. By doing so, your revenue is increased, your therapists get to work with engaged and enthusiastic patients, and your patients win because their care is delivered by a group of people who are empowered to deliver effective, data-driven care.

Sarah Baumann

Sarah Baumann is the Business Systems Analyst at Clinicient in Portland, Oregon. She can be reached at

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