What Is Network Leakage?
A quick primer on a pervasive problem in US Healthcare
The term Network Leakage is notorious in US healthcare because everyone has it and no one has been able fix it. We have heard time and again that “leakage is unavoidable” and “we’ve tried to fix leakage multiple times, it can’t be done.” But what is leakage? Why can’t it be solved? What can be done about it?
Network Leakage refers to the movement of patients between systems of care. Simply, leakage occurs when a patient receives care in one system and then seeks additional or continued care in another. Traditional business language would call this problem customer churn; however, this challenge in healthcare is much more complicated. Allow us to demonstrate with a quick example:
Let’s say that I visit my primary care physician (PCP) and he says that I need to see a cardiologist. My PCP is part of System A and he sends me to Dr. X (a cardiologist), who happens to be part of System B. When I go see Dr. X and receive treatment from her, that’s classified as network leakage for System A.
This leakage example seems very simple on the surface, but is filled with nuance that demonstrates why the problem of Network Leakage is so hard to solve.
Differing perspectives lead to opposing incentives that hurt patients. System A sees my movement between my PCP and Dr. X as leakage; System B sees it as an acquisition. So there is the problem of perspective - leakage is in the eye of the beholder, which makes generating strategies and understanding the issue of leakage difficult at best. The consequence is that neither system has an incentive to share their data with one another, and each is willing to shoot themselves in the foot to maintain the siloed data status quo. As a result, all activities around patient retention/acquisition, self-service scheduling, appointment reminders and the like all focus on a nearsighted symptom of network leakage, without realizing that a holistic approach is necessary to understand the flow of patients. The activities described above are all good approaches, but they need to be coupled with the right perspective - and that has to be a global perspective of patient flow - not solely acquisition or retention.
Limited Data Visibility. Even with data sharing between systems of care via EHRs and Health Information Exchanges (HIE’s), health systems struggle to gain visibility into the longitudinal journey of a patient. Unable to see encounters outside of one’s own health system, there is no way to manage the care of a patient effectively. As a result, my PCP and his administrative leadership can’t even tell how much money they leaked, nor the quality of my subsequent care by sending me to Dr. X; Therefore, visibility of care journeys is likely the single most confounding factor in solving the Network Leakage problem.
Anemic Feedback Loops. Improvement in referral behavior is logically preceded by the receipt of feedback, yet most providers in the US are only receiving feedback on less than half of their referrals. For example, when I go see Dr. X, there’s very little (if anything) in the way of feedback that goes back to my PCP. Therefore, sans feedback, my PCP and System A cannot possibly devise a way to better manage my care and optimize my journey and the revenue that they are missing from my out-of-network visits.
The Messiness of Choice. My PCP, his staff, and even I, myself, have an exceptional amount of choice in the referral process. This is great, but it confounds the leakage problem dramatically. Having choice is good, but without informed, evidence-based decision making, each choice can just as easily result in leakage and a bad outcome as it can in retention and a phenomenal experience.
Referrals are not consistently recorded. My PCP may or may not explicitly record a referral in the Electronic Health Record (EHR), what we call an explicit referral. She will typically document “referred to cardiology,” and that’s the end of it. After which, it is up to a Medical Assistant (MA), the front office staff, or me, the patient (which is terrifying) to find a cardiologist. The inconsistency of referrals being explicitly recorded has important implications.
Doctor (Human) Behavior. Many studies have been conducted that demonstrate that referrals, when explicitly made, are done primarily through familiarity (I know that doctor and I think they do well), regularity (I’ve made a bunch of referrals to this doctor in the past and haven’t had any issues), and chance (well the internet says this doctor is good, and that’s good enough for me).
Rudderless Journeys. When referrals aren’t explicitly managed by the sourcing system (System A and my PCP in this example) the patient’s journey takes on a life of its own and is typically far from optimal (we will talk more about this ad nauseam in other articles).
Sporadic Tracking. If my PCP and System A allow my referral and my cardiology journey to be governed by chance or rote behaviors, there is no good way to track my progress and coordinate the journey. In an increasingly fee-for-value landscape, the quality of the journey and outcomes are at the center of how providers get compensated for their services. If System A cannot track my journey and how I’ve been cared for, they are not just losing money to leakage, they are missing value-based reimbursement too.
As you can see, even a simple example of a referral outside of a health system is filled with nuance and complexity. Unfortunately, care journeys just like this one are repeated hundreds of thousands of times a year as patients move in, around, and through systems of care. This is why statistics like “50% of a health system’s revenue is leaked annually” are a stark reality, and why health systems have struggled to solve the problem - even when it appears that the money is right there for the taking and care orchestration is within arms reach.
At Monocle Insights, we have devised a unique system to curate a holistic perspective with unprecedented visibility. Our product suite and novel data sources bring regional scale with procedure-level precision, executing novel analytics that identify leakage, assess where, who and why out-of-network referrals occurred, as well as recommendations to fix it - down to the provider, diagnosis, and procedural. We are seeing huge advantages in this approach - resulting in 60% recoverable leakage and strategy definition of care gaps to address the remaining 40% of network leakage. Armed with Monocle Insights, the end state for health systems is a low-input, low-effort way to drive revenue straight to their bottom lines, boosting operating margins significantly.
Contact us now to find out how we can help you elevate care quality and provide an influx of revenue onto your bottom line without elaborate integrations, systems, or changes to your organization.
