4 Steps for Building a Successful Patient Referral Program

For healthcare facilities from the largest hospitals to the smallest specialty practices, keeping a steady flow of patients is crucial for sustaining and building the business. To help ensure consistent business, many healthcare facilities are turning to patient referral programs.

How do these programs work? How can you build a new patient referral program from scratch? Are there restrictions on what you can do in a referral program as a healthcare provider?

What Is a Patient Referral Program?

A patient referral program is a way for healthcare providers to leverage the goodwill of their existing patients and turn it into new business for the practice. It uses “word-of-mouth” advertising from satisfied patients to attract new customers and grow the business.

In essence, such programs encourage patients to refer their friends and family to the medical practice.

The specifics of the program may vary from one healthcare facility to the next. For example, state-specific ethics guidelines might discourage certain resources from being used to promote the program.

The Difference between Patient and Physician Referral Programs

A patient referral program is distinct from a doctor or physician referral program. In a doctor referral program healthcare providers recommend patients to another doctor/physician with specific medical expertise in a dedicated field.

For example, a primary care physician might be part of a physician referral program or just have a few specialists in different fields that they know can take care of health issues that might require specific expertise. If they have a patient that needs treatment for a radial fracture, they may provide basic aid and then recommend the patient to an orthopedist for further treatment.

Why Healthcare Practices Are Prioritizing Referrals

There are a number of reasons why many healthcare facilities choose to put time and effort into creating a patient referral program, such as:

1. Because Traditional Advertising Isn’t Providing the Best ROI

While traditional advertising can still work, the cost of TV ads can be prohibitively expensive for a less-than-optimal return on investment (ROI). For example, 30 seconds of airtime on a local TV channel can cost between $5 and $10 per 1,000 views (Source: Creative Humans). Not bad, right? In a local channel with an audience of 100,000 people, that’s still only $500-$1,000 per commercial.

On top of that, however, you have to add the cost of producing the commercial spot and the need to play the commercial repeatedly over the course of several weeks or months to reach the whole of your target audience.

Additionally, TV viewership is on the decline in general. With the rise of streaming services, fewer people in all age groups are watching broadcast television. An article by Array Digital notes that the time spent watching TV has declined by 16% for the US population in general, by 39% amongst the 18-24 demographic, and by 34% among 25-34 year olds. Older Americans in the 50-64 year-old range saw the smallest drop at 9%, while those age 65 and up spend just slightly more time watching TV than before (2%)—the only demographic to see an increase.

With diminishing returns on traditional advertising, alternatives are needed to keep patients coming.

2. Because Consumers Trust Their Peers More Than They Trust Experts

While the figures vary from one study to the next, the general consensus is that consumers trust the recommendations of their peers.

For example, a study by Nielsen stated that: “Eighty-three percent of online respondents in 60 countries say they trust the recommendations of friends and family.” Meanwhile, that same study noted that: “More than six-in-10 global respondents say they completely or somewhat trust TV ads (63%).”

While that’s still more trust than distrust, it’s a major difference! Modern consumers have more information about the services and products available to them than ever before and have learned to start distrusting advertising. However, they know their friends and family aren’t being paid to provide testimonials and wouldn’t recommend a bad doctor to them.

3. Patient Referral Programs Don’t Cost Much

A patient referral program doesn’t have to cost very much to be effective. It can be as simple as printing a few business cards for patients to take home and share with others. Of course, it can be more complicated and involved, too, but it doesn’t have to be.

4 Simple Steps to Create a Sustainable Patient Referral Program

So, how do you create a new patient referral program? While there is always room for customizing the program to fit the needs and resources of the clinic, some of the basic steps for making a sustainable referral program include:

1. Look for Ways to Improve Patient Satisfaction

Obviously, patients who aren’t satisfied with the care they receive aren’t going to recommend the service to others any time soon. So, the first step in any sustainable patient referral program is to look for ways to increase patient satisfaction. This can include things like:

• Streamlining the patient intake process to be more convenient;
• Making patient waiting areas more comfortable for patients;
• Conducting training to improve patient interactions with facility staff;
• Reducing wait times in the practice; and
• Providing high-quality care.

2. Review Your State’s Laws Regarding Provider Ethics

Different states have different rules regarding provider ethics that may be relevant to the creation and maintenance of your practice’s referral program. So, it’s important to check for relevant state and federal guidelines when creating such a program.

For example, one way that businesses in other industries drive referrals is to offer incentives—like a gift card or a discount—in exchange for referrals. However, this is not something that a clinic should do, as it may conflict with ethical practice guidelines. As noted by the American Medical Association (AMA):

“to be ethically appropriate, word-of-mouth referrals must be voluntary on the part of current patients and should reflect honestly on the practice. Physicians must not offer financial incentives or other valuable incentives to current patients in exchange for recruitment of other patients.”

Legal firm Holland & Hart also warns against giving “gifts to referring providers, patients or other sources of business… such gifts may violate federal and state fraud and abuse laws and result in fines—or worse.”

However, state guidelines in your practice area may allow some type of incentives—which can be a powerful tool for getting more referrals.

If you’re in doubt about whether a particular item is allowed in your referral program, try to contact a lawyer specializing in healthcare legal practice or ask your state’s medical ethics board (or equivalent organization) for advice on what you can or cannot do.

3. Create a Means of Tracking Referrals

How will you know which patients were referred to your healthcare facility, and by whom? Creating a means of tracking referrals is a great way to measure the impact of the referral program and knowing which patients to thank for driving business your way.

For example, you could give patients special referral cards to give to their friends and family—just have them print their name on the back of the card and you’ll know who referred the person. Alternatively, you could have a “Referred By: X____________” line on your patient intake form to have new patients self-report who referred them.

4. Make a Document for the Referral Plan with Roles and Responsibilities

Consider how each person in the practice will help with the patient referral program. From office staff who hand patients referral cards to doctors/nurses/aides who can ask patients about if they know anyone else experiencing similar health problems that need help, there needs to be roles and responsibilities for ensuring that the program works.

It can also help to have such a document on hand when reviewing the referral program with any state ethics boards.

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