Physician referrals in a competitive environment. An estimate of the economic impact of a referral.

Beyond offering optimum care for individual patients, physician referrals have a cumulative economic impact on many components of the broader medical care system. This article offers an approximation of the magnitude of that impact. By retrospectively reviewing financial records associated with 225 referrals from fee-for-service, rural family practice sites to university-based specialist colleagues, we found that the average referral generated $2944 in combined hospital charges and professional fees within a six-month period after referral. Almost half (110/225, or 49%) of those referrals resulted in a hospital admission and 72% of all revenue associated with referral accrued to the hospital. A second and more detailed study of 97 referrals showed that only 18% of total revenue resulting from referrals accrued to the physician to which the patient was initially referred. We argue that control over volume and destination of referrals, historically the referring physician's prerogative, is susceptible to change in our rapidly restructuring medical care system. In the future, no economic entity that benefits from physician referrals should take for granted those referrals or their impact.