Take a Critical Look at Your Referral Relationships

January 10, 2012

Unhealthy referral relationships can drag on in radiology, but there are often valid reasons to dissolve the partnership.

Like many radiology groups, we are constantly exploring new opportunities for partners. That promotes good growth and health. As they say, if you are not moving forward you are moving backward.

But one of the big mistakes I’ve seen is not being critical of the business you have. Just because you start a relationship doesn’t mean you should stay in it forever. Sometimes it is not what you expect it to be. Sometimes this becomes an opportunity cost (i.e. precludes you from pursuing other business).

Unhealthy relationships can drag on for long periods, especially in referral based specialties, like radiology. Often radiology groups worry about alienating referring physicians and making a bad name for themselves. Those may be valid concerns and must be considered. But they should not trump valid reasons to dissolve the relationship.

If you are wondering why you took on a particular partner, what things might you consider?

First, how much administrative time does the relationship take? Some referring groups expect you to carry the load for them, doing the technical side and interpretation side work. That may be very expensive to you personally, or your practice manager. How demanding are they? Some groups and individuals are very labor intensive and that may detract from your ability to pursue other work or to do a good and prompt job with all your work. Are they asking you to be their radiation safety or radiation medical officer? It may be that you need to ask for additional compensation for that job.

Are they important referring physicians in other parts of your business? Do you have personal or other professional relationships with them? Do they serve on local medical boards or are they significant leaders in your community? That may make dissolving the relationship more delicate. You don’t want to be uncomfortable with your future interactions, and you don’t want to be spoken badly of.

If you do sever the relationship, do it peaceably. Give them advance notice, and support for a reasonable tie. Be civil and provide a business explanation. Do not speak poorly of them, no matter what you believe. Not only might that injure your relations with them in other settings, you may want to rekindle the relationship later. Moreover, everyone talks in medicine and it is a small community. Given that we are a referral based practice, your long term relations are more important than short term gains.

Are they paying promptly? What is the payer mix like? We have had partners who ask for readings and agree to terms but delay payment for months or longer. Sometimes they have large under-insured populations or a poor payer mix. That does not mean you don’t want to work for them, but you may need to be careful about how many relationships of that type you have, or your cash flow can suffer and that may impact your ability to other work and to retain employees.

Does your reading for them help you or your partners with additional referrals? Many groups ask that you read things like in-house plain films or ultrasound and promise cross-sectional imaging or procedural referrals to you. Do an audit. Did they really increase referrals? If so, there may be more at risk than you realize.

How much do you enjoy the work? Is it specialty work? If it is stimulating, you may be willing to tolerate some other less desirable aspects to keep it. Specialty work may offer the dual benefits of a better per exam reimbursement and greater professional satisfaction.

Think about all the factors carefully before making a decision. Importantly, once you look critically, see if anything is correctable. It may be that a few tweaks are the answer rather than canceling a contract.