The Benefits of Diversifying a Hospice’s Referral Mix

As the health care system changes, hospices may want to focus on diversifying their mix of referral sources.

A range of factors are transforming the environment in which home-based care providers operate, including hospices. Among them are value-based payment models, the workforce shortages, regulatory scrutiny and reimbursement that isn’t keeping pace with costs, according to a new research report from Transcend Strategy Group.

Other emerging market forces include the entry of large payer companies into the space, demographic tailwinds and a greater focus on health equity.


In this era, relying on one primary referral source like hospitals or skilled nursing facilities (SNFs) is “too risky” for hospices, Transcend President and CEO Stephanie Johnston indicated.

“We saw this amplified during COVID organizations that were heavily referral or heavily dependent on one type of referral. Think about it like an investment portfolio,” Johnston told Hospice News. “You wouldn’t go all in on one investment asset; you’d be thinking about managing risk across multiple. And that’s exactly what hospice and home-based care providers need to do — think about a referral portfolio that they’re managing. That should include relationships with physicians, hospitals and SNFs.”

These strategies can significantly boost referral volume and help families access those services sooner, Johnston said.


Nationally, most hospice referrals still come from hospitals, the report indicated.

Source: Transcend Strategy Group

By diversifying to include a broader contingent of referral sources, hospices can better navigate the gradual transition towards value-based care, as well as weather reimbursement changes, according to the Transcend research.

When providers aggressively market to referral partners in one particular setting, they can encounter fierce competition. Some referral organizations may also have financial incentives that are not aligned with early hospice referrals or engagement with a particular provider, such as a hospice, the report indicated.

Hospices can also benefit from thinking about patients and families as referral sources, and stepping up their marketing to consumers, Johnston said.

“There’s the capability for patients and families to directly refer themselves for hospice care and get care earlier. In our work with hospice organizations all over the country, we’ve seen that those yield significant volumes of referrals,” she said. “We’ve got organizations for whom family and self-referrals comprise upwards of 60% of their referral mix.”

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