Understanding Patient Leakage: Causes, Consequences, and Solutions

Patient leakage is one of the most pressing problems facing medical practices today. In this post, we discover the ways to prevent this issue.

Have you ever wondered why patients leave one healthcare system for another, a phenomenon known as patient leakage? This has been a significant challenge in the healthcare industry for some time now. Do we know why this is happening so often? There are several factors that are playing a part in this — 48% of healthcare executives believe patients leave due to the high level of competition in healthcare. A lack of talent and appropriate services also accounts for 35% and 32% of patient leakage.

Understanding and addressing patient leakage is crucial to help healthcare systems sustain themselves and grow, but also for ensuring patients receive the best possible care. According to the report by ABOUT Healthcare, preventing the losses of patients could potentially increase revenue by 17%. Despite these challenges, some healthcare systems are taking action. Over the past five years, 41% of systems have actively worked to reduce patient losses. 62% of healthcare leaders are actively training their staff on how to retain patients and prevent them from leaving for other providers.

Today, we will look at what patient leakage is, why it's happening so often, what it impacts, and how healthcare organizations can recognize it and find solutions to retain and attract more patients.

What is Patient Leakage?

Preventing patient leakage - Male doctor having a telehealth consultation with a senior patient.

Patient leakage refers to when a patient leaves a healthcare system or provider network to seek care somewhere else. For example, if Richard D., who has a primary care physician at one hospital decides to visit a different health system or hospital for specific services, procedures, or follow-up care, this is known as patient leakage. This event, for any reason, can create major challenges for healthcare organizations. 

There are two main types of patient leakage:

  • Involuntary leakage. When patients are forced to look for care somewhere else due to lack of access, inadequate services, or providers not being in their network.
  • Voluntary leakage. When patients willingly choose other providers for reasons (i.e. quality of care, convenience, amenities, cost, or patient experience.

Patient leakage is such a problem today because healthcare organizations lose out on potential revenue and opportunities to retain patients in their care network. Healthcare providers could be missing out on a staggering $2.5 billion due to this issue. For each dollar spent to reduce the number of patients leaving for other systems, hospitals can gain $31.36, and potentially up to $500 per dollar spent. As value-based payment models grow, keeping patients within a coordinated system is crucial for delivering high-quality, low-cost care.

Causes of Patient Leakage

Patient choices often shape the course of their treatment journey. When these choices lead them outside their primary health network, it leads to patient leakage. But what are the forces that lead patients in this direction? Patients choose to visit healthcare providers outside their network for a variety of reasons:


More patients are making choices based on convenience, like providers located closer to home or work or those with more flexible office hours. Leakage can occur when patients opt for more convenient options outside their network.

Quality and Service

Poor care quality, long wait times, safety concerns, lack of advanced medical technology, or unsatisfactory experiences at one provider may motivate patients to take their care needs somewhere else.

Specialty Care Needs

Many patients steer toward medical practices known for specialty services (i.e. cancer treatment, neurosurgery, or orthopedics). Even if the provider is out-of-network, the value proposition of high-quality specialty care justifies the time and expense.

Patient Preferences and Brand Loyalty

Separated from clinical care, individual preferences, marketing, reputation, and recommendations from family or friends also play a role in determining patient choices and loyalty. Many patients consciously prefer certain healthcare facilities over others.

Payment Options

With patient responsibility accounting for over 50% of every healthcare dollar, patients are in the driver’s seat—and billing and payment preferences matter. In fact, according to Becker’s Hospital Review, 65% of consumers say they would consider switching to a new healthcare provider with a more convenient payment system. Offering patients options of how they receive and pay their bills is an important consideration in overall patient satisfaction.

Referrals to Out-of-Network Providers

Even within wide networks, primary care physicians often refer patients to specialty providers, surgeons, or hospitals that are not part of the same coordinated care system. This accidental leakage disrupts care continuity.

The role of insurance and network limitations also plays a significant role in patient leakage:

  • Insurance Coverage. Patients may choose to look for care outside their primary network if their insurance coverage is not accepted or if they can get better coverage elsewhere.
  • Network Limitations. If a health system's network is limited and doesn't include the necessary services, patients may be forced to pursue care outside the network.

Consequences of Patient Leakage

A female doctor shaking hands with a healthcare finance professional during a meeting.

The impact of patient leakage is multifaceted. This isn't just about patients moving around from Provider A to Provider D— it also has a significant financial impact on healthcare systems and the quality of patient care and satisfaction. 

When patient leakage remains uncontrolled, here is just a glimpse of the impacts it can have on medical practices and health systems:

Revenue and Market Share Declines

Out-leaked patients represent lost opportunities for more revenue from potential patient visits and procedures. High rates of leakage can significantly hurt a health system's market share over time.

Underutilization of Services

When patient volume is lost at a high percentage, it can result in underutilization of existing healthcare infrastructure, equipment, and staff.

Compromised Care Coordination

As patients are separated across different competing health systems, patients' healthcare data, treatment plans, and care teams become fragmented. This lack of care coordination raises concerns regarding patient safety, treatment errors, and substandard health outcomes.

Patient Displeasure

Patients who voluntarily choose to go to another provider for some or all of their medical care needs are ultimately “voting with their feet”. This shows that the original provider failed to meet patient expectations and satisfy their care preferences.

Distorted Population Health Data

Patient data and health trends across a specified population are necessary for effective population health management initiatives. However, inadequate data due to leakage makes it challenging for health systems to coordinate care for entire populations.

Identifying Patient Leakage  

Now that you understand some of the consequences of patient leakage, you must be able to identify when and why patient leakage is occurring within your health system. Recognizing patient leakage is the first step toward limiting its impacts and improving patient retention. Effectively identifying this issue will require using data to pinpoint problem areas.

Here are some ways to identify patient leakage:

Claims Data

The only true way to know where leakage is occurring is by looking beyond your health system's encounter data and tapping into claims data. With this kind of internal and external data, your health teams can clearly see where patients are out-migrating, and to which providers and systems.

Patient Journey

Leakage can occur at any point in a patient's journey—from referral to intake to billing and beyond. One important juncture for addressing leakage is during the patient transfer process—for example, when a patient needs specialty care.

Data Analytics

Data analytics can reveal current leaks and hotspots. One effective way to discover where your healthcare organization is losing revenue from lost referrals is by evaluating current data in relation to previous performances. Understanding the relationship between the past and present can reveal changes in patient referral patterns and whether or not current strategies need to be adjusted.

Referral Patterns

A healthcare organization can use data to see where patients are going for care in contrast to their own expectations based on referrals and scheduled appointments. Using this process, patient leakage can be identified, even down to the specific treatments and procedures and the providers that are providing the care.

Reducing patient leakage has become a priority for 94% of health systems. However, 90% of these systems do not have confidence in their ability to track patient leakage. Data analytics play a major role in identifying patient leakage. With analytics, providers can use certain techniques to identify patients who are likely to seek out a different provider for their treatment. Key performance indicators (such as referral conversion rates, appointment show rates, and follow-up rates) can also help track and manage patient leakage.

Solutions to Address Patient Leakage

Group of doctors in a hospital attending to different patients, helping to prevent patient leakage.

Healthcare organizations have several important strategies to retain and recapture patients:

  • Expand provider networks. Develop more comprehensive networks or partnerships so patient needs and preferences can be better accommodated. Get rid of unnecessary out-of-network referrals.
  • Improve access. Reduce wait times, expand hours, provide telehealth options, and implement transparent scheduling systems to attract patient volume.
  • Focus on patient experience. Prioritize communication, service, convenience, amenities, and satisfaction to meet rising patient expectations.
  • Offer competitive pricing. Improve cost transparency and provide affordable care options through lower costs, package pricing, and payment plan flexibility.
  • Enhance care coordination. Smoothly transition patients and information between different providers/settings to prevent fragmented care.
  • Market services. Promote centers of excellence, technology assets, outcomes data, and specialty care to retain existing patients and win new ones.
  • Acquire physician practices. Strategically acquire well-regarded physician groups, especially in competitive specialties, to keep loyal patient bases in-network.
  • Build partnerships. Work closely with payers and local providers to coordinate community-based population health.

Future Trends and Considerations

Looking toward the future, patient leakage will continue evolving alongside industry changes such as:

  • Telehealth adoption. As telehealth options expand, health systems must accommodate patient demands for virtual care access and convenience to capture volume.
  • Retail healthcare. Retail clinics and urgent care centers continue disrupting care delivery with easy access. Health systems must compete on convenience.
  • Employment shifts. As clinicians move between competing systems, patient loyalty often follows suit. Maintaining strong alignment with physicians will remain crucial.
  • Patient trends: Patients will likely continue exercising choice. Factors like price transparency, amenities, branding, and payment technology will differentiate competing options.

Addressing Patient Leakage with BillFlash

Patient leakage is one of the most pressing problems facing medical practices today with major cost and care delivery implications. While some degree of leakage may be unavoidable, there are strategies that can be used to identify at-risk patients and services and strengthen your position in a competitive healthcare industry. 

As patients have more choices than ever, practices must ensure they provide the absolute best patient financial experience possible. BillFlash offers flexible payment plans, convenient payment options, and digital and mailed statements to simplify patients’ financial experience. Now more than ever, the healthcare financial experience is a critical part of the overall patient experience. By optimizing both, your practice can attract and retain patients for the long term. Schedule a demo today!

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