SM: The Surprising Secret Behind Doctor...

It's early Tuesday morning and Ashleigh McKenzie is behind the wheel of her Toyota Sequoia, iPhone in hand, squinting as she navigates the rural back roads of southwestern Alabama. The petite, energetic blonde has a full day of doctor visits ahead -- and the first one, she says, is "kind of out in the boonies." When she finally locates the modest one-story building (tucked off the main road, a few long blocks from both the Baptist church and the tanning salon), McKenzie catches a lucky break: The waiting room's almost empty. So after greeting the front-desk staff with a cheery "Hey, y'all!" and inquiring whether the doctor has a few minutes, she's ushered straight to a sunny private office.

Inside the May Issue

• Mutual Funds That Are Too Big to Succeed
• 10 Things Seafood Restaurants Won't Tell You
• Safe at Home

The appointment starts with a little get-to-know-you chitchat, during which McKenzie learns that this internal medicine doctor, who started her practice a few months earlier, is already busy with a growing roster of patients. In the sports-crazy South, the newly minted M.D. says she's already seen a few teenage concussions. And of course, U.S. demographics being what they are, she's got a steady influx of aging patients complaining of everything from chest pains to backaches to scary-looking skin growths. In short, plenty of folks who might need to be referred to a specialist.

The Referral Road Map

With health care spending in the U.S. dipping after a 15-year rise, doctors and medical facilities are competing fiercely for patients. Take a look at what's at stake when your physician hands you a referral slip.

All good news for McKenzie -- because even though she is nursing a lingering cold, that's not what brings the 32-year-old University of Alabama grad, stylishly turned out in a black dress and triple strand of pearls, to the small town of Bay Minette (population: 8,500). She's making the trek as a principal of AdvisorsMD, one of a small but growing number of health care consultancies around the country that promise to help specialist physicians reel in more referrals by marketing their services to fellow doctors.

In this business, it's all about pitching one doctor to another -- often without one having seen the other in action, or face-to-face. On this morning, McKenzie is promoting two clients: a 20-doctor orthopedic group trying to fend off a nearby competitor and a solo urogynecologist who handles pelvic and bladder issues. But she knows she has only a few minutes to get through her pitch, a spiel that touches on a host of body parts, from arthritic hands and hips ("We've got some top surgeons") to leaky bladders ("Do you get many older patients complaining of incontinence?"). Not an expert on medicine herself, McKenzie has brought along some show-and-tell, including a glossy flier that looks like a yearbook page for the lab-coat set, complete with 20 smiling head shots of doctors posing with diplomas or spinal vertebrae models.

The internist, with patients waiting outside, nods absently. There is no discussion about the physicians' credentials or experience. (McKenzie later says she has met this doctor before and that clinical quality of AdvisorsMD's clients is assumed.) She doesn't describe the nonsurgical treatments the bladder guy offers, nor how the orthopedists handle pain management. But wait times are a different matter; McKenzie excitedly describes a referral hotline that guarantees appointments within 24 hours. A business card, with an X-ray of a skeletal hand holding a phone, completes the pitch. "This is good for the girls at the front desk to keep handy," she says.

Most patients assume that if they've got an ailment their family doctor can't fix, they'll be referred to a specialist who's, well, special for reasons they expect: They are board-certified, are skilled in the latest techniques and boast an impressive track record of healing. Most also presume that their own doctor has pretty thoroughly vetted the "ologist" professionally, if not personally -- after all, their health and well-being are at stake. So it may come as a surprise that the nattily dressed guy or gal sitting two chairs down in the waiting room, the one who brought that jumbo tin of caramel popcorn for the front-desk staff, may play a role in determining the next surgeon they see.

Meet and Treat

Enlarge Image

Close Photograph by Gregg Segal for SmartMoney

Physician liaison Mary Baker arranged a sit-down for specialist clients Corey Gould (center left) and Robert Sklar (right) with pain doctor Frank King (center right).

With specialists' operating margins having fallen in the past decade and health care reforms putting increasing pressure on their bottom line, more are turning to this burgeoning group of marketing pros to open new-patient pipelines. For anywhere from $3,000 to $10,000 a month, these so-called referral-development consultants will provide marketing plans and dispatch a "physician liaison" to pound the pavement and praise the doctors' prowess. The pitches can focus as much on waiting-room decor as on clinical credentials, but in the end, marketers say, they're sparing doctors the roadside-billboard approach to bringing in patients, and reshaping a long-ignored, but important component of doctoring. "I tell doctors how to sell their business without looking needy, cheesy, greedy or sleazy," says Stewart Gandolf, founding partner of Healthcare Success Strategies, a Southern California medical marketing firm, which says it helped double referrals for one Midwest ophthalmologist in a six-month period.

But while no one can fault a doctor for trying to drum up business in tough times, critics say that medicine and marketing can make for strange bedfellows. To be sure, accepting payment for a referral is illegal and patient advocates say that no doctor will intentionally make a bad referral. Physicians who accept marketing pitches insist they're not unduly influenced. But even proponents of the process say it's easy to see how carefully crafted messaging -- the better-looking brochure, the faster-talking liaison -- could subtly sway doctors. Or how a steady stream of thank-you gifts might keep a specialist top-of-mind. (Even years later, the Mobile, Ala., dental community still raves about one oral surgeon's gift basket: ribs and bottles of Jack Daniels.) "This isn't supposed to be something where referrals are facilitated by slickness," says Lawrence Nelson, a bioethicist at California's Santa Clara University. "That's kind of shallow."

Especially, experts say, in an age when care options are proliferating at a dizzying rate. Got nagging back pain? Choices include not only orthopedists, chiropractors and osteopaths, but also neurologists, rheumatologists and physiatrists. (And that's not counting controversial laser-spine-surgery centers.) Indeed, the number of specialist (and subspecialist) categories has nearly doubled in the past decade and a half, making it all the more complicated for patients to be shipped off to the right office. But even for simple referrals, critics complain that patients -- who get nearly 70 percent of specialist referrals from their primary care doctors -- have no idea that this world of white-coat wooing exists. The American Medical Association's Code of Medical Ethics requires doctors to provide patients with "relevant information" about potential procedures, but has no guidelines on what to tell them about the specialist to whom they're being sent. "It goes against the basic trust that is the centerpiece of the physician patient relationship," says Peter Clark, director of the Institute of Catholic Bioethics at Philadelphia's St. Joseph's University.

Most people, of course, rarely give the source of a medical referral any thought. It's just a name scribbled on a pad -- until something goes wrong. Curtis Brown, a 56-year-old New Yorker, remembers his general practitioner choosing from a list of insurance-approved names when he started losing a lot of weight from an apparent stomach problem. The specialist, he says, put him through nine months of invasive tests before telling him to just "eat more." Two years, two more referrals and four pants sizes later (he dropped more than 35 pounds), Brown finally got a diagnosis: celiac disease.

According to most doctors, in the past, referrals were handled through a fairly simple professional network, with specialists meeting internists and family doctors at hospitals, conferences and, yes, occasionally in the golf clubhouse. It wasn't a perfect pipeline -- critics say too many referrals could be based on personal relationships. Still, Dr. Bernard Lown, a now-retired Nobel Prize winning cardiologist who practiced for more than five decades in the Boston area, says the emphasis was usually on someone's medical bona fides -- where they trained, what they published and what they've accomplished as a healer. The bottom line, he says: "They looked for patient outcomes."

Today, a lot of that pipeline has evaporated. Many educational events where doctors used to mingle have moved online. Doctors struggling with shrinking reimbursements and rising costs say they have no time for recreational bonding. And the world of big-box medicine is making it tougher for independent doctors to develop referral-worthy relationships. Not only are health systems and hospitals buying up more medical practices -- and directing their doctor employees to keep all their referral business in-house -- but they're also increasingly shutting many doctors out of the hospital altogether and using their own on-site physicians, called hospitalists. These developments are troubling to specialists because, according to one national survey, four in 10 medical-office managers flagged referrals from other physicians as the most effective way to attract new patients.

It's numbers like those that got the attention of the Neck & Back Medical Center, a doctors group in Laguna Hills, Calif. With business down 40 percent in four years, the group decided to wade into the marketing waters by hiring a local outfit, The Referral Specialists. On a recent rainy Friday, two of the partners are cooling their heels in a treatment room at a nearby pain doctor, chaperoned by their physician liaison. "I've been wanting to do this for years," says Dr. Corey Gould, whose partner arrived still wearing his dark-blue scrubs. The two have been promised a chance to liaise with the pain guy over a lunch, but are forced to idle for nearly an hour in a windowless room with a view of the medical-waste bin. Lunch consists of sandwiches and mini tarts eaten off a nearby exam table.

Ultimately, the face time with the pain doctor lasts less than 20 minutes. Medical procedures are briefly discussed, including the merits of induced microfractures. But the conversation quickly turns to business -- which insurance they take, what's happening with a competitor down the road. When the pain doctor queries Gould and his partner about their marketing firm, the rep perks up. On her way out, she catches up with him, eager to schmooze with a potential new client. "I'm sure people tell you that you look like Robert Downey Jr.," she says.

If doctors are just getting in on the referral game, hospitals have been at it for some time -- and on a larger scale. Whereas patients see a hospital only as a place for serious tests and procedures, administrators see a hospital also as a collection of business areas (radiology, ORs, cancer centers) with specific revenue targets -- goals most readily reached when providers send along more patients. When hospitals buy physician practices and become their bosses, federal law prevents them from tying doctors' compensation to in-house referrals. But they are allowed to incentivize them by offering bonuses based on the overall performance of the hospital. "Go into a hospital board room, and 99 percent of the time they're talking about referrals and physician relations," says Timothy Crowley, a former managing director at Leerink Swann, a health care investment bank.

Indeed, at a recent Hospital and Physician Relations Summit in Scottsdale, Ariz., hospital administrators and doctors gathered for three days to collectively fret about everything from "physician alignment" to "referral leakage." In one session, a Pennsylvania hospital official identifies one type of leak -- proactive patients doing their own doctor research -- as a growing challenge. Not that patients can't be corralled. Many hospitals now employ staffers called "navigators," who help recovering patients with paperwork and follow-up appointments. Part of their job, though, is insuring that the patients' next specialist has the same hospital logo on his or her lab coat.

For advocates, the problem with all this is just how little consumers are aware of the invisible hand of medical marketing and how it might affect their care. "I never think you should make a referral without telling [the patient] why you're making it," says William Andereck, medical director of the California Pacific Medical Center's program in medicine and human values, who lectures widely on ethical and economic issues in health care. In general, though, most doctors say marketing campaigns won't affect care because they're always going to vet referrals. When he's not selling his own practice, and he's the one listening to the pitch, Gould is often familiar with the names marketers are throwing out, he says; if he's not, he researches them. Would he tell patients the source of a referral? "I have never been asked that," he says. "If they asked, I'd tell them how I met them."

Advocates say patients now need to be more vigilant about how they're getting shipped around. Besides querying the doctor who's giving the name, they can use websites (like certificationmatters.org and castleconnolly.com) that verify and rate specialists. For those who want more details, the federal government will soon launch a major new resource: comprehensive physician "report cards." Based on the mother lode of records -- millions of Medicare files -- the reports will offer details on things like doctors' complication rates and their patients' hospital readmission rates. "It's an almost universal view into the behavior of doctors around the country," says David Lansky, CEO of Pacific Business Group on Health, a nonprofit coalition of employers concerned about quality and affordability in health care.

Still, that's months away, and most experts say referral marketing will only become more entrenched as health care cuts continue. Back at AdvisorsMD in Alabama, McKenzie says the company's expecting a strong 2012, with plans to launch new software that reps and doctors will be able to use to build more relationships. Like many in this field, she says, the firm is careful about which doctors it works with; she adds that the firm's efforts improve patient service by keeping doctors on their toes. After all, the best referral in the world won't keep the patients coming back if the doctor runs late, has bad bedside manners and overcharges. "We're not going to represent any Joe Blow who botches up patients," she says.