Hospitals Hire Sales Reps to Recruit Referrals

Typically, when we think of sales representatives, we see the image of a man or woman dressed in a suit, entering a doctor’s office to promote the latest new drug or device.  These sales representatives usually work for major pharmaceutical and medical device manufacturers and go around the country educating and making physicians aware of the latest clinical research and breakthroughs on a particular company’s drug. 

Interestingly, the use of sales representatives has now grown beyond just manufacturers.  A recent article from USA Today article described a new practice whereby hospitals hire sales reps, often formerly employed as pharma reps, to increase referrals to their hospital.  If a hospital does not operate at optimal capacity due to an incomplete understanding of its services and resources by referring physicians, hiring sales reps may give hospitals an efficient and valuable way to increase capacity, instead of the typical in-flight magazine ads that also increase awareness. 

In northwest Indiana, Carrie Sota visits five or six doctors’ offices every workday as part of her new sales job.  But Sota isn’t selling the physicians on a prescription drug or a medical device. She’s promoting her hospital — the University of Chicago Medical Center.  Sota, 30, is one of four employees the academic medical center has hired in recent months to make “sales calls” on physicians in the hope that they will send more patients to the hospital. “We are trying to build meaningful relationships,” said Sota, who was previously a saleswoman for a small medical device company. 

The University of Chicago Medical Center is one of a growing number of hospitals nationwide hiring former drug and device sales reps to visit doctors’ offices to persuade them to use their services over competing facilities.  

Rather than handing out samples of prescription drugs, the sales reps call on doctors armed with the latest information on how their facility is reducing hospital-acquired infections and improving patient-satisfaction scores.  These reps probably know how many Nobel laureates are on staff, service volumes, Joint Commission reports and other quality indicators that might increase confidence by referring physicians.  

In visits that can last five to 20 minutes, reps try to win doctors’ loyalty by helping them get better times on operating room schedules or easier patient referrals to hospital-based specialists. The sales reps can also carry messages back to the hospital, such as a doctor’s request for a new medical device to be available in surgery. 

While hospitals have always tried to woo doctors to refer patients to them, the institutions are growing more direct in their efforts. The hospitals mine data to see which doctors have the most profitable, well-insured patients, and then they assign those doctors to a sales rep. 

‘Physician liaisons’ on the rise 

Convinced the sales-call strategy is fueling higher admissions, Tenet Healthcare, the nation’s third-largest for-profit hospital chain, has doubled its sales force in the past two years. It now has 152 “physician liaisons” at its 49 hospitals, most of which are in California, Texas and Florida. 

About two-thirds of Tenet’s liaisons are former drug and device sales reps, and they can make tens of thousands of dollars in bonuses if doctors increase their referrals to the hospitals. “These people are really good and really assertive and very sophisticated,” said Stephen Newman, Tenet’s chief operating officer.  And the jobs are there considering the major cutbacks pharmaceutical and medical-device companies have made in the past decade.  However, one downside to hiring former drug and device sales reps is that their medical knowledge usually focuses on a single specialty, such as diabetes treatment or orthopedics, whereas pitching a hospital to a doctor requires sales reps to be familiar with a wider range of hospital services. 

Some criticize the use of hospital sales reps as “a waste of resources.” Paul Ginsburg, president of the non-partisan Center for Studying Health System Change, said, “The net results of changing physician-referral patterns is that one hospital gains at a cost of others, and all the hospitals burn resources to pay (sales)people who take up the doctor’s time.” 

While federal law prohibits hospitals from paying doctors to admit patients, hospitals paying salespeople to influence doctors can get the same results, he said.

Newman said Tenet’s liaisons have strict guidelines so they can’t “game the system” to reach financial bonuses. For example, their bonuses can’t be tied to just one doctor’s referrals. 

Newman said the company is focused on increasing referrals from doctors who split their patient referrals among multiple hospitals, as well as from physicians who don’t yet refer to Tenet facilities. Since 2007, the company credits its physician liaisons with helping to boost the numbers of doctors who actively refer patients to its hospitals by 39%, or more than 4,500 doctors. 

Hospitals say their new sales approach is part of a broader strategy to develop closer ties to physicians, who largely determine where patients go for care. Hospitals also are buying doctors’ practices or forming closer partnerships with physicians to improve care and drive admissions. 

“I think everyone wants to grow their market, and lots of hospitals see that the No. 1 way to get referrals is physician-to-physician interaction, and the second-best way is physician-to-physician-liaison interaction,” said Christine Perry, who manages the physician liaison program at Duke University Health System. Unlike most hospitals that have hired marketing people for the positions, Duke hires nurses as its liaisons. 

Specialists are profitable 

Many of the physician liaisons focus on specialists, who bring in patients for services with the highest profit margins, including orthopedics, cardiac care and cancer care, Perry said. But the sales calls also extend to internists and family doctors.  In fact, she said, a big factor behind the trend is that many primary care physicians no longer visit their patients in the hospital, because most hospitals have full-time physicians called hospitalists who care for patients in the facility. As a result, hospitals have fewer opportunities to interact with doctors in the community to tell them about a new CT scanner or new specialist. 

Dr. Kaveh Safavi, the lead health industry consultant for Accenture, said hospitals are seeking ways to keep beds filled in the face of efforts by government and private insurers to reduce hospitalizations by eliminating pay for unnecessary admissions. “Hospitals know they have to create a larger funnel for a bigger population of patients to make their way to them,” he said. 

Kathy DeVries, vice president of marketing at University of Chicago Medical Center, said the former drug sales reps understand how to work with doctors. “They speak their language,” she said. The hospital is now trying to hire a sales rep focused solely on pediatricians. In its help-wanted ad, the hospital said the liaison will have a goal of making 160 contacts a month with physician offices, including “25 meaningful face-to-face contacts with physicians.” 

HCA, the nation’s largest for-profit hospital chain, has at least 150 employees who make physician visits — or about one per hospital, said spokesman Ed Fishbough. He said about 90% of them visit doctors who already send some of their patients to HCA hospitals. “It’s to give our physicians and their patients a voice and to listen to any concerns the doctors may have and to address those,” he said. 

Michelle Osipowicz, who spent five years as a sales representative for at Takeda Pharmaceuticals, is enjoying that aspect of her new role as a liaison for The Hospital of Central Connecticut.  “I act as a conduit between the hospital and the doctors in the community,” said Osipowicz, who visits up to eight offices a day, sometimes dropping in unannounced to chat with office staff about the hospital’s services or its latest medical specialists. “I bring more value to the physician office. I feel more respected in this role,” she said. 

Ultimately, while some may believe this kind of marketing is a waste of resources, there is good reason to believe that this practice may also improve hospital utilization and health outcomes.  The pronouncement by Paul Ginsburg, criticizing the model as zero sum, is false.  Different hospitals have different strengths and capabilities.  As long as excess capacity exists, matching patients to the highest value (quality) hospital makes the system more efficient and probably saves money.  

Nevertheless, as this practice continues to grow, hospitals and their sales reps must be vigiliant about any potential for fraud and abuse and the anti-kickback law.  Seeing how this practice appears to be new, it may be some time before Congress or States pick up on any of the potential compliance implications hospital reps may have due to their influencing in referral.  In the meantime, it is in hospitals best interests to begin training their reps now on compliance with state and federal anti-kickback laws, the false claim act, and Stark.