Data-driven Strategy Delivers Relief From the Pain of Reimbursement Cuts

Reimbursement reductions—most recently, the 2011 Medicare Physician Fee Schedule cuts—have had a significant impact on the radiology arena, with many practices and imaging-center companies taking sizeable hits to their bottom lines or being forced to close their doors. Some entities, however, refuse merely to accept the negative impact of government reimbursement cuts. Rather, they are harnessing analytics to assess—proactively—the effects of such purse-string tightening on their revenue streams and earnings, as well as to formulate new strategic initiatives aimed at compensating for the shortfall.

Center for Diagnostic Imaging (CDI), Minneapolis, Minnesota, ranks in this group. Tom Tomlinson, COO, says, “Imaging providers can react to cuts—and other challenges, for that matter—by laying off staff to meet financial targets, but that only creates stress and impedes the caliber of service to patients. We have long thought it far better to assess and analyze data at a granular level to see how reimbursement reductions and other factors will affect us, and to base our approach to handling them on actionable information, rather than hearsay.”

CDI currently owns and operates 59 imaging centers in 10 states; its roster of affiliate radiologists includes approximately 200 to 225 individual practitioners. Over the past few years, Tomlinson notes, its leaders have consistently mined the database to determine how (and to what degree) anticipated cuts will affect not just the business in general, but revenues generated per individual CPT® code. These projections are based on a combination of variables, including (but not limited to) reimbursement-percentage figures released prior to the execution of cuts, proprietary historical-utilization data, and practice-expense data.

Not long ago, it became apparent to CDI’s leaders that drastic measures were warranted, if the company was to remain on firm financial ground in the wake of seemingly endless reimbursement-related financial challenges. A three-phase initiative, dubbed Focus Forward and born of a deep dive into multiple data silos maintained by the organization, was subsequently launched.

The first phase of Focus Forward entailed the identification of the top 10 most frequently performed MRI procedures across all centers; these, Tomlinson says, account for 60% to 70% of CDI’s imaging volume. Reports highlighting the average scan time, by CPT code and by facility, showed significant differences from market to market and center to center. For instance, a procedure that was taking an average of 30 minutes in one market was shown to require an average of an hour elsewhere. A series of what-if analyses was then executed, with the objective of decreasing cost per procedure by increasing the number of exams that could be performed daily in each top 10 category.

“As an example, we looked at how much we could streamline a particular procedure by assigning certain tasks—such as preparing patients, starting an IV, and escorting patients in and out of the exam room—to someone other than a technologist,” Tomlinson explains. Appropriate adjustments were subsequently made, resulting in a 9% decrease in cost per procedure.

In the second phase, leaders once again plumbed different data silos to obtain a reading on exam protocols, by center and by individual CPT code. An analysis again revealed significant discrepancies; for instance, radiologists were discovered to be performing the identical exam using different pulse sequences.

The amount of time used to complete individual imaging procedures also varied from center to center. Protocol adjustments, calculated in line with averages, were then used as an ingredient in developing best practices for performing each procedure, yielding an additional 12% reduction in cost per procedure.

Tomlinson emphasizes that CDI is not offsetting the effects of reimbursement cuts and reaping savings at the expense of patient care. Feedback from evaluations by patients and referring physicians is fed into its database and analyzed regularly, as a proactive measure. “So far, there have been no negative effects—only positive ones,” he says.

Phase three of Focus Forward is currently in the works. It will involve analysis of data pertaining to other imaging procedures performed at CDI facilities.

Julie Ritzer Ross is editor of RadAnalytics.com