Doshi Diagnostics Q & A: Strategy and the DRA

As the Deficit Reduction Act worked its way first through the machinery of the legislative process and then, later, through the millwork of implementation, imaging center operators around the country hoped they somehow might be able to scupper the part of the law affecting them before the DRA could take effect on Jan. 1. Once they realized there was no stopping the measure, many shifted their attentions to devising business strategies to spare their centers a fiscal savaging.

Doshi Diagnostic Imaging Services of Hicksville, NY, began formulating its strategy shortly after the act passed into law at the close of 2005. Founded in 1985 by Leena Doshi, MD, Doshi Diagnostic grew from a single Queens location to a string of 18 freestanding, multi-modality imaging centers throughout the greater metropolitan New York City region and neighboring parts of New Jersey. The enterprise provides state-of-the-art outpatient imaging services, including general radiography, open MRI, CT, PET, PET/CT, digital mammography, ultrasound, bone densitometry, fluoroscopy, vascular intervention, and a full range of nuclear medicine and nuclear cardiology procedures, all delivered using the latest in technology, beginning with high-field open MRI systems and continuing on to include systems such as the GE Pro Speed Helical/Spiral CT scanner, the Philips Allegro High Performance PET scanner, the ATL Ultramark 9 High Definition ultrasound unit with color flow Doppler, and a variety of gamma cameras.

The Doshi Diagnostic family of imaging centers developed its brand by leveraging hardware-and-software prowess with the talents of a diverse medical, technical, and administrative staff to deliver high-caliber customer service. This is plainly in evidence in Doshi Diagnostic’s December, 2006, agreement with Islandia, NY-based MedLink International Inc to utilize the latter’s proprietary virtual private network technology as an avenue for speedily delivering radiology reports and related DICOM images to approximately 20,000 referring physician offices in the New York area (those referring physicians are able to also avail themselves of MedLink’s electronic medical record product to view current and past reports on their patients; Doshi Diagnostic announced it expected to transmit up to 5,000 studies a day through the MedLink VPN and that the agreement involves centralization of approximately 700,000 medical records). Anish Berry, president of Doshi Diagnostic, contends that, as a result of this agreement, his imaging centers—all equipped with PACS and RIS—now have the means to satisfy customers more efficiently and more effectively than ever.

ImagingBiz.com recently found occasion to pose to Berry a number of questions about his organization, in particular, its plans for coping with DRA-instigated cuts in radiology reimbursement.

ImagingBiz: How significant a toll do you expect the Deficit Reduction Act to exact on Doshi Diagnostic?
ANISH BERRY: To start with, approximately 12% of our total revenues are derived from Medicare payments. One of the concerns attendant to that was whether the anticipated cuts would result in a reimbursement for certain procedures that was actually below the cost of performing those studies. Another obvious management concern was that the cuts were directed at mostly high-ticket procedures precisely because those are the procedures that provide the greatest profit to the provider, such as MRI and PET. To gauge the effect of these and other concerns, an analysis was undertaken by a combined task force of our billing and accounting departments. The task force was assigned the job of determining by modality the degree to which each individual center would be affected.

ImagingBiz: Once that analysis was completed, and you ascertained the total dollar impact of DRA, what steps were next taken?
BERRY: Senior management—which includes our founder and medical director Leena Doshi, MD, and the chairman of our parent corporation, Nitin Doshi, MD, of Diagnostic Imaging Group LLC—held a number of think-tank meetings to elicit ideas and opinions on how best to counteract the effect of the cuts. It was eventually decided that we would use a multidisciplinary approach and attack the problem from as many different angles as we could. One way was simply to increase revenue by increasing the volume of procedures performed across the system.

ImagingBiz: By what means?
BERRY: First, by sending a dedicated team of physician liaisons from each center to visit the surrounding neighborhood’s referring physicians. The liaisons’ responsibilities include ensuring that the referring physicians are receiving everything they need and want out of their relationship with us. The liaisons have been instructed to concentrate on interacting with the referring physicians who are potentially able to refer more business to us.

ImagingBiz: What opportunities are there for this intensified interaction?
BERRY: The liaisons make it a point to follow up with these physicians on a more regular basis. They sometimes hand-deliver films and reports to them. Generally, they make themselves fully accessible to the physicians.

ImagingBiz: Has this been effective?
BERRY: We have seen an increase in business in certain areas due to these efforts.

ImagingBiz: We understand that your DRA survival strategy included conducting a review of your existing vendor contracts. To what effect?
BERRY: This was to see where, if at all, there could be a reasonable renegotiation of terms. We knew that the vendors expected a drop in product sales due to the effect DRA would have on their customers. Because of that, we were confident that vendors would be prepared to deal reasonably with radiology providers. So we organized a negotiating team to contact all types of vendors, not just radiology equipment companies but also suppliers of everything from office goods to uniforms and maintenance.

ImagingBiz: How productive was that exercise?
BERRY: We expected that some vendors would be willing to deal more than others, but there was almost no one that slammed the door in our face. In fact, we were surprised at just how willing these vendors were to work with us. They needed only to be asked.

ImagingBiz: That must have been gratifying.
BERRY: It was, particularly because we saw significant savings across the board from it, especially in the area of equipment maintenance. Also, given the amount of thought applied to the process along with the research that had been conducted beforehand, we were able to firmly but fairly negotiate from a position of strength. We had the knowledge and expertise to be able to achieve substantial savings.

ImagingBiz: What other steps did you undertake to cope with DRA?
BERRY: We also reviewed our payor contracts to determine how many of them had reimbursement provisions tied to Medicare rates.

ImagingBiz: This was helpful how?
BERRY: In some cases, it led to our being able to renegotiate reimbursement to a higher percentage or to a non-Medicare-based rate. But even where no renegotiation was possible, we were at least able to enter into a meaningful dialogue with high-level executives in those payor organizations. As a result, we have established new relationships, and these may in time prove quite valuable. Overall, we were able to measure the extent to which our payors were contemplating reducing their rates to bring them in line with DRA: from what we could glean, it appeared that most had no such intention. At the very least, by identifying contracts tied to Medicare, we now know where we must focus our attentions in order to, hopefully, secure a removal of those provisions at contract renewal time.

ImagingBiz: Other actions?
BERRY: We took a fresh look at all expenses, most importantly overtime. That led to development and implementation of new scheduling criteria, more efficient use of technologists and radiologists, and stricter supervision of which employees are authorized to work overtime. Very substantial savings have accrued.

ImagingBiz: Billings and collections. What about these?
BERRY: Our entire billing and collection process was scrutinized to see where efficiencies could be improved. For example, teams have been established to target specific payors who are unreasonably behind in payments. What we do is contact those payors to see if we can determine the reason for the lateness of payments; if the problem turns out to be that our claims contain errors, we correct those errors and immediately resubmit. In a similar vein, we have been looking at what we can be doing internally to reduce the time between rendering the service to the patient and submitting the claim.

ImagingBiz: Evidently, then, there was a silver lining to the advent of the DRA in that it forced you to reevaluate the strengths and weaknesses of your business, and then to redirect attention onto neglected aspects of your operations. Does that effectively capture the essence of your DRA response?
BERRY: Yes. Under the time-tested theory that “only the strong survive,” we strongly believe that DRA has provided us with opportunities to prosper in an environment that will damage less-prepared entities. We believe many weaker businesses will be unable to compete in the marketplace and that we will ultimately obtain a greater share of the market because of our strength. Although no one welcomes decreased reimbursements, at the end of the day it has made us a stronger and more efficient enterprise capable of meeting the challenges of radiology, a business which is sure to grow in the coming years. We believe we are in the best possible position to weather this storm and ultimately profit from the boom yet to come in radiology.

It should be noted that Doshi Diagnostic’s parent company—Diagnostic Imaging Group LLC—operates approximately 32 other freestanding, multi-modality imaging centers under the banner of Signet Diagnostic Imaging Services, located up and down the length of Florida. Berry serves also as president of Diagnostic Imaging Group and is joined at the top of the umbrella organization by Chief Operating Officer Tariq Shaikh, Executive Vice President and General Counsel Mark Gelfand, Chief Financial Officer Fred Tylutki, Vice President of Nuclear Medicine Gene Hecht, and Vice President of Purchasing Hemant Maru.

Significantly, Berry and his teammates are firm believers in strategic planning based on thorough analyses of facts. His imaging centers appear poised to do well in the age of DRA because they did not wait for Congress to complete its machinations before getting started on this strategic planning. Recognizing the danger that lay ahead, they took action appropriate to the threat. Doshi Diagnostic provides a useful example of how not to let the well-intentioned but nonetheless clumsy dictums of a cost-conscious government interfere with one’s commitment to serve customers, provide value, and prosper.