Practice–Hospital Alignment in Radiology: What Makes a Relationship Work?
Radiology-practice alignment with hospitals and health systems has never been a simple proposition, and recent years have seen the severance of long-standing ties between hospitals and the practices that served them. Simultaneously, however, conditions in the US health-care market have made alignment between the two parties a more promising proposition than ever before—if certain conditions can be met.
“There is a level of alignment where radiology groups have a seat at the hospital’s leadership table. There are notable groups across the country that have achieved that status—and there are notable groups that have not.”
Douglas Smith, managing partner for the Strategic Positioning & Consulting business group of Integrated Medical Partners (IMP), notes that commoditization has long been a fear in the imaging industry. As the market for radiology services matures, more competition drives prices downward, and (the reasoning goes) customers are unable to distinguish between providers on any basis other than price. With the growing trend toward health-care–delivery integration, however, radiology practices have an opportunity to sidestep the commoditization risk entirely.
“If we talk about radiology-group alignment with hospitals and health systems, and the mechanization of that alignment to meet the strategic and tactical imperatives of the health system, that’s where we’re seeing radiology avoid the label of being commoditized,” Douglas Smith says. “There is a level of alignment where radiology groups have a seat at the hospital’s leadership table. There are notable groups across the country that have achieved that status—and there are notable groups that have not, and are, therefore, left on the sidelines of the emerging health-care space.”
Characteristics of Aligned Practices
No two aligned relationships are exactly alike, of course, but there are some common characteristics that Smith and his colleagues Bill Pickart, Bob Kebbekus, David Smith, Tim Dyer, and Steve Goodman highlighted in a roundtable discussion on how radiology practices can successfully achieve tenable alignment with their hospital and health-system partners.
“The groups that successfully gain a seat at the leadership table are the ones that understand what the strategic plan of the hospital or health system is, as well as where they fit—they wrote the imaging portion of the strategic plan,” David Smith, IMP’s senior vice president of client services, says. “These groups have approached the hospital and have endeavored to understand where it’s going, and they are the groups that are achieving alignment, while very successfully maintaining private-practice status.”
Pickart, who is CEO of IMP, notes that recent pressures on group practices, including improved hospital/health-system alignment, have resulted in consolidation of radiology practices. These consolidations were perceived as being limited to financial relationships: mergers, limited mergers, and acquisitions. These limits no longer apply, in today’s market.
“Alignment, supported by collaboration with other regional groups, brings results that are beneficial and provides an alternative to the three traditional financial strategies,” he says. “Hospital systems around the country are now making a concerted effort to organize their multiple radiology groups around shared protocols and shared coverage.” Collaboration between these groups can facilitate meeting the hospital’s objectives, while supporting the desired independence of the respective groups.
Kebbekus, who is COO of IMP, connects a radiology group’s ability to collaborate with a health system with its ability to collaborate with other groups in regional networks or other affiliated models; both types of relationship, he says, require a cultural focus that is not traditionally inculcated in physician-owned practices. “Too many radiology groups today, for understandable reasons, tend to be inwardly focused, and are likely to be more combative or competitive with these partners than they are collaborative,” he says.
David Smith adds, “A big part of that is group culture—you see a lot of groups where the only thing valued is getting the work done. If you don’t value someone taking the time to attend hospital committee meetings or to meet with hospital leaders, you won’t be able to build an aligned relationship. It all starts with good, comfortable communication—your practice has to build that foundation before it can build a strategic partnership.”
“The groups that are more effective have multiple touchpoints at different committee levels. The effort is cooperative, and there is a sense, within the group, of a common goal and strategy.”
Kebbekus notes that this is truly a cultural issue, since focused action from multiple partners in the practice will be required to build a solid foundation. “Even when practices have a good hospital relationship, many times, we find that it comes down to one individual—the president or lead person of the group,” he says. “The groups that are more effective have multiple touchpoints at different committee levels. The effort is cooperative, and there is a sense, within the group, of a common goal and strategy.”
Partners in Positioning
Douglas Smith drills deeper into exactly how radiology practices can begin to cultivate these relationships with hospitals and health systems. He says, “The question is what the successful groups are doing: What do they say, do, and offer, other than a nice conversation? That’s where we see the differential. Radiologists should understand that they are uniquely positioned to understand how imaging is used throughout the continuum of care—much more than in the hospital’s sites alone. Radiologists bring a universal view of how imaging is used (both appropriately and inappropriately) in the local market.”
Imaging, it is often claimed, is a major contributor to increasing health-care costs, and in-office imaging performed by nonradiologist physicians is on the rise. Douglas Smith points out that radiology groups can spin these challenges from straw into gold by leveraging their experiences to help hospitals and health systems surmount them.
“If the integrated delivery system has an objective to be cost effective for any emerging payment models, radiology practices can bring the data,” he says. “They’re in a position to offer that actionable information: How do we get there, and what will be the result if we implement certain initiatives and protocols? It’s a key differentiation point.”
“If the integrated delivery system has an objective to be cost effective for any emerging payment models, radiology practices can bring the data. They’re in a position to offer that actionable information.”
David Smith concurs. He says, “The role of the radiologist is to help health-system leaders understand where the opportunities lie—not just in imaging, but across the continuum of care. The radiologist is one of the few specialists who sees that, and he or she can help leaders make assessments about how to invest capital.”
He continues, “Information is power. To the extent that the radiology group has information to bring to the table, it will be in a stronger position in working with the health system. It enhances the group’s position as a valued partner.”
Key Performance Indicators in Aligned Relationships
Pickart anticipates that radiology practices will need to aggregate and understand a variety of data types, both clinical and operational, to provide value in an aligned relationship. “Based on the early indicators as to what measures need to be tracked for the purpose of collaboration in care—be that through accountable-care organizations (ACOs) or home health care—those will be financial data, clinical data, demographic data, and then data inserted (by the various participants) into the model relative to appropriate benchmarks for determining that improvements or targeted outcomes are occurring,” he says.
In relationships that Douglas Smith has seen, hospitals and health systems have been particularly focused on differentiation in the eyes of payors and the government—and have sought to codevelop metrics with their radiology practice partners accordingly.
“In the future, hospitals will need to have differentiators with constituents such as commercial payors and the government,” he notes. “Those indicators will revolve around a set of quality-assurance data, like that aggregated by RADPEER™, as well as outcomes and quality measures. Right now, these measures are not well defined, but the systems are there to capture them.”
He also names utilization information, episode-of-care and downstream–episode-of-care data, and financial data regarding cost-efficient points of entry for various imaging modalities as measures that will be of particular importance to hospitals and health systems.
Dyer, who is CFO of IMP, adds that radiology groups have access to historical data that can be used for predictive modeling, to the benefit of both parties in the relationship. For instance, he says, “If your health system wants to try a bundled episode of care, you can run that through a model based on your historical revenue and cost data, and very easily understand to what degree that pricing will kill you or help you. It gives you the opportunity to suggest an alternative that won’t hurt your group’s business.”
“The key is understanding the health system’s strategy and bringing your data and clinical expertise to the table to help leaders understand what they mean and develop their tactics based on that information.”
David Smith also notes that a one-size-fits-all approach will not work for radiology practices; data aggregated will depend on the specific needs and strategic goals of the health system or systems with which practices align. “Some health systems are very focused on the ACO model; others are seeking to enhance certain service lines,” he says. “The key is understanding the health system’s strategy and bringing your data and clinical expertise to the table to help leaders understand what they mean and develop their tactics based on that information.”
Organizing and Contextualizing Data
As David Smith’s comment underscores, harnessing data to create value will represent a challenge for even the most robust radiology group. “These groups generate reams and reams of data, and unless those data are organized and contextualized in a way that’s actionable, they will not get anywhere,” Pickart says. “With the right analytical construct, however, they can develop customized cubes of information that they can use to reinforce the value of collaboration.”
Goodman, CIO of IMP, notes that developing such an analytical construct starts at the bottom, with a logical information-gathering architecture. “A typical radiology group is likely to be using five or six PACS, and all of those data need to be merged together into actionable information, or they are useless,” he notes. “Logging into 20 pieces of equipment to get 20 reams of paper isn’t efficient enough for anyone to do it on a regular basis. It just isn’t going to happen.”
To address this issue, Goodman urges radiology groups to start thinking now about how to make traditionally homogeneous IT systems heterogeneous. “It’s a difficult thing to do; it requires a lot of expertise on the IT side and a lot of vision on the architectural side,” he stresses, “but if garnishing data can make your business more valuable, a lot of time should be taken to determine how that will happen—and what will happen a year from now, when you want to add something new.”
For instance, Goodman says, a group’s IT staff might direct all information from every IT system into a monolithic database, with a single pane of glass (a common user interface) from which any user can obtain the global information that he or she needs. The pane-of-glass metaphor is intentional; Goodman emphasizes that the interface must be intuitive for the data underneath to be of any use. “It should be something users can become familiar with and explore,” he says. “It takes a lot of thought to take large, complicated models and simplify them for use by the business analyst.”
Vertical Cells Versus Longitudinal Integration
Actionable data, and the ability to produce them reliably, are so critical because they give hospitals and radiology groups a common language to speak—and give radiology groups something differentiating to bring to the relationship, Douglas Smith says. “In the 1990s, we saw what I call integrated delivery 1.0,” he explains. “In version 1.0, there were vertical cells—loose alignments or affiliations of hospitals in geographic areas, organized as cells rather than longitudinally integrated.”
The longitudinal structure of integrated delivery 2.0, on the other hand, will require commonality across multiple institutions, including inpatient and outpatient sites of service. “That’s where radiology comes forward,” he says. “They’ll want to see common protocols, across the entire system, on how to treat a certain disease state or what clinical indication will necessitate a certain type of imaging.”
“The radiology groups that are ahead of the game are bringing the solutions to hospitals, rather than reacting to hospitals’ ideas of what they think they need to have.”
Radiology groups are well positioned to supply data to support these protocols—and are even better positioned when they form local networks, Douglas Smith says. “The radiology practices that are able to come together, in some form, to meet that longitudinal approach are well ahead of the game,” he says. “They can tell the health systems that they don’t need to merge to offer them the end result of a merger, through an affiliation strategy. The radiology groups that are ahead of the game are bringing the solutions to hospitals, rather than reacting to hospitals ideas of what they think they need to have.”
Pickart concludes, “Informatics is a common language and can be the bridge between the radiology group and its collaborative affiliates, as well as the health system they serve.”
Developing an Outward-facing Culture
All of the roundtable’s participants stress that these relationships will not come naturally to many radiology groups. Although there is much opportunity to be had in cooperating with one another to align with hospitals and health systems, preserving radiology groups’ independence as businesses will, ironically, require them to develop and operate within an outward-facing, less individualized culture.
“It will be important for groups to have strong, well-defined cultures to survive,” David Smith says. “Too many groups, today, have not given much thought to what their culture is, what it should be, or how to drive it in a positive direction.” To succeed in the integrated delivery systems of the future, groups will have to redouble their focus on customers. He says, “You need to help customers define what their needs are and then deliver. Build an internal culture that rewards, not penalizes, the people who engage in that.”
“Acting as a collaborative unit creates an environment where the groups can supply the hospital system with services without the hospital having to make competitive choices. It doesn’t mean that the group gives up its independence; it means that it does things to nurture that independence, instead of working against it.”
Groups will also have to shift their vision of who the customer is, Pickart adds. “Far too often, we see groups view each other as significant and threatening competition to each other, or to the hospital system they serve,” he says. “While they’re positioning (or are positioned) against one another, the forces around them are acting to try to commoditize their imaging value proposition—so it’s as though they are arguing over the placement of deck chairs on the Titanic.”
True alignment, on the other hand, will require not just alignment with the hospital or health system, but with other local practices, Pickart believes. “A willingness to collaborate can bring big benefits,” he says. “We see groups with really talented radiologists who possess subspecialized capabilities that just don’t make sense, economically, to replicate in another group.”
He continues, “Acting as a collaborative unit creates an environment where the groups can supply the hospital system with services without the hospital having to make competitive choices. It doesn’t mean that the group gives up its independence; it means that it does things to nurture that independence, instead of working against it.”
Cat Vasko is editor of RadAnalytics and associate editor of Radiology Business Journal.