The Incredible Shrinking Growth Market
By Curtis Kauffman-Pickelle

The literature is full of case studies detailing how business lifecycles at varying points in the maturity of markets affect growth curves and levels of sustainable profitability. This is an exercise that goes well beyond analyzing the impact of the DRA on MR and CT profitability and plays to the essential composition of our free market system. The message: Markets change and businesses figure out ways to adapt or die. And, the guy who loses today just might become your nemesis somewhere down the road.

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The Radiology Imperative
By Nicole Pliner

The number of radiology procedures ordered in the United States continues to increase at an unrelenting pace. Studies now suggest that at least one in ten residents currently receives a computed tomography (CT) scan each year and one in twenty undergoes a magnetic resonance scan (MRI). So where is the source of this seemingly endless demand for radiology images? Is it the aging population? The technology? Aggressive marketing by physician investors/owners of imaging equipment and imaging centers? The referring physicians? Cardiologists and other specialists? Or perhaps the radiologists themselves?

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Practice Expense Changes Could Mean Trouble

As if the health care reimbursement picture for 2007 was not complex enough with the present and upcoming Deficit Reduction Act (DRA) changes for diagnostic imaging, on June 29 the Centers for Medicare and Medicaid Services (CMS) published a proposed rule in the Federal Register that will, according to CMS, create the “largest revisions ever proposed for services related to patient evaluation and management.”

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Is There a Reprieve in the Offing?

Many in the freestanding imaging world were cheered when Congressman Joe Pitts (R-PA) introduced the Access to Medicare Imaging Act (H.R. 5704) late on the evening of June 28. The bipartisan legislation with 42 original cosponsors calls for a two-year moratorium on the cuts in payments for Medicare medical imaging services included in the 2005 Deficit Reduction Act (DRA) passed by Congress in February.

 “A delay in the implementation of these cuts is essential in order to give Congress a chance to fully understand how cuts of this magnitude could affect Medicare beneficiaries’ access to imaging services.”

— Congressman Joe Pitts (R-PA)

The bill also calls for a comprehensive Government Accountability Office (GAO) study to analyze the impact of the DRA's payment methodology on patient access, with special attention to rural and medically underserved areas. “Congressman Pitts’ legislation will provide America’s seniors some relief and the Congress some time to study the impact of this change on patients and services,” said Cherrill Farnsworth, executive director, National Coalition for Quality Diagnostic Imaging Services (NCQDIS). “We thank him for his leadership on this issue, which will benefit our Medicare population the most.”

The legislation represents a victory for the broad coalition of organized provider groups, patient advocacy groups, medical manufacturers, and providers known as the Access to Medical Imaging Coalition (AMIC), also known as the Big Tent Coalition. AMIC representatives were predicting that Gordon Smith (R-OR) would introduce the bill would introduce the bill in the Senate sometime this month.

List of Original Cosponsors (word document)

A Wave of Sanity

More positive developments are reported by the lobbying firm that represents NCQDIS, Health Policy Source, Inc, Washington, DC. According to Dan Boston, executive vice president and partner, the House Energy & Commerce Committee has notified CMS that it would like Administrator McClellan to testify before the Members on the imaging issues. According to Boston, the issues to be discussed will include utilization, and a pending OIG report on prospective ‘waste, fraud and abuse’ in imaging.

Does this signal a return to the issue of over-utilization in imaging and a step back from the hatchet approach most evident in the February passage of the DRA? Imaging center operators are advised to arm themselves with the facts on over-utilization in imaging.

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ACR Appropriate Utilization

NCQDIS Appropriate Utilization Campaign

Imaging in the Crosshairs

PET-CT Reality Check

The operators of freestanding imaging centers find themselves positioned between hope for a reprieve and the unhappy possibility that the DRA will come to pass as planned. With PET-CT still on the upswing on the adoption curve, keeping a close reality check on this modality is particularly important for independent diagnostic testing facilities. Richard W. Townley is president and chief executive officer of AGI Healthcare Group, San Francisco, told a reporter for Imaging Economics that some projections for PET/CT see the modality proliferating during the next 5 years by two- or threefold over current levels of deployment.

Due to a trend among payors to certify only multi-modality facilities, Townley does not see a future for single modality deployments, with the exception of oncology practices. Townley does see a continuing need for mobile PET/CT operators, at least in the near term. “They have a place to help build volume loading and while the fixed site is built out,”Townley told Imaging Economics. “There may also be a benefit with the mobile in CON [certificate of need] states. The mobile operator often will already have that CON in place.”

Townley also cautions those who are eyeing PET/CT installations to avoid growing too dependent on referrals from a single large oncology practice when designing a business model. “The more valuable they are as referrers, the more risk you face that they will buy their own machine or want you to do a leasing arrangement,” he notes.

Referral volumes needed to break even financially on a PET/CT are two or three PET referrals per day over the course of a 5-day week, at least for now, using the most recent CMS reimbursement pronouncements.

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