Chaos Theory Redux
By Curtis Kauffman-Pickelle

Curtis Kauffman-Pickelle

This is the time of year when the Nobel prizes are handed out and that started me thinking about chaos theory and how the concept translates into our own profession’s mind-boggling array of alternative outcomes based on various approaches to the problems being presented, especially in today’s outpatient world. Competitive pressures, reimbursement uncertainties, self referral accelerations, all add to the noise level.

Make no mistake, we are navigating through uncharted territory in medical imaging today and the latest information coming out of Washington indicates more rough waters ahead. We are all grappling with the uncertainty that accompanies such chaos, but the path to success remains outlined by some fairly consistent markers. Chief among these is the requirement that future success will depend increasingly upon one’s ability to articulate a message of market differentiation. What, specifically, is your value proposition? How does this benefit your potential customers? In what way is this different than the other outpatient practices in your market area? How can you leverage this difference into a success strategy?

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Two Hospitals, Two Paths:
Case Studies in Hospital Outpatient Imaging
This is the second of two articles profiling how hospitals are approaching the business of outpatient imaging. Part II presents two case studies describing the experiences of a regional hospital system and a community hospital.

Craig Anderson, Sr

Joseph Bryzynski

The outpatient imaging enterprises of Premiere Health Partners, Dayton, Ohio, and Robinson Memorial Hospital, Ravenna, Ohio, could not be more different. The three-hospital health system, for instance, opened 6 imaging centers within nine months and partnered with three radiology practices. The county hospital went solo, with one imaging center and sole ownership. Both, however, achieved their mission: volume is steadily building in the new freestanding as well as existing hospital-based outpatient imaging operations, successfully stemming the outflow of outpatient imaging studies to community-based imaging centers, while maintaining hospital-based reimbursement.

A linchpin to both successes was choosing the right leadership, according to Craig Anderson, Sr, founder of Charis Healthcare LLC, Hudson, Ohio, a consulting company that was engaged to facilitate planning for both ventures.

“If you are going to be successful, one of the keys is to not put these outpatient centers under department heads in your organization, but to go out and recruit best-in-class service delivery executives to manage these centers.”

—Craig Anderson, Sr

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Legislative Update:
Calculating the True Cost of the DRA
By Andrew Whitman

As the medical imaging industry is well aware, the Deficit Reduction Act of 2005 (DRA), effective January 1, 2007, directed severe reductions in payments for many imaging services in the physician office and independent facility setting. Under the DRA, the payment for the technical component (eg, equipment, non-physician personnel, supplies, and overhead) of an imaging service was set at the Hospital Outpatient Prospective Payment System (HOPPS) payment rate, if the PFS payment rate is higher. This led to severe cuts in certain imaging procedures that are essential for diagnosing and treating disease. The Congressional Budget Office (CBO) predicted that these cuts would create Medicare savings of $8 billion, but calculations performed by the Medical Imaging & Technology Alliance (MITA) have estimated that the cuts will reduce Medicare expenditures for medical imaging by $13 billion.

Examples of these cuts include:
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Scott Arant, CEO of American Health Imaging (AHI), a 20-center chain based in Decatur, Ga, started operations in June of 1998 in Decatur, Ga, an eastside suburb of Atlanta, with an open MRI, as did many other entrepreneurs around the nation. The facility flourished in short time, and AHI sold a portion of the company to private investors to further develop the company. Over the next five years, the company opened five more imaging facilities in Georgia, Alabama, Dallas, Tex, and Tallahassee, Fla. With competition intensifying, AHI switched from a de novo model to an acquisition model and acquired three centers from Radiologix around 2002 (two of which were recently sold in Orlando). The company subsequently got back into de novo development, building two centers in Indianapolis and one in Columbus, Ohio. It subsequently acquired five centers in Texas, and opened two additional centers, one in Austin, Tex, and one in Omaha, Neb. AHI is currently in a holding pattern, focusing on efficiency and keeping an eye on the market.

“We don’t have any aspirations about being the largest in the business. We’ll let RadNet and MedQuest chase that dream. We are committed to having quality facilities in markets that truly need these services or markets where we truly believe we can provide a competitive advantage, and therefore track the business. Size is not our game. Quality is our game.”

—Scott Arant, CEO, American Health Imaging

ImagingBiz.com talked with Arant about quality imaging and strategies to maintain quality in the current reimbursement environment.

American Health Imaging locations

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Michael Silver, PhD

After enlightening attendees about the new players in the outpatient imaging field, and educating them on where the growth potential exists, Michael Silver, PhD, read outpatient radiology the riot act in the concluding segment of his talk: “You have to know your market,” advised Silver, vice president, Sg2, the Skokie, Ill-based health care consulting group. “You have to have an aggressive marketing program, you have to monitor and measure what is going on in the marketplace, and you have to develop the skills to manage by margins, because that is going to determine who is going to be successful, who is going to survive and who isn’t.”

The business skills likely to become even more important than in the past, Silver said are a strong back office from a billing perspective, accreditation, CON skills, and lobbying. “If you are contracting with radiologists, the growing trend that we are seeing is performance-based contracting,” Silver shared. “Both hospitals and outpatient facilities want performance from the radiologists that they are working with, and they want to monitor that performance and hold radiologists to those contracting guidelines of performance. And you have to be very proactive in your marketplace with regard to lobbying and accreditation, and CON skills will probably become more important in the future.”

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IT as Gatekeeper: Who’s on PACS?

Craig Roy

Allowing physicians, whether they are referrers or outside specialists, access to an outpatient radiology practice’s PACS is a subject that is being discussed with increasing frequency among CIOs.

Craig Roy is chief information officer and head of IT (information technology) for Radiological Associates of Sacramento (RAS), a private practice that serves 23 sites in Northern California. RAS radiologists read for two major Sacramento area hospitals as well as manning the group’s own outpatient clinics.

Roy says that how doctors are allowed access to electronic images—and under what parameters they are given access—is a hot topic among CIOs. For one thing the radiology practices must keep an eye on the legal requirements of the federal Health Insurance Portability and Accountability Act (HIPAA), which is designed to keep patient medical records private unless the patient gives consent for their dissemination.

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Last January, UnitedHealthcare, Edina, Minn, became the first insurer in America to require nationwide accreditation for all outpatient-imaging providers, effective March 2008. The mandate applies equally to all outpatient providers of MRI, CT, PET, nuclear medicine, nuclear cardiology, and echocardiography. Providers have a choice of being accredited by the American College of Radiology (ACR) or the Intersocietal Accreditation Commission (IAC).

Why did United Healthcare — supported enthusiastically by the ACR — make the move?

“We believe that our program addresses the quality and safety of imaging through the application of nationally recognized standards,” answered Laurie Paidosh, director, radiology programs, UnitedHealthcare. “It assures that the imaging equipment, physicians, and the technologists are in compliance with the appropriate performance standards. So bottom line, our goal is to advance the safety and quality of imaging services.”

The broader story is that many of the factors driving the increased utilization of imaging drove UnitedHealthcare to action, according to Paidosh.

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David R. Gruen, MD

In 2002, Norwalk Radiology—like many radiology practices across the nation—reached a crossroads. Prepare to invest in expensive new digital mammography technology or stop doing mammograms. In fact, more mammography centers in the U.S. closed than opened between 2001 and 2004, but in Norwalk, Conn, practice president Allan Richman, MD, rightly recognized that women would drive service line growth, and it was a good idea to take care of them.

Given the proper attention, the mammogram is the engine that drives outpatient imaging, David R. Gruen, MD, radiologist, contended, during a presentation at the at the 2nd Annual GE Healthcare Outpatient Imaging Center Conference, July 27, Crystal City, Va. In an hour-long talk, Gruen, medical director for women’s imaging, described why Norwalk Radiology chose to grow its women’s imaging service, how it built that service, and its ancillary benefits.

“Mrs. Jones is a mammogram annuity,” Gruen explained, “and if you take good care of her she will be there every year, from age 40 until she’s 88 and retires to her nursing home and doesn’t get a mammogram anymore. At the $6 annual profit for Mrs Jones’ mammogram, you are going to make $240 over a lifetime. But that is not why we are doing this.”

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As if radiologists were not facing sufficient challenges of late, they now are seeing increasing interest from cardiologists seeking to promote the sharing of certain studies. In some hospital settings, the cardiologists ask for an exception to the radiologists’ exclusive contract, so that the cardiologists can serve as additional interpreters of such studies as cardiac CT and coronary CTA. Those cases can be approached like other, earlier turf issues, with the radiologists advocating the need to maintain case volumes and expertise within the imaging department. Some institutions will support maintaining radiology for radiologists; where that is not the case, other would-be imagers need to be obligated to follow departmental protocols and share in responsibility for call.

Cardiologists may argue that they are the experts in the heart. Yet while cardiologists do have extensive training, little or none of it has to do with how to operate or interpret CT, MRI, or PET. Indeed, the president of the American College of Cardiologists reported in 2006 that, “During most current three-year general cardiology fellowships, achieving level 2 expertise in echocardiography and nuclear cardiology is feasible, but exposure to CT and CMR is incomplete or nonexistent.” Patients are best served by having studies interpreted by an unbiased expert radiologist, someone with extensive training in imaging, and someone whose judgment can’t be colored by the prospect of more tests or procedures. And self-referral is a very real concern as health care costs continue to skyrocket: Between 1993 and 2003, for all sites of service, the utilization rate of all noninvasive imaging per 1,000 Medicare beneficiaries increased 12% among radiologists compared with 170% among cardiologists. The massive growth in utilization by cardiologists has nothing to do with shifts in site of service, but much to do with self-referral.

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