Real Rads
Don’t Eat Quiche
By Curtis Kauffman-Pickelle

Curtis Kauffman-Pickelle meets with the owners of Truxtun Radiology Medical Group in Bakersfield, CA, Pragati Patel, MD and Girish Patel, MD.

And they definitely do not do “admin”.

A dilemma facing today’s increasingly complex radiology practices is an interesting one, given the fact that the forces of business are converging in a kind of perfect storm on the practice environment, creating an increasing need for a fundamental understanding of the value of the commercial side of the medical group from each partner.

The issue is fairly clear. Radiologists graduate from medical school with, at best, a course or two on economics under their belt. Their residency is rightfully focused on the clinical equation, followed perhaps by a year or two of intense subspecialty work in a fellowship. The recruitment process often leads the new physician to a partner track position with a group that has built a rather significant enterprise over many years, with lots of employees, millions in revenue, and a host of business elements to be paid attention to by the partners. Welcome to the eye of the storm and a challenge for which you might feel completely unprepared—balance sheets, lease deals, LLC agreements, debt management, people issues, risk assessment, revenue generation, and so on.

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Breast MRI: An Imaging Center Opportunity to Raise Bar of Care

Stephen J. Pomeranz, MD

ENew guidelines from the American Cancer Society [1] recommending annual breast MRI for high-risk women are expected to result in significantly expanded demand for the study. Robert Smith, director for screening at the American Cancer Society, estimated that the new guidelines would add between 1 million and 2 million women a year to the number who should have breast MRI in the United States, according to an article in the New York Times. [2] In order to participate in the delivery of care, imaging centers must institute stringent new technical standards, invest in MR-compatible biopsy equipment, initiate training for radiologists and technologists, and, in some cases, implement more empathic patient interaction protocols.

Even before the new guidelines were released in March, ProScan Imaging (PSI), a Cincinnati-based network of 25 freestanding imaging centers in 11 Eastern states and one of the largest teleradiology providers in the world, reported a threefold increase in the number of breast MRs read via teleradiology in the past year and 10 of its centers had already begun providing the examination. Stephen J. Pomeranz, M.D., CEO and medical director of PSI, has read approximately 7,000 breast MRs during the past five years and was not at all surprised by the announcement of the ACS’s new recommendations. “I have had the opportunity, first-hand, to appreciate the power of breast MR, especially in women who have tougher breasts to evaluate on x-ray,” Pomeranz said.

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Strategic Planning for Imaging Centers: Act with Plan in Hand
By Eugene Walters and Timothy Stampp, MBA

Imaging center success hinges on many factors, but without the volume to sustain the operation and power it toward profitability, failure is a given. Breakeven is the bare minimum any business operation must achieve to keep the doors open, yet some radiology groups and entrepreneurs in the imaging center business blow blithely past that and other basic business calculations in their race to open the doors.

This approach is no longer sustainable. The Deficit Reduction Act (DRA) slashed MR net revenue by about 35% and CT earnings by approximately 25% in the outpatient setting. Radiologists also took an approximate 8% hit in professional income with the 2007 Medicare Physician Fee Schedule, due to a downward adjustment in the relative value unit (RVU) method of calculating payment.

Despite these cuts, new players continue to enter outpatient imaging, two from the world of mass merchandising: Wal-Mart and Walgreen’s. Both retail powerhouses, employing legions of MBAs, intend to establish health centers inside several hundred of their stores, and onsite diagnostic imaging is believed to be an element of that. Payors also are now in the imaging space: with UnitedHealthcare’s purchase of PacifiCare, they are operating centers in Nevada. CIGN

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SIIM 2007 Report
By Nicole Pilner

The Society for Imaging Informatics in Medicine (SIIM, formerly SCAR) met last week in Providence, Rhode Island. Some of the hot topics included the following:

Information Sharing Among Enterprises
A notable focus at SIIM was the need for enterprises to share information outside their own walls. Many business needs are driving this requirement, including the RHIO (regional healthcare information organization) initiative and more physician/hospital joint ventures in outpatient imaging. Several solutions, such as storage gateways and data repositories that facilitate cross-enterprise document and image sharing, were discussed. As the technology to develop such gateways improves, a number of initiatives are being launched to enable the sharing of information across different provider networks.

PACS Replacement
The PACS market appears to be shifting from first-time implementations to replacements. Several vendors have indicated that the majority of their sales are coming from the replacement of another vendor’s PACS. One of the most difficult issues with PACS replacement lies with data migration. The time and expense incurred with PACS data migration and the solutions to this problem continue to be hot topic

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Legislative Report:
Maryland Radiologists Defend State’s Anti-Self-Referral Law
By Robin Fogel Shaivitz

In 1993, the Maryland General Assembly passed legislation to prohibit self-referrals by physicians for three types of imaging services to patients. They were MRI, CT, and radiation oncology. The legislation was introduced on behalf of the Maryland Hospital Association, at that time concerned about the outside influence of physician- and non-physician-owned operations in the field of oncology, which would refer their cancer patients to their own operations for radiation treatment.

The Maryland Radiological Society was aligned with the hospitals on this and brought significant resources to the table to pass this bill. Opposing the legislation was the entire community of organized medicine, including Med Chi, which is the state association of physicians, as well as many specialty medical organizations. Their arguments against the legislation were that there was no need to prohibit ownership as long as disclosure existed, which it did. While the Maryland law was patterned after the federal Stark legislation, it went much further in specifically banning referrals. Enforcement of the prohibited practice of self-referral was left to the Maryland Board of Physicians, the independent body that oversees the professional practice of Maryland licensed physicians.

Unfortunately, the art of writing legislation is not easy. When this bill was finally passed it was written with exceptions, exclusions, and exceptions to the exceptions. That left a great deal of leeway in the interpretations by attorneys in the advice they gave to their medical practice clients.

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Last month, peripatetic CEO Joseph J. McDonough returned to imaging after a 5-year hiatus, this time as CEO of Soteria Imaging Services, Louisville, Ky, with a mandate to grow. His last imaging stint was as CEO of International Radiology Group/American Imaging Management, Dallas, Texas, and since then he has served as CEO of home health care company Reliant Holdings Inc, Norcross, Ga, a custom mobility company. He next launched an internet startup that provides products and services to private schools before accepting the top job at Soteria, a privately held company owned by the Bob Jones family and Carousel Capital, Charlotte, NC. Founded in 1992, Soteria Imaging Services operates 19 imaging centers in 10 states, so far eschewing the saturated markets and first-tier cities for places like Omaha, Nebraska, Champaign, Ill, and Eau Claire, Wis. You will not find the name Soteria—Greek for salvation—anywhere in the 10 states the company operates, except, of course, at the corporate headquarters in Kentucky, a state in which Soteria operates 3 imaging centers. ImagingBiz.com caught up with McDonough just three weeks after he had taken the helm of Soteria to discuss leadership challenges, objectives, and plans for the future.

ImagingBiz.com: As the new CEO of a large entrepreneurial imaging center chain, what are the first action points on your agenda?

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With its announcement that it would buy Cytyc, Marlborough, Mass, for $6.2 billion, Hologic Inc, Bedford, Mass, broadens its position in the women’s health care market and buys access to its gatekeeper: the obstetrician/gynecologist. Will the move precipitate a consolidation on the vendor side of diagnostics that would replicate the consolidation currently underway in the provider side of the outpatient imaging provider market?

In an investor relations webcast, Jack Cummings, Hologic CEO, and Glenn P. Muir, Hologic executive vice president and CFO provided an overview of a robust company powered by the adoption of digital mammography and insight into the acquisition strategy. Presently digital mammography represents 50% of Hologic revenues, with an avowed 50% U.S. market share and 38% of the estimated 3,900+ worldwide FFDM installed base.

With FFDM on the early end of the adoption curve, Hologic is well positioned to continue to benefit from market growth: 20.4% of all MQSA-accredited mammography facilities have FFDM, and just 19.6% of accredited mammography units are FFDM.

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David C. Levin, MD, unleashed a powerful tool for radiology in the form of newly crunched data illustrating the role of self-referral in the rapid growth of high-tech imaging. Presenting on Recent Trends in Utilization of the Major Imaging Modalities at the RBMA 2007 Summit in St Louis, MO, Levin used data gathered from a variety of sources, including Medicare Part B data and the Blue Cross Blue Shield (BCBS) Medical Cost Reference Guide, to underscore the startling differences in the utilization growth rates of high tech imaging performed by radiologists and that performed by self-referring physicians.

“If you are looking at growth in private office imaging, the increases are occurring primarily among the nonradiologists and that is something you have to keep in mind when you go out and talk to the payors and the hospital administrators,” Levin told attendees.

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Academic Incentive Plan: A Takeaway for Private Practice?

Does an incentive plan designed for an academic practice have applications in private practice? More specifically, can outpatient-focused radiology practices find something of value in an incentive plan that assigns points to various behaviors in addition to RVUs? An article by Edward Bluth, MD, chairman of radiology at Ochsner Clinic, in the May issue of the Journal of the American College of Radiology, describes an incentive plan implemented at Ochsner that put 10% of individual income at risk in a pool for distribution. And while an academic environment presents challenges to measuring individual contributions that are not found in private practice, issues related to measuring input in any practice are universal.

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The Medicare Payment Advisory Commission (MedPAC) and the Centers for Medicare and Medicaid Services have both stated the important goals of maintaining access for Medicare beneficiaries, reducing cost, and improving quality as we move forward into the pay-for-performance future. The payment systems used to fund Medicare’s services should facilitate these important goals, especially in the area of improving quality for medical imaging services.

But the truth is, they do not. As Medicare’s mechanism for payment adjustment to the Physician Fee Schedule, the Sustainable Growth Rate (SGR) factor’s reduction calculation is tied to economic indicators, not the quality of the service provided. In addition it has been waived repeatedly by Congressional resolutions that are signed into law almost every year. In fact, to catch up with its calculated annual adjustments as mandated by the SGR, a 5% reduction in the professional component would be required every year for the next ten years.

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Executive Suite

Barry D. Pressman, MD, was elected president of the American College of Radiology at the recent annual meeting and chapter leadership conference in Washington, DC. Additionally, Jeffrey C. Weinreb, MD, New Haven, Conn, was elected vice president; David C. Kushner, MD, Virginia Beach, was elected speaker; and Alan D. Kaye, MD, Bridgeport, Conn, was elected vice speaker.