Like most radiology practices nationwide, Pueblo Radiology Medical Group, based in Santa Barbara, California, is facing the imperative to do business differently than in the past. Wayne Baldwin, CEO of the 18-radiologist practice, attributes the shift to changes in the regulatory environment that have made today’s radiology marketplace anything but “business as usual.”
“Radiology has been in the crosshairs for at least five years—we’ve faced annual reductions in our fee schedules, and health plans have increased deductibles and introduced special co-pays for advanced imaging,” Baldwin says. “When patients come in now, it’s not like the old days, when we simply billed them. In far too many circumstances now, that would mean we would never get paid.”
Using business intelligence information provided by its billing provider, Zotec Partners, Pueblo’s leadership saw that the recent economic downturn was correlated with an uptick in bad debt—and if the trend continued, the practice’s financial health could be at risk.
“How you operate now has to be different,” he says. “It’s not 1982 anymore. You have to figure out how to modify your operations to survive in the new world.”
Adapting to Radiology’s ‘New World’
Pueblo Radiology covers five hospitals and owns three outpatient imaging locations, one of which is dedicated to open MRI; since entering into a partnership with Radiology associates of San Luis Obispo in 2010, Pueblo also acts as the southern division of a newly formed larger entity, Central Coast Radiology associates.
The expansion reflects a trend toward consolidation in the imaging marketplace—and that’s not the only trend Baldwin has seen impacting the practice in recent years. Comprehensive, monthly business intelligence reports revealed a few trends gaining ground, including an increase in bad debt.
“Maybe you used to bill patients $25 and now you’re billing $150, and that’s not an insignificant change,” Baldwin says. “When we looked at our data, they showed what looked like a hockey stick on the bar chart that indicated the increased value of patient responsibility dollars. And surprise, surprise, that was correlated with the economic downturn and increased bad debt.”
Additional information derived by Zotec on a monthly basis tracks nearly every aspect of operations, Baldwin says, ranging from physician productivity as measured by work RVUs to payor performance to referral patterns. “At the end of the day, this data is a very valuable tool,” he says. “Without that data, and the ability to track those metrics in near-real-time, we wouldn’t have an accurate picture of how we’re doing.”
Leveraging Business Intelligence
Once Pueblo Radiology had leveraged business intelligence to identify the increase in bad debt, it was time for the practice to consider its options. “Most of the issue could be tied to failure to collect dollars at the time of the service,” Baldwin says. “We knew we had to handle our cash collections at time of service differently.”
Pueblo Radiology instituted a new training procedure for its front office staff aimed at facilitating better interactions with patients regarding payment. “We needed to educate them about the issues they would face when asking for the money upfront, and how to prepare both themselves and the patients beforehand,” Baldwin says. “We have been diligent about preparing them so that they are confident and able to deal with those interactions, and are able to escalate it if there is a special issue or a question.”
The results, Baldwin says, have been nothing short of dramatic. “Our new hockey stick is cash collections at time of service,” he says. “Bad debt has decreased by about 75%. That’s a significant amount of money to the practice—it represents hundreds of thousands of dollars.”
Business intelligence not only enabled Pueblo Radiology to spot its bad debt issue, Baldwin says; the data also allowed the practice to measure the impact of the changes it had made in operations, enabling leadership to know whether their efforts were gaining traction.
“We changed how we operated to address a problem,” Baldwin says. “We used data not only to identify the problem, but to measure our progress. Our results have been remarkable.”
As the health care marketplace continues to evolve, Baldwin predicts that business intelligence will be increasingly vital to practices’ continued success—especially radiology practices, which have already seen their fair