The question in the headline is not open-ended and philosophical. It is multiple-choice and strategic, as any given hospital or multi-hospital system now inevitably perceives its contracted radiology practices as occupying ground in one of only three possible capacities.
The perception may remain unarticulated, but the conclusion is inescapable: Your hospital sees your practice as either its valued partner, its irksome competitor or one of its essentially invisible service suppliers.
The confluence of currents that led up to this present business reality, as well as its future ramifications, were fleshed out by William G. Pickart and Keith Chew in a presentation at the RBMA 2015 Radiology Summit Conference in Las Vegas in June. Both are executives with Milwaukee-based Integrated Radiology Partners (IRP), Pickart serving as CEO and Chew as a senior vice president. Chew also is president of the RBMA board of directors.
Pickart and Chew detailed how, in the past, a practice could sustain the relationship by remaining largely invisible to hospital leadership. If local conditions were right, it could even strike a deal to operate as a sometime competitor to the hospital. Neither of those identities is viable any longer, the two said. As market and regulatory forces pressure hospitals to transition from volume to value, and fast, hospitals are weeding out both competitors and ghosts among their contracted radiology groups.
“Our definition of a valued partner is a practice that teams with hospitals and their systems to strategically control costs, decrease medically unnecessary or otherwise inappropriate diagnostic and therapeutic services, provide ordering guidance to referring physicians, and assist in the implementation and continuous support of clinical decision-making,” said Pickart.
From here on in—or very soon, and for every hospital and hospital system in the U.S.—only valued partners will make the cut. Take steps now to become one, he said, or your competitors will soon be receiving an RFP.
Volume still matters
Chew outlined the mix of forces driving healthcare toward value-based delivery and payment models. He called out continually declining reimbursements, ever-rising costs of doing business and shifting payer mixes as Baby Boomers move to Medicare and health reform enrolls millions more in Medicaid. He also noted that case mixes are becoming more complicated as the health status of the population continues going from bad to worse.
“Ultimately, in a population health approach, you are worried about the care of the population—and not just today but five, 10, 15 years down the road,” Chew said. “As part of all of this, you’re going to see that preventive services, like low-dose CT lung screening and mammography, should increase in volume and in value.”
He used lung cancer screening as an example. When the disease is detected at stage 2 rather than stage 4, he said, the savings to the system can top $175,000. Radiology can contribute to not only capturing such value-creation opportunities but also to continue winning volume, albeit in a more strategic way in the past, Chew suggested. His example here was negotiating quality metrics.
“We’re talking to a payer about basic metrics like turnaround times and medical necessity,” he said. “The numbers are small, just 35 cents to 40 cents per member per month. But we’re talking 246,000 members every month. That’s over $1 million per year to do what we’re already doing. If we can get that number from 246,000 to half a million, we can bring in $2.5 million a year at just about 40 cents per member per month for the work we’re already doing for radiologists.”
The more covered lives radiology can help bring into the hospital system, the more value the profession can rightly publicize down the road. “Hold onto [those covered lives] and get more of them,” said Chew. “As you move into risk-based, that’s the approach that is probably the most appropriate across the board.”
Value is defined as quality divided by cost, he reminded. To offer a stronger value proposition to the hospital, a practice can increase quality, decrease costs or do both. “We have to look at the value proposition that is out there in healthcare to get to understanding what it means to be a valued partner.”
As the healthcare economy continues to change, the immediate goal must be to develop quality metrics that will start off rudimentary and become progressively sophisticated. “After we are able to collect more