Outlook Sunny, 3 Models to Watch

Twitter icon
Facebook icon
LinkedIn icon
e-mail icon
Google icon

Hospital outpatient imaging departments have definitely taken it on the chin in 2010 after weathering the downturn fairly well, reports Shay Pratt, The Advisory Board, in his talk on The Future of Imaging Payment. According to members surveyed, median growth dropped from 6% in 2008 and 2009 to 4.5% in the first quarter of 2010, with bad debt as a percentage of revenue up to 6.3%, a number Pratt likes to see below 5%. Most member hospitals attributed the volatility to unemployment.

Nonetheless, Pratt was cautiously optimistic on the outlook for growth in hospital outpatient imaging in the coming years. He predicts relatively healthy growth rates for advanced imaging (3.9% CAGR for CT; 4.2% CAGR for MRI) through 2014, after which provisions for expanded access to health care will begin. Two keys to understanding the potential increases in volume is recognizing that 60% of the uninsured are younger than 40, and looking at the experience of Massachusetts, where expanded access resulted in and increase from 65% to 79% of people visiting a physician once a year.

The Advisory Board estimates that expanded coverage will result in an additional 2.5 million CT studies and 1.6 or 1.7 MRI studies performed in 2019, after five years of coverage expansion.

“The question is, how many of these scans are you already doing?” asks Pratt. “It may not be a case of getting a lot of new volume, but getting paid for it.”

While there is widespread insecurity surrounding how health care reform will impact the delivery of care, Pratt does not foresee any revolutionary changes before 2018. But he did identify three delivery models to watch:

1. Enhanced P4P. Expect to see experiments with increased financial bonuses and penalties or withholds assessed based on outcomes or process performance.
2. Bundled Payments. The reform bill also authorizes demonstration projects beginning in 2013 in which the payor disburses a single payment to cover hospital and physicians in one lump sum to be divided among themselves, working together to bring costs in line and produce a good outcome. They are talking about bundling not just inpatient, but the episodic bundled payment, including all physician, pre-admission, inpatient, ambulatory and post acute-care services, which could drive down utilization of imaging. “It is hard to execute, and Medicare is going to have a world of hurt trying to get this up and running,” notes Pratt.
3. Accountable Care/Shared Savings model. This model charges a group of providers with care of a specific population, introducing total cost management incentives and bonuses to keep patients out of hospitals. CMS has several pediatric and other projects teed up over next 8 years, beginning in 2012. At same time a lot of private payors are looking at getting some projects going as early as 2012. “If this model comes into widespread use there could be a large pressure on imaging,” Pratt speculates. “It all depends on the size of the bonus.”

“At the end of the day we are not going here overnight,” Pratt notes. “Fee for service is still very much alive and well.”

In the meantime, Pratt recommends evaluating outpatient facility opportunities, maximizing the volume of orders through sufficient imaging capacity, and optimizing referring physician referrals.