Achieving Competitive Scale in Radiology While Maintaining Independence

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Bill Pickart, CEOAs consolidation in the hospital market continues apace—driven by the increasing prevalence of integrated delivery networks (IDNs), accountable-care organizations, and other new payment/delivery models—many radiology groups find themselves at a crossroads. How can they gain the scale necessary to meet the mounting demands of today’s care continuum, given the continued downward pressure on reimbursement? RadAnalytics spoke with Bill Pickart, CEO of Integrated Medical Partners, about an emerging option that strikes a compromise between independence and scale, enabling groups to take a proactive approach to meeting hospitals’ evolving quality and service directives and needs. RadAnalytics: Given the fact that hospitals are consolidating in record numbers, can independent radiology groups maintain their viability by using a similar strategy? Pickart: Absolutely: Independent practices can protect their franchises by following a similar strategy within the appropriate model. RadAnalytics: What is the appropriate model? What are the advantages of one model or approach over another? Pickart: Traditionally, consolidation involved practices in a merger or an acquisition. Having worked in the merger/acquisition-financing sector, I know that there are numerous challenges associated with those models—none of which is more important than successfully joining the disparate cultures of the merged practices. It’s very difficult, and it requires much skill and many resources. Without the proper merging of cultures, the merger will not be successful. As an alternative to a merger or acquisition, an affiliation is a more feasible way to collaborate beneficially and work together. RadAnalytics: Alignment of interests between competing practices has proved elusive in the past. How would an affiliation model help groups overcome this reluctance and find common ground? Pickart: Practices need to understand that significant, permanent changes (both to the way that they engage in the delivery of care and to the manner in which they are reimbursed) necessitate change in the way they compete. In addition, there has to be a desire, among groups, to promote affiliation and collaboration, on a noncompetitive basis, as a model that enables them to feel comfortable sharing data, developing clinical protocol metric, and quality-outcome measures—all for the benefit of their primary customers, their hospitals, their referring physicians, and their patients. RadAnalytics: Is this a way of ensuring consistency for a customer who otherwise might have reason to be wary (because the groups aren’t financially aligned)? Pickart: Yes: Financial alignment is typically achieved through merger or acquisition. It is assumed that the practices, once merged, will provide one consistent level of diagnostic quality. The affiliation model does not involve a financial merger or acquisition, yet its purpose, its governance structure, and its ability to provide evidence of performance are designed to promote best practices in support of network directives. As hospitals are consolidating under IDNs or systems within a given marketplace (with the intent of delivering consistent, high-quality care across all of their facilities), it’s imperative for radiology groups to enhance their positions within those networks by promoting consistency among themselves in support of network goals. RadAnalytics: What will it take for the affiliated groups to demonstrate that they are meeting the hospital’s needs? Pickart: In the absence of strong evidence of affiliated groups’ promotion and accomplishment of the hospital’s objectives, the hospital will not assign value to the affiliation. Through use of the correct measurements and analytics, the affiliate can demonstrate that it is committed to the quality-of-care objectives being promoted by the hospital (for the hospital’s benefit). It is imperative for the affiliate to demonstrate its contribution to the hospital’s objectives continuously, through its reporting capabilities. RadAnalytics: Have you seen any real-world examples in which groups collaborated while maintaining their independence? Pickart: Collaboration models are in the process of being brought to market. For instance, at the Fifth Annual ACR–RBMA Forum (held in Boston, Massachusetts, on September 7-8, 2013), an affiliation model was introduced and discussed. Although I’m not privy to all of the details, its intent sounds consistent with what I have been describing. RadAnalytics: How is trust established between the partners in an affiliation model? Pickart: Establishing trust among the collaborating partners is paramount in the success of the affiliation model. It’s also one of the most challenging issues to deal with on the front end of assembling the group. It is the key consideration for the affiliation project’s leaders to use in determining whether the effort to bring the groups together will ultimately be successful. The way to promote trust is for both the legal documentation underpinning the model and the ongoing management structure of the model to support a common trust. Engaging an impartial, third-party collaboration facilitator who can assist in bringing the groups together in a way that will help them trust one another is extremely beneficial to the success of the collaborative effort. RadAnalytics: What roles do the structure and the facilitator play? Pickart: Given the speed at which consolidation pressures in the marketplace are mounting, there is not enough time for radiology practices to merge all of their operating systems and information platforms to address the pressure. To meet immediate needs, the ideal platform is one that allows data to flow from each of the practices’ disparate systems/platforms into a central repository to provide for the required analytics. Deeper integration, and the economies of scale that result from a full system integration come later. Assuming that the hospital is the primary client of the affiliate, the affiliated groups must provide evidence demonstrating that they are doing what they committed to do to benefit the hospital’s IDN and support its stated goals. Structure is important. In order to maintain confidentiality among the groups, operations and, most importantly, the analytics and informatics systems of the affiliate need to run on a unified, group-neutral platform. I have spoken to numerous entrepreneurial radiologist leaders who have recounted their unsuccessful experiences and attempts to assemble a collaboration model. Most are of the opinion that their efforts were unsuccessful because they neglected to engage a neutral, nonmember facilitator to make the collaboration operational. Neutrality is a key concept. RadAnalytics: Why is it so essential that groups act quickly? Pickart: The clock on the assemblage of IDNs started ticking three and a half years ago. Our community has not responded quickly enough to the potential demands and requirements of the new IDNs that are now upon us. Radiology practices that understand the needs and desires of their hospital systems, as well as the market pressures they grapple with, and that are responding to those inputs are the best positioned to succeed as independent groups. RadAnalytics: What can hospitals get from a larger-scale radiology-practice network that they can’t get from a traditional practice? Pickart: Hospital systems driving IDNs want a singular voice representing their radiology community. They want to ensure consistency of radiology-interpretation quality and service across their networks. Most important, they’re looking for a partner relationship that promotes alignment and the sustained support of their goals and objectives. If done properly, the affiliation will allow the hospital system to achieve its goals. The affiliated practices can pool resources and subspecialty expertise in a manner that will promote consistency across all of the facilities in the hospital system. It can also provide unified and consistent reporting—clinical, as well as demographic and financial—for the benefit of the hospital. RadAnalytics: Why is a radiology-practice–affiliation model most attractive to an integrating hospital system? Pickart: Typical system configurations that include numerous independent radiology practices will struggle to unify the practices as tightly and as quickly as required through the traditional aggregation models. The traditional models are disruptive. Practice acquisitions are cost prohibitive for most hospitals as a means to achieve their goals. The affiliation model allows for unification and collaboration to happen quickly. It allows groups to remain independent, sparing all of the parties the angst (and the turmoil of attempting to meld cultures, financial structures, and operational entities) typical of a merger and/or acquisition. The time and energy saved can be focused on the development and articulation of network goals and measurable outcomes. RadAnalytics: How would the affiliated model benefit the groups in the future? Pickart: In the next 20 years, the demand for radiological services will increase. Despite utilization-management efforts, the aging of the US population will result in greater net utilization than exists today. With declining reimbursement per episode of care, this increase means that radiology practices must develop more efficient ways of managing their resources. The affiliation model provides a framework through which groups can work together to share unique talents and capabilities—for the benefit of one another and of their hospitals, clients, and patients. The bottom line is that the affiliation model allows radiology groups to demonstrate performance according to mutually developed and agreed-upon performance measurements. In doing so, they can differentiate themselves, collectively, for the benefit of the hospital. Affiliation provides the hospital with an opportunity to differentiate itself and to advertise in its market that it has a unified radiology strategy—one that meets or exceeds stringent quality, service, and outcome objectives.