Mark Kleinschmidt: Brokering a Shared Vision

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When NightHawk Radiology, Coeur d’Alene, Idaho, purchased the business infrastructure of St Paul Radiology in the summer of 2007, the entire industry took notice. In purchasing what is widely acknowledged to be one of radiology’s best business operations, NightHawk also acquired one of its strongest leaders in Mark Kleinschmidt, St Paul’s former CEO and recently named VP of sales for NightHawk. ImagingBiz.com caught up with Kleinschmidt to discover why this marriage was brokered and exactly what it has wrought. ImagingBiz.com: With the acquisition of the St Paul Radiology business infrastructure by NightHawk Radiology Services and a subsequent deal in which CML Healthcare acquired ARS, you appear to have set a trend. Why are radiology business offices such attractive assets in this market? Kleinschmidt: I believe that successful, efficient operators are always going to be attractive. In both cases that you mention, it’s really a case of high-quality radiologists, as well as an efficient, well-run business office, that make the difference. I wouldn’t say it’s the back office alone, but really the combination of those two that makes the practices look worthwhile. ImagingBiz.com: As the CEO of St Paul, you played a key role in building the business side of the practice. What was your background before arriving at St Paul, and what were your objectives in taking the job? Kleinschmidt: I’ve been in radiology for 20 years, since 1988, and most of that time I spent consulting with groups, looking to improve their back offices, if you will, and the whole business side of their practices. I worked with several dozen groups throughout the country over that period of time, and got to understand the nuts and bolts of radiology business operations. That was the background in coming to St Paul. I really wanted to build on St Paul Radiology’s 80-year tradition of providing high-quality radiology services—to maintain, grow, and continue that tradition they had—but also to use technology to begin to improve the efficiency and quality of service provided by St Paul Radiology, and to make St Paul Radiology an innovative leader in radiology. ImagingBiz.com: Tell us about the strength and experience of your leadership team. Kleinschmidt: We’ve always had strong physician leadership. In fact, in the nine years I spent there, there were only two physician leaders during that time, so there was always strong continuity, but also in terms of the business people, the key leaders have all been there a minimum of five years. There’s stability in leadership, along with people who want to be there. Obviously, professionals have options, so these are people who chose to join us and then to stay. ImagingBiz.com: What are the key components that make a great radiology business operation? Kleinschmidt: I think you need strong leadership, and I think you’ve also got to set clear expectations. Everybody needs to understand the goals and to follow them. Then, you need to get out of the way and let them do their jobs. You need people who are detail-oriented, people who have a real can-do attitude about improving what they do, and people who are focused on being as efficient as they can be. ImagingBiz.com: There are a handful of sophisticated radiology business offices in the market today. What do you think attracted NightHawk to St Paul? Kleinschmidt: I think they saw a premier radiology group in St Paul Radiology. St Paul was the largest private practice in the country, at the time, and had always been innovative and entrepreneurial, and that was attractive to NightHawk. There is a demonstrated long-term track record of success, so they had the confidence they were buying into a successful organization. At the end of the day, what cinched the deal is that both organizations had a shared vision of where radiology was going, and that led to the collaboration that we reached now. We are following the same vision; we’ve got the same dream. ImagingBiz.com: What is that shared vision? Kleinschmidt: What we see happening is that radiology continues to become much more complex and sophisticated, and it increasingly requires subspecialty orientation to the delivery of care. Unlike the old days, when the radiologist had to travel to where the exam was performed because it was all analog and film based, now, with technology, we can deliver the exams to where the subspecialty radiologists are. I think that the vision St Paul had, and that NightHawk has today, is to bring together the best and brightest radiologists from throughout the country and build an organization that is focused on high-quality services in an efficient manner, using technology to assist the radiologists to become even more efficient. ImagingBiz.com: What is your vision for how NightHawk will use this new business asset with its existing customers? Kleinschmidt: One of the things that I have said is that I don’t want to see this just become another billing service. Instead, what we want to do is offer billing services in conjunction with other services that NightHawk offers. For example, if there is a radiology group that needs nighttime reads or even subspecialty reads, we can package that together—business-office services with the professional services that the radiologists offer—and do so in a package to help differentiate ourselves from the other players in the marketplace. Our vision, though, is also to offer an alternative for radiology groups that want NightHawk and its affiliated radiologists to perform final interpretations (in a model where the radiology group reading it and NightHawk can actually bill the patients and/or their insurance directly for those exams, rather than billing them on a fee-per-exam basis). It gives us a little more flexibility, so that NightHawk then can be viewed as an extension of that local radiology group’s practice and can be paid on the same basis on which the radiologist gets paid, which is billing and collecting for its own services that it performs. ImagingBiz.com: Now that you are a NightHawk executive, how has your role changed? Kleinschmidt: I now am taking a more national view of things. At St Paul Radiology, we were most concerned with the Greater Twin Cities area and the upper Midwest; NightHawk, now, has allowed me to step back and take a broader view of what is happening throughout the country. Most recently, I have also been given the opportunity to lead the NightHawk sales force. That is really designed to have our salespeople understand radiology group practice better—to get into those accounts and really make sure we are providing services that meet their needs, rather than simply providing a single product that had been traditionally offered (which was the preliminary read product). We are now extending that, and it requires people to have a greater understanding of the radiology marketplace in order to understand their needs. I now am assisting the sales force to move them in that direction. ImagingBiz.com: What is the most important way in which you intend to add value to NightHawk’s business operations? Kleinschmidt: NightHawk has a lot of talented people here, so I don’t pretend to have a special skill that can enhance things to a great degree. I guess my contributions are to add my voice to the mix, and to make sure my years of experience working on the radiology-group side can assist NightHawk in designing its products and services to meet the needs of those radiology groups. ImagingBiz.com: What are the business tools St Paul has that can be leveraged for other practices? Kleinschmidt: I expect that we will get more involved in radiology-group management, particularly with smaller groups that are located outside urban areas and that really need and want leadership to take them forward. It requires someone who understands the needs of small groups, too, and that’s an area in which I suspect we will play an increasing role. I also think that the wealth of data we have amassed over the years at St Paul could be of immense value to other NightHawk customers: to help them set up best practices, to design ways to be more efficient, and to automate processes that had previously been manual. I think the experience that St Paul (and now NightHawk) has in those areas and the data that it has amassed are going to be immensely useful as other groups look to model themselves on what St Paul has done. ImagingBiz.com: The tools are important, but without strong leadership they can’t be effectively applied. What are the three most important rules you use to lead? Kleinschmidt: They are, first, to establish a clear vision of where we are going; second, to build a strong team around you (and not to be afraid to hire people who are smarter than you are); and third, probably, to take risks—to lead the market. ImagingBiz.com: Who or what has most influenced your style of leadership? Kleinschmidt: I’d have to say, probably, my parents. They always said, "Do the right thing; change the world." They said things like, "Know what you stand for and stick to your principles. Don’t take yourself too seriously." I think those are all things that have helped me, and those are all traits that I clearly picked up from my parents.