Drawing a line in the shifting sands of the radiology marketplace, David Engert, CEO, NightHawk Radiology Holdings, has gone public with a list of the terms under which the teleradiology company would consider providing service directly or indirectly through a practice management organization [PMO] to a hospital. Coupled with a statement of commitment to radiology practices, NightHawk’s rules of engagement were released in response to the current predatory practices in the teleradiology market, Engert told ImagingBiz during a telephone interview.
ImagingBiz: What prompted the development of what you are calling your rules of engagement?
Engert: It’s something we developed well over a year ago as a result of a situation: We were indirectly providing services to a Toledo, Ohio hospital through a PMO, and had been for multiple other sites before that, but this one didn’t turn out well. It wasn’t managed well by anyone in the picture, and when we got in there, it blew up. We didn’t want to see that happen, that was never our intention.
That was the impetus for us to say we inadvertently or indirectly can’t get involved in something like that again. We decided to create an internal set of rules of engagement that would be our guideline for not letting that happen.
Why we decided to go public with it now is related to something we see happening in the entire radiology industry. We have never engaged in disintermediating a group or becoming competitive or predatory with any of our customers. But, we have seen several, many, other teleradiology companies become very predatory, some overtly, and some not so overtly, but they are going after hospital contracts and going after business that either was currently provided by a group or was very recently provided by a group.
We want to send a clear message to the marketplace, so that our customers and anybody who might ever think about being our customer understands that we are publicly committed to following a very well-defined course that precludes us from becoming predatory with our customers, our radiology groups, in general. We are making the statement publicly now, even though we have been living and breathing it for a year.
ImagingBiz: Your third rule of engagement states that you would consider supporting a PMO’s bid for a hospital contract only if the hospital initiates an open competition and none of the competing groups were a client. Could you clarify?
Engert: In rule number 3, if there is an incumbent radiology group, and they are not a NightHawk customer, and an open and fair competition for the business develops, and no other group pursuing that business is a customer of ours, we would consider providing services to a PMO if they won the business. It is important to clarify that under our rules, if the incumbent group is not our customer and another radiology group competing for that business is our customer, we would participate with that group, and not a PMO.
ImagingBiz: You allude to some missteps in your press release and some hard lessons. Are you referring to NightHawk’s role in the Mercy Health Partners/Consulting Radiologists relationship? What is your current role there?
Engert: If I look back at Toledo, I would say that was not done with an open and fair competition, because it was not done with a public RFP. In the business world, if something happens that we didn’t plan on but inadvertently and indirectly results in an outcome we don’t like, all I can do is try to make sure it doesn’t happen again. That’s the hard lesson we learned.
We are contractually committed [to provide services at Mercy Hospital through Imaging Advantage]…. The original contracts with Imaging Advantage were signed when Paul Berger was still CEO.
ImagingBiz: Did this decision result in you losing some of your customers? How significant of a loss was it and what were the lessons you learned?
Engert: Yes, but I am not going to comment on who and what. It hasn’t had a dramatic impact on our financials, but I am not proud of losing any customers. I think it is apparent in the rules of engagement: What we are trying not to see happen is a group getting displaced that we have any direct involvement with, ever.
I magingBiz: What has been the response from your customers to your new initiative? Has it tempered their fear that NightHawk is a predator?
Engert: Overwhelmingly positive. The marketplace has been afraid that NightHawk might be a competitor since