Change is rarely easy, but Mark Stolper, executive vice president and CFO of RadNet, Inc (Los Angeles, California), says that it does not have to be painful. Communicating a workable vision and working with existing stakeholders can make all the difference because an acquisition has many moving parts. With 233 imaging centers now operating under the RadNet banner, Stolper knows this better than many: RadNet is the largest radiology group in the United States, with strong presences in California, Maryland, Delaware, New York’s Rochester and Rockland counties, Rhode Island, and Northern New Jersey.
Sticking almost exclusively to the East and West Coast markets has made RadNet and its regional practices familiar names in these populous regions. Private payors know the RadNet name because it carries considerable negotiating power, Stolper says; patients and referring physicians now RadNet’s centers and radiologist partners, as many of them have been fixtures in their medical communities for decades.
“The only way you can stop these private payors from unilaterally deciding your pricing is by having enough leverage and power that you can push back,” he says. “If you are the biggest provider in a market, the threat of your becoming a nonparticipating or out-of-network provider to regional payors could significantly hamper patient access, convenience, and quality of care. Radiology practices that partner with us suddenly have a seat at the negotiating table.”
The middle of the country might occasionally beckon, but Stolper says that it is much more efficient to operate centers on a regional basis, to share overhead and spread assets. An example is the ability to float technologists and other employees across the operation, in addition to garnering favorable contracts with equipment-service vendors.
RadNet’s Approach to Managing Change
By Mark Stolper
In a perfect world, we would have as much standardization among our centers as possible; however, running imaging centers is quite different from running a group of McDonald’s restaurants. Many of our centers are of different sizes, contain different equipment, have different patient and payor mixes, and have different referral relationships. We cannot have a one-size-fits-all mentality when we approach our operations and acquisitions.
Our significant scale and operating experience, though, have provided numerous core competencies and cost advantages relative to many of the smaller operators we have acquired. We try to impart this experience and these advantages to acquired operations as soon as possible. We fondly call this the process of RadNetization.
For instance, our scale has afforded us significant pricing benefits in procuring medical supplies, contrast agents, and radiopharmaceuticals. We also have the ability to purchase imaging equipment in bulk (at lower prices) and to secure equipment-maintenance and -service contracts at a cost benefit. We have also, historically, brought acquired centers operational and cost benefits in the areas of reimbursement operations (billing and collections), IT (we will be installing our eRAD RIS and PACS in all of our centers), medical coding, transcription, marketing, and compliance.
We are cognizant that change is not always easy to accept or adopt. We never try to revamp an acquired operation all at once, except in extreme cases (distressed situations, complete turnarounds, or matters that significantly improve patient care).
We generally like to make improvements over time, in conjunction with the existing employees, radiologists, and managers of acquired entities. In fact, we are very open minded in the way we approach our business.
We like to think that we are trying to proliferate best practices among our centers. This includes, from time to time, adopting the practices of acquired entities, if they are more effective than current RadNet ways of doing things.
Mark Stolper is executive vice president and CFO of RadNet, Inc (Los Angeles, California).
Fewer in the Future
Looking five years down the road, Stolper expects to see fewer imaging centers in the United States, and he predicts that those that remain will be owned by an increasingly small group. The challenges of lower reimbursement, pressure to reduce utilization, and the lack of availability of capital will not go away, and scale will remain vital to survival.
With success comes imitation. “Health systems and hospitals are getting more interested