Radiology Practices Fight Declining Technical Revenues

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imageAlicia Vasquez

Declining technical revenues have become a way of life for imaging practices, but that doesn’t mean that they are taking the situation lying down: “Having a proactive stance and an ongoing application of strategies to compensate for decreases, head on, is a must for facilities with a will to survive,” according to Michael Bohl, executive director, Radiology Group PC, SC, Davenport, Iowa.

imageMichael Bohl, MHA

Much of the precipitous drop of recent years can be traced to the DRA of 2005. A study 1 published in the September 2009 issue of the Journal of the American College of Radiology: JACR cites a Government Accountability Office report indicating that in 2007—the first year that the DRA took effect—Medicare Part B payments for imaging dropped to $12.1 billion, 12.7% less than the $13.8 billion in payments reported in 2006.

The DRA cuts, however, are only the tip of the iceberg. Additional radiology payment cuts instituted by CMS and slated for gradual implementation between 2010 and 2013 will “do further damage,” Bohl says. He estimates (based on what he describes as a sophisticated model) an overall 28% reduction in Medicare revenues for large, multimodality imaging centers over the next three years. Revenues from dual-energy x-ray absorptiometry will drop by 43%; for CT, by 36%; for nuclear cardiology, by 36%; for MRI, by 33%; for general radiography, by 13%; for nuclear medicine, by 10%; and for ultrasound, by 6%, Bohl believes.

Moreover, reduced reimbursements are not the only factor setting imaging-center revenues on a downward path; other catalysts continue to come into play. Increased patient use of emergency departments’ radiology services, rather than those available at private facilities, tops the list for Arcadia Radiology Medical Group in California. So, too, does the languishing economy, which is affecting patients’ willingness to undergo elective radiological examinations for which a high copayment is likely to be required, according to Alicia Vasquez, administrator.

Yet another factor is payors’ growing tendency to add radiology benefit managers (RBMs) as to their cost-control arsenals. In many instances, Bohl notes, insurers will precertify radiological procedures, only to deny payments subsequently, based on RBM recommendation. “In the past, one of our bigger problems was practitioners who, instead of sending their patients to imaging centers, would bring imaging in-house,” Bohl asserts. “That trend is largely behind us. It’s been replaced, however, by the complication of RBMs, which—due to cost pressure on insurers—are here to stay. The impact on revenues will not be as great as that of declining reimbursements, but it will still be felt.”

Nips and Tucks

For both radiology groups, compensating for reduced revenues—no matter what their catalyst—entails the continued identification and elimination of poor income producers. “We’re a high–fixed-cost, heavy-salary business with an expensive infrastructure, so when the time arrived to consider how to handle declining revenues, we looked at where we were spending too much money for not enough return,” Bohl says.

Until recently, Radiology Group maintained two radiography sites operated from two physicians’ offices. A decision was made to close both facilities, yielding considerable savings in equipment, maintenance, rent, and the salaries of two FTEs. “Operating single-modality centers, particularly underperforming ones, simply did not make sense for us on so many levels,” Bohl says.

Complementing these cuts are changes in imaging centers’ personnel-utilization patterns and labor structure. It’s not surprising, according to Bohl, that many facilities have forgone wage adjustments in 2009 and 2010. Others are looking at alternative staffing arrangements, such as increased use of part-time personnel and imaging aides to support a core staff . Virtually all Radiology Group employees work on a full-time schedule. Bohl and his colleagues continue to monitor the situation, however; should conditions warrant, they will explore the limited use of part-time staff with flexible scheduling. Neither Radiology Group nor Arcadia Radiology has executed any layoffs, but both facilities have opted not to replace personnel lost through voluntary attrition.

Bolstering Productivity

Compensation for declining revenues also comes in the form of technology investments intended to increase radiologists’ productivity. Arcadia Radiology has integrated