Sg2: Business Execution Key to Post-DRA Survival

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After enlightening attendees about the new players in the outpatient imaging field, and educating them on where the growth potential exists, Michael Silver, PhD, read outpatient radiology the riot act in the concluding segment of his talk: “You have to know your market,” advised Silver, vice president, Sg2, the Skokie, Ill-based health care consulting group. “You have to have an aggressive marketing program, you have to monitor and measure what is going on in the marketplace, and you have to develop the skills to manage by margins, because that is going to determine who is going to be successful, who is going to survive and who isn’t.”

The business skills likely to become even more important than in the past, Silver said are a strong back office from a billing perspective, accreditation, CON skills, and lobbying. “If you are contracting with radiologists, the growing trend that we are seeing is performance-based contracting,” Silver shared. “Both hospitals and outpatient facilities want performance from the radiologists that they are working with, and they want to monitor that performance and hold radiologists to those contracting guidelines of performance. And you have to be very proactive in your marketplace with regard to lobbying and accreditation, and CON skills will probably become more important in the future.

Silver advised center operators to focus on:

business execution;

the products and services offered;

productivity; and

business models.

Business execution skills, Silver said, fall under the following three functions:

Focus. Silver urged attendees to allocate their resources appropriately for the strategy they want to have.

Execution. This function includes the development and maintenance of brand value, and the implementation of good service, appropriate technology, and people management,

Measurement. Margin management is imperative, Silver emphasized. “You’ve got to measure your performance and monitor and correct it in the marketplace,” he emphasized.

“When we look at a retracting market, which we are seeing in some parts of the country, you have to become more productive and shorten the length of exams,” advised Silver. “But you also have to focus on the quality of the service and the reports that are going out, and add more hooks into your referring physicians. That means, in part, focusing on your reports, focusing on the service, focusing on subspecialty capabilities for those specialist as well.”

Silver urged participants to strategize about adding value to their products and services. “Brand-value strategize so you are not viewed as just a commodity, because once you are a commodity, it’s the low-price spread,” he said. “P4P and quality is going to become a very significant issue for you, much more than you would have thought a few years ago. That means your radiologist will have to become involved in peer review programs, which will become mandatory, and accreditation programs. Geisinger Clinic is now providing financial guarantee on their coronary bypass surgery. If you have complications, the patient care is provided at no additional cost. We are going to see more and more discussion of those kinds of programs in the marketplace, especially from self-insured large corporations that don’t want to pay for the same surgeries multiple times, and don’t want to pay for reads that are ineffective.”

In developing business execution strategies, radiology practices must be aware of the dangers of decentralized reading. “If your referring physicians are no longer seeing your faces, it is critical that you have strategies for adding value in the marketplace,” Silver warned. “Once you have a decentralized service, its very easy for your referring physicians and consumers to view you as a commodity. So you have to aggressively work at added value, brand value, and strategize so that you are not viewed as just a commodity, because once you are a commodity, it’s the low-price spread.”

The Right Stuff
The right products and services for your particular marketplace are critical, Silver said, and encompass the following: technology and technology timing adoption, scope of services, patient access and service, scheduling, and the report.

“The biggest mistake that we see is that facilities don’t think about their strategy for the following year when they acquire technology,” Silver revealed. “You have to have a multi-year strategy. You have to think about your scheduling process. You have