Over the past 15 years, outpatient imaging has been subject to high growth rates. Because this has been particularly true of the more profitable high-end imaging services, this growth has attracted attention from all quarters. For the first 10 of those 15 high-growth years, outpatient imaging was most often provided by hospitals or by radiologists; they made high-end imaging available as part of multi-modality imaging services.
Over the past 5 years, however, clinicians have increasingly become active participants in the provision of the high-end outpatient imaging services that are ancillary to their specialties. Conflict between clinicians and radiologists/hospitals has often been the result. Where the provision of high-end outpatient imaging services is concerned, collaboration has been seen far less frequently.
The challenges made to clinicians’ involvement in outpatient imaging, to date, have been primarily regulatory and financial, with barriers erected by commercial payors growing in some regions. Nearly every imaging provider has been affected by decreasing Medicare and commercial payments; in response, providers are trying to cut costs, improve productivity, and increase procedural volumes.
A number of the factors that affect the provision of imaging services today can also be expected to have a continuing influence on this industry in coming years. Hospital inpatient and emergency-department volumes are increasing significantly and are having an impact on campus imaging services by creating shortages of capital, capacity, staff, and space.
At the same time, hospitals continue to lose high-end outpatient imaging, oncology, cardiology, and surgery services, primarily because their competitors concentrate on offering more convenient access, better service, and the ability to meet the needs of patients and physicians. Increasing numbers of underinsured and uninsured patients are receiving services at the hospital, leading to a deterioration in the economic health of the remaining outpatient imaging performed on the hospital campus.
There is growing friction between specialists and the hospital regarding coverage and exclusivity for inpatient and outpatient services (and off-campus competition for revenues). Patients are demanding user-friendly service delivery, while at the same time becoming more discerning in evaluating quality of care and their out-of-pocket costs.
Pressures from CMS, OIG, state agencies, and commercial payors will continue to affect payments, infrastructure costs, and the formation and operation of outpatient imaging ventures. The Deficit Reduction Act (DRA) of 2005, which became effective in 2007, continues to be one of the key factors influencing group outpatient imaging revenues. On a regional basis, the response of commercial payors to the DRA, along with the success of their initiatives, can also have an important impact.
The pending conversion-factor reduction effective in 2008 will also be an element requiring consideration and planning. Of course, the degree to which an imaging group is affected by these changes depends on its individual circumstances, including its examination mix, its payor mix, its geographic location, the terms of its existing and future contracts, and the success rate of its collections program.
The 2008 Medicare Physician Fee Schedule (MPFS) proposed rule changes will become effective January 1, 2008, and phase III of the Stark regulations became effective on December 4, 2007. Several new rules affecting imaging providers will result. Some types of leasing arrangements, particularly those in which investors are not at risk, would effectively be barred under the MPFS proposed rule changes. Also affected are percentage compensation arrangements (other than those for professional services).
As a result of the new regulations, markups (ie, profits) on certain purchased and reassigned technical and professional component services for Medicaire patients ordered by the group billing for the service are no longer allowed. Certain services furnished under arrangement with a hospital that, in turn, bills for such services are now under scrutiny and could well be propitiated. Congress has threatened to outlaw global billing of imaging services and even now this concept still appears to be under serious consideration.
Nonetheless, there are still situations in which an outpatient imaging venture might be beneficial. If the referring physician