Two Hospitals, Two Paths: Case Studies in Hospital Outpatient Imaging

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The outpatient imaging enterprises of Premiere Health Partners, Dayton, Ohio, and Robinson Memorial Hospital, Ravenna, Ohio, could not be more different. The three-hospital health system, for instance, opened 6 imaging centers within nine months and partnered with three radiology practices. The county hospital went solo, with one imaging center and sole ownership. Both, however, achieved their mission: volume is steadily building in the new freestanding as well as existing hospital-based outpatient imaging operations, successfully stemming the outflow of outpatient imaging studies to community-based imaging centers, while maintaining hospital-based reimbursement.

A linchpin to both successes was choosing the right leadership, according to Craig Anderson, Sr, founder of Charis Healthcare LLC, Hudson, Ohio, a consulting company that was engaged to facilitate planning for both ventures.

“If you are going to be successful, one of the keys is to not put these outpatient centers under department heads in your organization, but to go out and recruit best-in-class service delivery executives to manage these centers.”

Premiere Health Partners
Prior to accepting the CEO position at Vanguard Imaging Partners, Joseph Bryzynski performed the more abstract task of strategic planning and business development, first for Good Samaritan Hospital and then for Premiere Health Partners, a three-hospital health system resulting from the merger of Good Samaritan, Miami Valley Hospital, and Middletown Regional Hospital in the greater Dayton, Ohio area.

“I was feet-on-the-ground, still responsible for activities specific to Good Sam, but we also started to talk about what it means to be a system,” Bryzynski explained. “Do we compete with each other? What service lines do we focus on? Outpatient imaging became one of the areas we felt Premiere needed to focus on, and I became the business development person within Premiere to spearhead that effort.”

The hospitals had a sense of urgency in moving forward with the imaging project as it rightly recognized it could not compete on the basis of service with the many outpatient imaging centers appearing in their community. “The patients coming out of the trauma program, the emergency department, and the inpatient side always got first priority,” Bryzynski acknowledged. “Premiere basically decided, we are either going to be in the outpatient imaging business or not, and if we are, we are going to have to create a different model to be competitive in that industry.”

Within an 18-month period, the three hospitals and 37 participating radiologists went through the entire organizational process to form a new entity, including operating, governance, and legal agreements, opening its first center in July 2005, and five subsequent centers, with a seventh planned to open next month. “Not only were we trying to build patient volume, but we had to build a company,” Bryzynski recalled. “This was not done as a department of the hospital. So policies, procedures, hiring of employees, payroll, an accounting system, a billing company, all of this was happening in parallel, while we were out developing our centers and picking which communities we were going into.”

Vanguard first assessed the primary and secondary service areas for the three hospitals in Southwestern Ohio, eliminating sites that were closer than 10 miles to each hospital. They merged the market assessment tools the hospital had with the tools Charis had and ended up with a long list of communities ranked and prioritized based on competition, population growth, supporting physician base, and demographics. After defining the critical mass of centers as being six, Vanguard chose the top six communities and began looking for space to lease. All but one of the centers is multi-modality, including high-field open and closed MRI, CT, ultrasound, and X-ray. The company is currently struggling with the decision of whether or not to add mammography. “When we started this venture, it was before the days of digital mammography,” he noted. “So we’ve gone from a $67,000 capital expenditure to a $600,000 capital expenditure.”

All of the major local financial institutions were approached for financing. “We basically have a partnership with one of the large financial institutions in the Dayton area,” Bryzynski said. “The hospitals and radiology groups put in their equity contributions to get us through the first year, year-and-a-half of our startup operations.