Radiology group takes a risk for thrifty patients

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Is flat-rate pricing the wave of the future for outpatient radiology? One large practice in the Midwest is going to find out.

The 50-radiologist Northwest Radiology Network, based in Indianapolis and ranked No. 37 in Radiology Business Journal’s latest Radiology 100 survey, has pinned a guaranteed price menu of 12 exams to its website. Regardless of what body part a patient has imaged, he or she will never pay more than $50 for an x-ray, $150 for an ultrasound, $600 for a CT or $800 for an MRI.  The only variables lifting rates to those ceilings are whether contrast is used and whether two images are required.

The practice’s move to put its money where its patients’ priorities are caught the eye of healthcare money watcher J.K. Wall, who blogs for the Indianapolis Business Journal. “[T]he plan right now is a small experiment to see if Northwest Radiology can use flat-rate pricing to attract more customers without losing money in the process,” wrote Wall.

He noted that the practice is not offering flat-rate pricing on imaging services it provides to local hospitals, which collectively represent at least 90% of Northwest’s business.

The practice arrived at its prices by looking at a few variables, including the rates it has negotiated with various private insurers. Then it aimed for the midpoint.

On paper, it’s a can’t-lose for the patient. Those with health plans that would have paid more than the listed price will still only pay the flat rate. And patients whose insurers negotiated a lower rate than what’s on the menu will still pay the lower rate.

But what about the practice?

“Since some of its scans are lower than the amount of reimbursement it would normally have received from insurers, Northwest Radiology could lose money if larger chunks of patients choose flat-rate pricing on those procedures than the chunk that chooses the profitable scans,” Wall wrote.

Kent Hansen, MD, the practice’s CEO, told Wall that there is indeed some financial risk involved—a caveat that did not go unnoticed by Northwest’s board of directors and its other physicians. But a consensus emerged that a better system had to find a foothold in a time when patients are paying more and more out of pocket for healthcare.

“Flat-rate pricing probably is the future,” Hansen said. “I think people want it.”

Check out Northwest Radiology Network’s flat rates here and read J.K. Wall’s blog post here