Surmounting the Challenges of Radiology-group Affiliation to Achieve Sustainability

Bill Pickart

In the most recent issue of this publication, I spoke of an emerging business model for radiology practices that want to maintain their independence while making the best use of economies of scale: local and/or regional affiliation. As hospitals and health systems continue to consolidate under emerging payment and delivery models, medical groups that hope to continue serving these customers as independent entities will have to increase in scope and scale to survive.
Nowhere is this truer than for radiology practices, which (in today’s health-care environment) can no longer expect to maintain their hospital contracts without providing true, deep, and broad subspecialty-level service, 24/7, to support health systems’ goals. These goals include improved access, better referring-physician alignment and recruitment, differentiation from competitors, demonstrated quality, and demonstrated appropriateness of care. What’s more, radiology groups need to provide this enhanced service level at a lower price—and are working with less and less reimbursement, to boot.
Ironically, it has been shown, time and time again, that radiology groups are most effective when they are able to remain nimble and entrepreneurial—in short, when they have the characteristics of a smaller-sized group. For that reason, the future business model with the most promise for this profession is affiliation and collaboration, in which multiple radiology groups align around shared service-level delivery, clinical and operational quality, efficiency, and financial performance—while maintaining their autonomy.
This model balances the need to increase in scale with the importance of remaining independent and agile. It’s the best of both worlds, from a strategic perspective, if it can be planned, structured, and executed correctly.
Like any emerging business model, however, the affiliated approach does contain potential hazards. The entrepreneurial nature of many radiology practices means that groups will have to learn to set aside their individual agendas for the sake of the power of the affiliated group entity. Once the affiliation is established, it will need to market itself appropriately to hospital and health-system customers—and will have to be prepared to deliver on its service commitments through innovation and recognized initiatives, as well as to provide evidence of that delivery through the use of powerful analytics, decision-support tools, and published measurements that prove that the group is furthering the goals of the affiliation (and the goals of its customers as well).
Coming to the Table
Based on the early development of collaborative-care models in which our radiology clients have been asked to consider participation in an affiliation (or to lead affiliation efforts), one of the most critical considerations for groups contemplating an affiliation is the availability to the affiliated group of each member practice’s datasets. The informatics and decision-support requirements of the emerging health-care environment will be stringent.
Practices must have access to the data produced by their key information systems, including revenue-cycle management, RIS, PACS, hospital information, scheduling, peer-review, accounting/finance, and any other systems that produce meaningful data that the practice can use to demonstrate added value to each member of the affiliated group, and, more important, its customers. Value, in this case, is defined as the establishment and documentation of favorable outcomes in terms of cost-efficient, high-quality patient care and of hospital customers’ differentiation needs.
Clinical data are also of critical importance because it is the convergence of clinical data that will create differentiation for the affiliation—and confer differentiation upon its hospital and health-system partners as well. By tapping into the reams of information produced by the PACS and the procedural side of the RIS, newly affiliated groups can begin to establish clinical protocols and determine the parameters that they will need to meet in order to be of benefit to their hospitals.
Clinical data will represent more of a challenge for newly affiliated organizations than financial/operational data will. Next year’s implementation of ICD-10 will result in disparities between how new codes are applied. Of course, radiology reports also contain a wealth of information in a nonstructured format that is difficult to derive with any degreeof automation. Report data will greatly enrich any newly established clinical protocols and benchmarks, but the data will take time to distill.
Establishing and Nurturing Trust
Because of their data-driven nature, the radiology-group affiliations of tomorrow will be structured in such a way as to promote trust among the different entities much more quickly than a traditional merger/acquisition would. In our experience with these arrangements, both financial and operational data will be standardized and masked, allowing groups to understand the combined organization’s standing without compromising the individual practices’ autonomy or privacy. Raw clinical data, on the other hand, are best shared freely among groups, for the benefit of all.
Nonetheless, trust is a tricky and ephemeral concept. In a traditional merger, combining cultures and bringing together information systems are the primary obstacles to be surmounted, but an affiliated model doesn’t require the same attention to organizational culture or systems integration. The groups do, however, have the imperative of sharing information. This sharing is critical to achieving all of the benefits of a merger with none of the liabilities—and is the key reason that such affiliations have only recently become possible.
Creating the Joint Leadership Team
The affiliation’s leadership team should contain representation from all of the member groups to ensure neutrality and impartiality. Further, the affiliation model will be at its most effective, in terms of meeting hospital and health-system needs, if it is visibly physician led. These initiatives cannot be approached as spectator sports.
Active physician involvement is essential. If the leaders of the affiliation listen to and correctly interpret the messages coming from the integrated delivery networks (IDNs) and/or accountable-care organizations (ACOs) in its target market, it will respond with an imaging strategy—driven by collaborative care—that will support their objectives (and that will resonate with every practice that has come to the table to create the new model).
Communicating the Value Proposition
New affiliations will face two critical communication challenges: appropriate messaging concerning the benefits of the combined entity (to establish relationships with newly consolidated delivery systems) and affirmation of the combined entity’s commitment to meeting hospital and health-system needs, medical-staff needs, and patient needs on an ongoing basis.
The initial messaging to the delivery network should focus on the positive influence that the affiliation will have on patient outcomes and on other key deliverables that the IDN will be marketing to its customers, including employers and individual patients. The most salient elements of that message are appropriateness of studies, utilization management, and adherence to best practices, in addition to the quality and level of subspecialization of the radiologists brought together by the affiliation. By virtue of its size and scale, the affiliation can help define clinical protocols, increase access, reduce costs, improve care, and increase efficiency in ways that the hospital never could on its own.
Ongoing communication of the value proposition will be essential to maintaining the relationship and will be almost entirely reliant on next-generation analytics and informatics. Measurements are likely to be specific to each relationship, given unique needs that vary from market to market, but the need to provide measurements of performance against pre-established goals will be universal. These measurements will need to be delivered (on a regular basis, in a manner that will be clear and concise) to all stakeholders, from physicians to administrators. With the growing influence of consumerism, some measurements might even be patient facing; transparency is of increasing importance to informed consumers.
Financial and operational measurements will also have a role to play, particularly when it comes to the affiliation’s ability to meet cost and/or reimbursement parameters that have been negotiated between the IDN and the payors. The affiliation will be able to weigh its resource-commitment levels for various dimensions of delivery of care (a current area of weakness, for many radiology practices). Companies such as IMP, which are handling analytics and informatics for multiple affiliations, will even be able to create national cost benchmarksfor various care episodes.
The unprecedented availability of these benchmarks will allow the affiliation to know—with certainty—what it can promise its health-system partners and what it cannot. Further, benchmarks will enable it to evaluate the viability of contract terms on a proactive basis. If, for instance, a health plan offers an unsustainably low payment amount for a certain imaging-inclusive episode of care, the affiliation can assist the health system in demonstrating that the rate won’t work, giving it a strong platform from which to continue the discussion.
As the health-care market continues to experience runaway consolidation, radiology groups that want to serve IDNs, ACOs, and other emerging entities will need both agility and scale to survive. By forming local and/or regional affiliations, practices can balance these two critical elements. The sustainability of the new business models that they form, however, will rely on groups’ ability to align under a unified and neutral framework, with a leadership team and a long-term strategy that reflect shared goals—and that promote the quality, efficiency, and affordability objectives so critical to the future performance of hospitals and health systems.
Bill Pickart is CEO of Integrated Medical Partners. He welcomes your comments at