Efficient Expansion on Medicare Margins: Eisenhower Radiology Medical Group
Eisenhower Radiology Medical Group (ERMG) has accomplished what many would consider impossible: rapid, recent expansion during a recession, with a patient base composed primarily of Medicare beneficiaries. The 17-radiologist group, located in Rancho Mirage, California, has added three imaging centers to its roster in as many years, according to Blair Dick, business administrator for the practice. “One of the biggest challenges we’ve faced was expanding from one facility to four in this economic environment, which is one of the worst we’ve ever faced,” Dick says. “We did it because we wanted to position ourselves to accommodate the increased demand for imaging services that will result from health-care reform.” Rancho Mirage is an affluent suburb of Palm Springs that has a patient population composed primarily of retirees on Medicare. “We have a very demanding medical staff at Eisenhower Medical Center,” Dick says, referring to the Rancho Mirage hospital with which the practice has a long-standing relationship, including joint-venture arrangements for outpatient imaging facilities. “We consider ourselves fairly high end; we try to keep our equipment very current, and we have very nice facilities. Our challenge is maintaining that higher-end service and quality while knowing that the reimbursement pressure is going to continue.” Understanding the Population To understand better whether its patient population can support the addition of new service lines, ERMG takes advantage of business intelligence provided by its billing partner, Zotec Partners. “Zotec helps us determine where our focus needs to be when we consider expansion,” Dick says. “We have a very high Medicare population here, which is good and bad news: It means high utilization, but lower reimbursement. We have to be able to make a go of it with 70% Medicare patients and the rest from HMOs and PPOs, which are not providing much more reimbursement than what we see from Medicare.” With a demanding patient population that uses imaging regularly, ERMG saw an opportunity in the outpatient market. “There are plenty of services on the inpatient side that would be—if done on the outpatient side—both more convenient and less costly for patients,” Dick says. “We have to make decisions on what modalities and mix of procedures we need to do to offer the complete experience for our patients.” In a recent example, ERMG moved some of its interventional services to the newest of its four Eisenhower Imaging Center outpatient facilities. With the help of business intelligence, the practice was able to determine that its volumes would support the change. “Under the joint venture with the hospital, we’re able to bill in a global arrangement, which gives us an advantage,” Dick says. “Not only will it be more beneficial for the radiology group, but it will also be more cost effective for patients.” Seeing the Big Picture With the help of business intelligence, ERMG is better able to forecast its future needs to ensure its continued success in the market. “We have such a wealth of knowledge now, even compared with what we had five years ago,” Dick says. “We can see the information any way we can think of looking at it: by patient demographics, geography, or payor mixes.” That capability has an impact on more than the practice’s ability to assess whether it can sustain new facilities, Dick says. “Something a lot of radiology groups struggle with is bringing on new radiologists—and whether the new person should be a partner or an employee,” he says. “You have to be able to anticipate what the best structure of the group will be, in terms of partners versus nonpartners, over the next few years. Bringing on bodies is a product of your volume, and understanding that, through business intelligence, can help us determine what kind of staff we need.” Business intelligence also helps the practice balance between high-end services (CT, MRI, and nuclear medicine) and services that benefit patients, but offer lower reimbursement, such as radiography. “When imaging centers really exploded as businesses, it was all about going after the high-end business, but that’s really a disservice to the customers,” Dick says. “We want to be seen as full service in our community. Business intelligence helps us decide whether we can offer interventional services alongside basic radiography, in a given facility; it helps us balance those services.” It’s most critical, perhaps, that business intelligence empowers the practice and its leaders to assess its options more quickly than ever before. “You can make decisions quickly and with more confidence,” Dick says. Cat Vasko is editor of MedPracticeBiz and associate editor of Radiology Business Journal.