Partnership As Growth Strategy: New York Radiology Alliance
Kenneth Schwartz, MD, medical director of New York Radiology Alliance (NYRA) in Bedford Hills, describes today’s radiology-practice environment as characterized by catch-22s. “I’ve been in the business for many years, and I have never seen such a drastic change over such a short period,” he says. “The demands of customers, referring physicians, and hospital administrators are much greater than they were in the past. You just can’t manage everything without the proper data, but in order to get data presented in the correct way, you need tremendous resources.” In anticipation of these changes, in October 2010, Schwartz and his colleagues merged their radiology group—called S&D Medical, at the time—with Virtual Radiologic Corp (vRad), enabling the practice to take advantage of vRad’s larger size and greater resources. “We felt that radiology groups are going to have difficulty meeting all these new requirements unless they attain a large enough size that they can achieve economies of scale, and we continue to believe that,” he says. “We think partnerships like ours are going to be a significant component of being able to continue to survive and grow in this difficult environment.” The Case for Teaming Up Schwartz sees a multitude of factors combining to create an environment in which, for radiology practices, bigger not only will be better, but will be necessary to survival. “What we are seeing now is the need to be more efficient, more customer oriented, more integrated, and more subspecialized. We think that in order to accomplish all that, the size of the delivery system is very important,” Schwartz says. “A four-, five-, or even 15-radiologist group is going to have difficult providing all this. Size is going to be a key differentiator, going forward.” The most critical change, in terms of service demands in radiology, has been turnaround time, Schwartz says. “Five years ago, the average turnaround time for interpreting an exam and producing a report was 12 to 24 hours, and everyone thought that was great,” he recalls. “Now, the turnaround for any kind of urgent case needs to be within 30 minutes, and the way the field is progressing, all cases will eventually have to be read within that time frame.” Further, Schwartz observes, the deepening of subspecialization in radiology has resulted in stronger alignment with other specialties. “It’s almost as if the neurology group has a neuroradiologist attached to it, the orthopedic department has a musculoskeletal radiologist attached to it, and the pediatric division has a pediatric radiologist,” he says. “That is a trend that is favorable, in the environment of accountable-care organizations and other risk-sharing approaches: The clinical physicians need radiologists’ opinions and consultations—now, more than ever. In order to offer that, though, you need to be of a large enough size to spare these radiologists, so they can dissociate themselves from the radiology department for long periods of time.” The radiologist shortage of yesteryear is no more, Schwartz notes, as residents continue to enter the field while older radiologists delay retirement. He adds that radiologists are more productive than ever before, meaning that fewer are needed to cover the same amount of clinical work. “It’s no longer a seller’s market in radiology,” Schwartz says. “Hospitals and customers can afford to be more demanding than ever before.” Evolving With the Market Schwartz sees evolution of the sort undertaken by NYRA—partnering to grow and to achieve economies of scale—as essential to the survival of radiology groups. “Hospitals are just not willing to take losses from their radiologists anymore,” he says. “They will just have their physicians send cases to places where they will get better, more complete service. The bar is much higher now, and it will continue to rise.” A doom-and-gloom mentality has been undertaken by many in the imaging field, but Schwartz views the current evolution imperative for radiology as a natural correction. “Some of this was overdue,” he notes. “Radiology had 10 of the most amazing years, in which we made a lot of money without having to work as hard as we do today. It was a little bit unnatural, even if we didn’t think of it that way at the time. It was a bubble that was bound to burst, and when it did, our practice didn’t want to be unprepared.” Today’s radiology groups need to stay nimble, accept the power of emerging technology to change the way that they practice, and be open to new business models, if they want to survive, Schwartz concludes. “Small to midsized groups will not be able to continue meeting all of these new requirements without some sort of strategy,” he says. “Old loyalties and considerations are rapidly dissipating: Hospitals are under much greater pressure than they ever were before, and they need to be sure radiology is prepared to meet their needs.” Cat Vasko is editor of Medical Imaging Review and associate editor of Radiology Business Journal.