Three Roads Diverged: Forecasting Imaging’s Future
If imaging is to visualize its future accurately, it must do so by looking to business models outside the health-care arena, according to Dieter Enzmann, MD, chief of the department of radiology at the University of California–Los Angeles. “There are three generic models that exist in virtually every mature market,” he says. “There’s always a low-cost producer, there’s always a premium product, and there is the customer-intimacy model as well. Customer intimacy is difficult (and not that common), but is growing in prevalence.” Enzmann believes that many radiology providers will evolve to fit into one of these three categories as the specialty’s market continues to mature, under the dual influences of consumerism and emerging payment and delivery mechanisms. “All three corners of the value triangle are going to be occupied by radiology,” he says. “Radiology groups currently have some choice of which value proposition to seek, and they need to be putting together strategies to achieve those goals.” Low-cost Position The first of the three models—the low-cost position—is the one that Enzmann believes will be dominant in the future, driven by hospitals and health systems working to fulfill reform’s triple aim. “The general trend of the Affordable Care Act is to decrease costs,” he notes. “The low-cost model will be embedded in larger health-care systems that are trying to achieve the low-cost positions in their markets.” As an example of a current manifestation of this market position, Enzmann cites national radiology groups. “Companies that provide centralized coverage using teleradiology, which have now expanded into daytime coverage, are providing quality radiology services at a low cost,” he says. “They do so by building economies of scale. Radiologists themselves are one of the largest expense components in the business, and centralizing them helps reduce costs. This will be a common model, in the future.” Product-leadership Position A second model that Enzmann forecasts is that of product and service leader, a role that he expects to be filled by forward-thinking academic medical centers. This, he explains, is a model in which the service is purchased not primarily on the basis of cost, but on some added value. Placing this concept in its historical context, Enzmann notes that for many years, this was the default position of radiology groups: “Radiology used to occupy this position, driven by the advanced technology of CT and MRI,” he says. “Now that these machines are more common and less expensive, and now that the skill and talent necessary to use them are more common as well, that premium basis is eroding.” In the future, Enzmann sees radiology groups at academic medical centers taking advantage of their setting to provide additional value (beyond high-quality interpretations). “These groups will provide robust, integrated diagnostic information, beyond just individual radiology reports,” he predicts. Customer-intimacy Position The third path that Enzmann sees is the customer-intimacy market position. He points to IBM as an example of this position in the consumer sphere. “IBM is in the business of analytics and consulting, which means what it is really selling is information,” he says. “It provides complete solutions, instead of products that the customer then has to know how to put together.” In this market position, he hypothesizes, the radiology group of the future might integrate diagnosis with minimally invasive treatments to provide personalized care to patients—the same stitching together of individual products into complete solutions that companies such as IBM have pioneered. “More accurate diagnoses can be turned into solutions by choosing much more specific treatment methodologies, and radiology has a unique ability to link those,” Enzmann says. “Radiology could deliver diagnosis and treatment as a more complete solution. That’s only just beginning to happen, but it’s a direction in which radiology should think about growing.” Radiology groups should start thinking now about which of these positions they want to inhabit in the future—as well as which are even options, based on their current positions. “This may be decided for radiology groups by the health systems with which they’re affiliated, especially as the consolidation in health care continues,” Enzmann says. “All the same, it’s important to understand what the value proposition of the health system is, so that you can begin to establish a strategy to be congruent with that position.” Cat Vasko is editor of Medical Imaging Review and associate editor of Radiology Business Journal.