Page 1


April/May 2010

STRATEGIC RADIOLOGY: 15 Practices Align for Strength

FEATURED IN THIS ISSUE Radiological Associates of Sacramento: Life After Sutter | page 14 Reap the Rewards of an Efficient, Effective Women’s Imaging Service | page 34 Practice CEOs Discuss Physician–Hospital Relations | page 50

w w w. i m a g i n g b i z . c o m

Di gi t a lEdi t i o nSpo ns o r e dbyI nt e l e r a d


April/May 2010

STRATEGIC RADIOLOGY: 15 Practices Align for Strength

FEATURED IN THIS ISSUE Radiological Associates of Sacramento: Life After Sutter | page 14 Reap the Rewards of an Efficient, Effective Women’s Imaging Service | page 34 Practice CEOs Discuss Physician–Hospital Relations | page 50

w w w. i m a g i n g b i z . c o m

7b¸a bW[S b] e]`Y a[O`bS` µEWbV /;71/A 2OaVP]O`Ra ]c` ^`OQbWQS VOa SOag c^b]bVS\cbS OQQSaa b] RObO `SZObSR b] dW`bcOZZg O\g Oa^SQb ]T ]c` PcaW\Saa /`[SR eWbV bVWa W\T]`[ObW]\ eS QO\ [OYS W\T]`[SR RSQWaW]\a OP]cb TW\O\QWOZ U`]ebV W\WbWObWdSa ]^S`ObW]\OZ ^`]QSaaSa O\R ]`UO\WhObW]\OZ `Sa]c`QSa¶ ³ >VWZW^ 1]ZZW\a PcaW\Saa ]TTWQS RW`SQb]` A]cbVeSab 2WOU\]abWQ 7[OUW\U 1S\bS` 2OZZOa BF

@7A ’ >/1A ’ 07::7<5 ’ 2=1C;3<BA

8=7< CA –  /;71/A 7\Q /;71/A Z]U] Wa O `SUWabS`SR b`ORS[O`Y ]T /;71/A 7\Q 0]ab]\ ;/






A new, radiologist-owned corporation is taking tentative, careful steps toward a national practice.



In a niche notorious for its comparatively low reimbursement, every step along the care continuum must be patient focused, yet investing in women’s health yields rewards.




Economic and market forces are prompting hospitals in two Ascension Health hospital systems to reengineer the delivery of imaging.



Independent radiology practices grapple with declining technical fees, commoditization threats, and the hospital interest in captive practices, as practice CEOs face unprecedented challenges.



From the king of PACS comes a fierce new RIS. Synapse RIS is the most advanced, most comprehensive web-based radiology management solution you can get. We packed it with lots of impressive, productivity-boosting features such as critical results notification, peer review, and a real referring physician portal that includes exam requesting, scheduling, report & image access as well as outstanding critical results alerts and tracking. “Draw-able” consent forms, instant messaging, and real-time eligibility verification are also available. Competitive systems don’t even come close. Implementation is ferociously fast at a fair price. And our RIS seamlessly integrates with Synapse PACS and every other PACS on the market. Plus Synapse RIS is an incredibly efficient teleradiology solution. Give us a roar. Call 1-866-879-0006 or visit © 2009 FUJIFILM Medical Systems USA, Inc.


PUBLISHER Curtis Kauffman-Pickelle EDITOR Cheryl Proval ART DIRECTOR Patrick R. Walling TECHNICAL EDITOR Kris Kyes ASSOCIATE EDITOR Cat Vasko



ADVIEW When the Invisible Hand Meets an Immovable Object By Cheryl Proval


THE BOTTOM LINE Capitation: An Inevitability Waiting to Happen By James Polfreman



12 LEADERSHIP | The Problem With Physicians Like Him 14 PRACTICE MANAGEMENT | Life After Sutter 16 CAPITAL BUDGETING | Financial Justification for Imaging Equipment By Penny Olivi, MBA, FAHRA, CRA, RT(R)

18 PRACTICE FINANCE | Rescuing Retirement By Joseph F. Bert and Daniel Kravitz

CONTRIBUTING WRITERS Joseph F. Bert; Daniel Kravitz; Penny Olivi, MBA, FAHRA, CRA, RT(R); James Polfreman; Julie Ritzer Ross; Cat Vasko; George Wiley ADVERTISING DIRECTOR Sharon Fitzgerald PRODUCTION COORDINATOR Jean Lavich CORPORATE OFFICE imagingBiz 17291 Irvine Blvd., Suite 406, Tustin, CA 92780 (714) 832-6400 PRESIDENT/CEO Curtis Kauffman-Pickelle VP, PUBLISHING Cheryl Proval VP, ADMINISTRATION Mary Kauffman

20 IMAGING INFORMATICS | Tracking Radiation Dose: IT Implications 56



FINAL READ The Tortoise and the Stack Burner By Curtis Kauffman-Pickelle

Radiology Business Journal is published bimonthly by imagingBiz, 17291 Irvine Blvd., Suite 406, Tustin, CA 92780. US Postage Paid at Lebanon Junction, KY 40150. April/May 2010, Vol 3, No 2 Š 2010 imagingBiz. All rights reserved. No part of this publication may be reproduced in any form without written permission from the publisher. POSTMASTER: Send address changes to imagingBiz, 17291 Irvine Blvd., Suite 406, Tustin, CA 92780. While the publishers have made every effort to ensure the accuracy of the materials presented in Radiology Business Journal, they are not responsible for the correctness of the information and/or opinions expressed.



A dView

When the Invisible Hand Meets an Immovable Object Can market mechanics preserve our health-care system?


n a coincidence worth noting, Adam Smith’s The Wealth of Nations was published in 1776, the year that our nation-to-be declared its independence from what was then the Kingdom of Great Britain. In that work, Smith argued that the colonies were not worth the cost of keeping them. Nonetheless, Smith’s ideas and US commerce, including the health-care marketplace, continue to travel in parallel universes. We got health-care reform, but we still have the same quasi–free-market system we had when we entered the fray, albeit with 31 million potential new customers. That makes us one of the only developed Western nations that can make that free-market claim. It is true that Medicare was on a collision course with fiscal disaster prior to reform, and apart from some vague hopes about the ability of accountable-care organizations (ACOs) to moderate costs, the reform bill did not address this cost conundrum. The free market has prevailed, though, and the free market continues to have the opportunity to find a solution. As the radiology market roils, splinters, and consolidates in response to reimbursement cuts; as hospitals gain clout; and as physician practices consider their options, I wonder what Smith would have thought. What would the champion of self-interest have said about our health-care future, and the likelihood of our health-care market producing a solution favorable to all members of the community? Reared by a widow in a small town in Scotland, Smith was educated at Oxford, where he acquired expertise in European literature and an extreme distaste for English universities. He returned to Scotland to take a chair in logic, and then moral philosophy, at Glasgow University. He earned financial independence and traveled widely as a result of leaving academia to tutor a duke. After that, Smith settled down to launch classical economic thought with the above-mentioned five-volume work. Though his renown is based on the theory that rational self-interest, in a free-market economy, leads to economic well-being, Smith had a great interest in ethics and charity (the

subject of his first book), and he believed that mankind was innately interested in the fortunes of others, as well as in their happiness. Classical economic theory suggests that if the health-care market and its actors are left to their own devices, prices will reach their proper level, supply will meet demand, and innovation in care delivery will flourish to meet the needs of all. Throughout this issue of Radiology Business Journal, you will find examples of providers successfully adapting to new market forces, such as the two Ascension Health hospital administrators who are reengineering the delivery of hospital-based imaging services, producing greater efficiency with the same resources. This month, we also write about the dissolution of a hospital–practice relationship that can be traced back to the 1920s; in spite of losing its hospital contract, the practice still stands strong (with new models of health-care delivery currently in formation). In addition, we bring you the story of a consortium of 15 of the nation’s largest practices, representing some of radiology’s most visionary leaders, aligning to achieve best practices, additional resources, and further efficiencies. If competition is allowed to flourish, if all of these providers are left to pursue their own selfinterest, and if there is enough supply to meet demand, Smith’s invisible hand of the market will allocate resources to the benefit of all. Uncertainties persist, however. Hospital–physician relations are strained in many markets. Teleradiology companies are testing the old definitions of what makes a radiology practice a radiology practice, and new delivery models threaten to commoditize the specialty. Further turbulence should be anticipated here. Smith used his theory of equality of returns (all uses of a resource must yield an equal rate of return) to explain why wages differed. The more difficult or unpleasant the trade, the higher the pay; hence enhanced wages are earned by radiologists (whose work is difficult to learn) and, in Smith’s day, by hangmen (whose work was odious to perform). Smith so strongly opposed techniques to prop up markets artificially that he went on record as approving of smuggling. Where would he have stood on the New Delhi ghost readers? A fascinating article1 in the April issue of Health Affairs describes health-care market


dynamics in the bellwether state of California that have arisen in response to this state’s delegated-capitation model of care. Its hallmarks, in some markets, are large multispecialty physician organizations and massive horizontally integrated hospital systems. In others, independent physician associations (IPAs) negotiate with insurers on behalf of independent physician practices, which overlap insurance networks by up to 97% in some markets. The authors argue that these characteristics have evolved to give providers unparalleled market clout in negotiating with payors in California. They also see relationships among California’s multispecialty physician organizations, large hospital systems, and IPAs and the ACOs that the Senate bill proposes introducing into the Medicare program (for the purpose of providing physicians with incentives to deliver high-quality, efficient care). The authors warn that instead of producing the intended efficient, high-quality care, the ACOs could raise the cost of care instead. Writing that antitrust regulations have been unsuccessful in challenging hospital mergers, the authors suggest that policymakers might, instead, need to turn to price caps on private-sector rates, unless market mechanics can be found to moderate price increases. Price caps would result in lower prices for insurance companies, which would (theoretically) pass these cost savings on to employers and consumers in the form of lower premiums—or would they? Let’s hope that the administration uses policy as Smith suggests: to enforce contracts and encourage innovation. Prices have to come down, but there might be enough elasticity in our health-care system for market mechanics to produce this result, rather than leading government to resort to price setting. That is a measure of which Smith definitely would not have approved.

Cheryl Proval, Editor Reference 1. Berenson RA, Ginsburg PB, Kemper N. Unchecked provider clout in California foreshadows challenges to health reform. Health Aff (Millwood). 2010;29(4):699-705.

Experts In Fair Market Value. Focused In Healthcare. Trusted by Clients. VMG Health is a recognized leader in the valuation of imaging centers. No one has more experience and insight into the critical factors that drive the value of an imaging center. Three Galleria TowFSt13155 Noel Rd., StFt%BMMBs, TX 214-369-4888 3100 West End Ave., StFt/BThville, TN 615-777-7300


Capitation: An Inevitability Waiting to Happen The author argues that health care (in general) and imaging (specifically) are on a 10-year track to capitation BY JAMES POLFREMAN


egardless of the effects of healthcare reform, the United States cannot continue on the current healthcare track, given deep, multiyear federal budget deficits. It is simply not sustainable, at a cost of more than 16% of the gross domestic product (GDP)1; in comparison, socialized medicine in the United Kingdom claims a mere 8% of its GDP. To make matters worse, the percentage of baby boomers retiring is at an all-time high. They have worked hard and have high expectations for prolonged longevity. The combination of all these factors means that health care is going to be an expensive undertaking, all around. Furthermore, our current health-insurance system does not promote prevention and wellness, but is, rather, a limited safety net unfurled once people get sick. Given the high number of uninsured patients, health systems have had to transfer the cost of indigent care, through rate increases, to managed-care providers. This, in turn, has made insurance extremely costly to the consumer. Unlike car-insurance rates, health-insurance premiums do not fluctuate based on use. Our current health-care payment systems are predicated on paying providers for patient encounters. Specifically in outpatient imaging, this concept has favored proliferation in the deployment of imaging technology, along with the dramatic rise in its use. Factors that further exacerbate this use include frivolous malpractice suits, physicians who have private imaging investments, and patients who fail to manage their disorders until their conditions become critical. The current payment system also holds little regard for medical outcomes; while some barriers (such as radiology benefit management) have been implemented, little has been done to curb the growth of medically unnecessary exams. The DRA has shown that by reducing reimbursement by an average of 20%, demand can be reduced. Recent results2 show that between 2007 and 2009, the rate of growth for MRI, CT, and PET/CT declined to 1.1 % annually, whereas historically, growth was in the 10% range

A 10-YEAR TRACK Current thinking is that for long-term viability, we are on a track toward a capitated health-care system. This is expected to

evolve over the next 10 years and might accelerate if we are unable to contain costs in the short term. In talking to health-care leaders and research organizations, I’ve found that the sequence of events regarding capitation is generally perceived to be: • first, reduced reimbursement and pay for performance; • second, bundling of events; • third, a shared-savings model or accountable-care organizations (ACOs); and • fourth, capitation. A lot is still to be worked out, but government will start by looking at areas of rapid growth in health care. Outpatient imaging is right in the crosshairs, and it is likely that the 2010 Medicare Physician Fee Schedule will lead to further reductions to Medicare outpatient-imaging reimbursement of 40% over the next four years. The reduction is predicated on increasing the equipment-utilization factor from 50% to around 90%. This will be devastating to both freestanding imaging centers and physician providers. Many of these reimbursement reductions will also be reflected in managedcare reimbursement for the same providers, assuming that commercial contracts are linked to Medicare rates. This will quickly accelerate the consolidation of freestanding imaging centers. On the hospital front, the forecast is that we will begin to see the bundling of events into a type of episodic payment linked to outcomes. An anterior cruciate ligament repair, for example, might include a physician’s fee, imaging scans, preoperative laboratory tests, surgery, and postoperative physical therapy (among other services) under one payment. Providers will be required to distribute the payment among the various services and to carry an outcomes guarantee. Should the procedure fail, the cost of a return to surgery would be borne by the provider. This solution, while potentially more affordable for the payor, does not address the growing volume of procedures. ACOs are considered the next step in evolution because they address an issue neglected in current health-care reform: wellness. ACOs are going to be required to manage the populations that they cover. The theory is that by managing patients on a regular basis, costly


events such as heart attacks can be avoided. Smoking cessation, weight monitoring, and early use of statins in cholesterol maintenance could have big effects on the overall health of a population. Technology will allow for remote monitoring, and this could significantly reduce costs. Remote monitoring is not currently paid for by most insurers, but under an ACO model, the provider could elect to use technology to reduce costs and increase the monitoring of covered lives. Cost will be the factor that determines when capitation is instituted, but the consensus is that it will be part of the ultimate phase of change, to assist in covering lives at an affordable rate. If we are to avoid the capitation debacle experienced in Massachusetts, significant planning and negotiation will be prerequisites. Providers are going to have to shift from increasing volumes and being paid on a per-click basis to managing a population, on a predetermined amount of money, through true disease management. Physicians will have to decide between private practice and employment, given the phasing out of ancillary revenue streams. Medical-equipment manufacturers will have to use technological advances as ways to reduce costs and prevent expensive inpatient surgeries. Hospital systems are going to have to place a tremendous focus on quality, safety, and performance measurement to ensure that costs are contained and that secondary infections are eliminated. James Polfreman is CEO, retail healthcare business, Memorial Hermann Healthcare System, Houston, Texas. References 1. OECD health data 2009. 0580.pdf. Published July 2009. Accessed April 2, 2010. 2. Access to Medical Imaging Coalition. Trends in physician imaging services billed to part B Medicare carriers and paid under the Medicare Physician Fee Schedule, 1998–2007: executive summary. SecondaryMainMenuCategories/NewsPublic ations/FeaturedCategories/CurrentACRNew s/archive/MoranStudy.aspx. Published October 2009. Accessed April 2, 2010.


The Problem With Physicians Like Him


uthor Thomas H. Lee, MD, writes that the problem with medicine is people like him: primarily men, in their 50s and beyond, who learned medicine when it was more about art and less about money. “We were taught to go to the hospital before dawn, stay until our patients were stable, focus on the needs of each patient before us, and not worry about costs,”1 he writes in the April 2010 issue of Harvard Business Review. “We were taught to review every test result with our own eyes—to depend on no one.” They were taught, Lee writes, that the only way to ensure quality was to adopt high standards and maintain them, using an approach that fundamentally will not meet the current cost-containment and quality demands on health care. While acknowledging that greed and incompetence do exist in medicine, Lee maintains that the biggest driver of cost increases is medical progress: new drugs, tests, and devices that are entering a system too fragmented and chaotic to absorb them cogently. The answer is a new kind of leadership at every level of health care, from the integrated delivery network to the physician practice. The first task of these new leaders is to understand that outcomes are what matter, not how many MRI studies physicians order or how many patients they see. The second is to accept that there is a place in medicine for value. The third and most important task is to subscribe to the belief that outcomes and values cannot be achieved without teamwork. Once leaders of a new breed accept the preceding maxims, they can begin to lead by articulating the vision for change, acknowledging the importance of clinicians who might resist a new way of working while making it clear that the new order is better both for patient care and for

business. An example of this new breed is Delos M. Cosgrove, MD, a cardiac surgeon who became CEO of the Cleveland Clinic in 2004 and immediately made performance measurement part of his plan. Available at first only internally, the outcomes data are now accessible on the Web. Seattle’s Virginia Mason Medical Center was also cited by Lee, who notes that its patientsfirst commitment extends even to practice patterns in its beautiful, light-infused cancer center, where physicians come to patients (instead of the other way around), and office space is bunched in cubicles in the middle of the center.

New Idea and New Structure Lee maintains that this focus on performance is a complete departure from the prevailing conventional wisdom among providers, which holds that true quality cannot be measured. If things are to change, the organizational structure of hospitals will need to be redesigned around the needs of patients, rather than those of physicians. Having separate units for cardiology, cardiac surgery, cardiac anesthesiology, and radiology, for instance, creates redundant administrative costs and dysfunction in the form of turf battles, Lee maintains. Misaligned incentives of physicians (paid per visit) and hospitals (paid per DRG) breed antagonism. “Large-scale organizational changes like these require strong leaders and a cultural context in which they can lead,” Lee writes. “For obvious reasons, such leaders gain additional leverage if they are physicians and their organization employs its [physicians]. At the Cleveland Clinic all physicians are on one-year renewable contracts, which sends a powerful message about the importance of team spirit.” The best way to foster buy-in on performance measures is to create a common


method of measurement. For example, when Massachusetts announced that it would collect and post bloodstream-infection rates, Lee’s institution, Partners HealthCare™ (based in Boston), got serious about the issue. Two hospitals had long reported different rates of infection, but hospital A, which had the higher rate, discounted the data because the hospital used a method (drawing blood through indwelling catheters) with a higher falsepositive rate. Only after hospital A adopted the other hospital’s method (drawing blood using a fresh skin prick) and discovered that it still had a higher rate of infection did it get interested in exploring what else hospital B did differently. “When data are uniform and reliable, leaders can push for the standardization of best practices throughout an organization,” Lee writes. The organization went one step further and started to apply colored tape to catheters that were inserted in the emergency department under less-than-ideal circumstances, as a signal to other caregivers to replace them soon as possible. Lee notes that although this directive did not come from above, it was the senior managers who created the impetus and the environment for change.

Team Spirit Because physicians see themselves as what Lee calls “heroic lone healers,” get-

Remember When… You didn’t have a patented technology to help you code compliantly and efficiently? Find out why the top radiology practices and billing services have implemented A-Life Medical’s computer-assisted coding product into their best practices. A-Life Medical, the most widely chosen and implemented CAC product in the market today.

The Pioneer & Leading Provider of Computer-Assisted Coding Products & Services for the Healthcare Industry


ting them to work in teams represents a culture shift, but a critical one. Lee offers the example of Geisinger Health System, Danville, Pennsylvania, where hospital readmissions have been cut in half. He attributes this achievement to a team approach to patient management, monitored by care-coordinator nurses who pay close attention to complex cases (especially when patients are about to be discharged) and determine when a patient needs to see a particular physician. “Not long ago, in the strict hierarchy of medicine, nurses were largely regarded as technicians whose job was to follow orders,” Lee writes. “No decision was made without a physician’s knowledge and consent. The notion of a nurse as a critical contributor and independent decision maker on a clinical team would have seemed absurd.” In a setting such as Geisinger Health System, physicians are required to hand off considerable responsibility to nurse practitioners if they are to get improved performance in measurements that are likely to play a greater role not only in who gets paid, but in payment rates as well. Lee says

that increasingly, the fortunes of physician groups will depend on teamwork.

Get Used To It Health care teams are well advised to look at performance improvement as a process, rather than as a project with a finite endpoint. The best way to do that is to adopt a culture of process improvement and make use of the tools of that trade: lean management, data collection, brainstorming, intervention, and impact analysis. Virginia Mason Medical Center found its way when CEO Michael Rona happened to sit next to Boeing’s director of lean management on a plane flight. Rona began taking teams to Japan to study the Toyota Production System, resulting in reduced costs, improved quality and service, and a strengthened balance sheet. Brent James, quality officer at Intermountain Healthcare, Salt Lake City, Utah, runs a highly respected process improvement program that helped Geisinger Health System, which offers such courses in turn. Lee identifies autonomy as the primary cultural barrier to a more collaborative approach to health care. Physicians, Lee

writes, “have historically seen themselves as their patients’ sole advocates, with the rest of the world divided into those who are helping and those who are in the way.” To promote the acceptance of teamwork and process improvement among physicians, Lee recommends three steps: • since altruism is at the core of most health care professionals, appeal to that impulse; • physicians are mesmerized by data, so put data collection and sharing at the center of your program; and • define a strategy around patient needs; they are what health care is all about. The number of people who need to be trained is the square root of the number to be influenced, Lee writes. An organization of 100 people can begin by training 10; one with 10,000 needs to train 100. —Staff Reference 1. Lee TH. Turning doctors into leaders. Harv Bus Rev. turning-doctors-into-leaders/ar/pr. Published April 2010. Accessed April 14, 2010.


Life After Sutter


hen news spread that Sutter Health (Sacramento, California) planned to cut loose its longtime radiology provider in Sacramento in favor of a captive model, some observers wondered how Radiological Associates of Sacramento (RAS), a 76-radiologist practice founded in 1917, would survive. Not only has it sustained the blow, but not one partner has left to join the new hospital practice. Anyone who has heard the practice’s CEO, Fred Gaschen, MBA, speak at RBMA, ACR®, and RSNA meetings during the past decade knows that RAS has been preparing for this eventuality for a dozen years. Consequently, what could have been a devastating blow to another practice is merely cause for belt tightening at RAS. The story is a cautionary tale for all radiology private practices, in these times of change.

In mid-October, we announced that a local medical-oncology group that was having some managerial and financial challenges was going to join RAS. Three weeks later, we got our letter of termination. —Fred Gaschen, MBA, CEO, Radiological Associates of Sacramento, Sacramento, CA

RAS and Sutter Health should have spent 2009 negotiating a contract for coverage of five hospitals (Sutter Davis Hospital; Sutter Memorial Hospital and Sutter General Hospital, which are parts of Sutter Medical Center Sacramento; Sutter Roseville Medical Center; and Sutter Auburn Faith Hospital). The old contract expired March 31, 2010, but communica-


tions stopped completely in the fall of 2009, Gaschen reports. “In mid-October, we announced that a local medical-oncology group that was having some managerial and financial challenges was going to join RAS,” Gaschen says. “Three weeks later, we got our letter of termination.” Meanwhile, after notifying RAS that its

contract would be allowed to expire, Sutter Health announced its intention to build an in-house practice. According to an article1 in the Sacramento Business Journal, Sutter Health hired radiologist Patrick Browning, MD, to serve as chair of Sutter Medical Group’s Division of Medical Imaging, founded in January of this year. The article notes that as of April 1, Sutter Health had hired 12 of 21 planned radiologists, and it is using locum tenens and a national teleradiology provider to fill the gaps. Gaschen believes that the point of departure for Sutter Health was competition in the outpatient market, where RAS operates 16 imaging centers. According to Cecilia Hernandez, director of medical affairs at Sutter Medical Center Sacramento, the decision was about cost and quality. “The focus is to improve effectiveness, make us more affordable, and get quality outcomes,” she told the Sacramento Business Journal. The same article quoted a March 5 letter to staff physicians sent by Tom Gagen, CEO at Sutter Medical Center Sacramento, reassuring physicians that the same level of quality would be met. “Our commitment as of April 1 is to provide at least the same level of coverage and quality as you have received in the past,” he wrote.

Breaking Up Is Hard While the loss of Sutter Health represents a blow to income for RAS, the practice’s 16 freestanding imaging centers account for the vast majority of the group’s imaging volume, Gaschen says. “The impact of losing the hospitals was something we did not want to happen, but it is far from sounding a death knell, or even having a serious impact,” he states. RAS is the sole provider of outpatient imaging and radiation-oncology services under a managed care contract with Hill Physicians in San Ramon (Northern California’s largest independent practice association, serving 300,000 covered lives). Hill Physicians provides inpatient services at Mercy General Hospital in Sacramento. Under the same contract, RAS is the designated provider of inpatient services at the Sacramento-area Sutter Health facilities. RAS partners’ incomes inevitably will decline. “Nobody left, and we have less

money, so physician salaries are going to go down,” Gaschen acknowledges. Dissolving a long-term relationship that some track back to the 1920s is complicated, so in order to be as nondisruptive as possible, RAS radiologists have agreed not to go into the hospitals unless necessary, and instead, to have all studies transferred to their PACS. “There are certain procedures that must be done in the hos-

I think all radiology groups need to start thinking differently. I see us moving more and more into areas of symbiotic relationships with what we do. —Fred Gaschen, MBA

pital,” Gaschen says. “One of the hospitals, Sutter Roseville Medical Center, is a trauma center. If there is a Sutter Physician Alliance patient at 2 AM who needs interventional radiology, we’re there.” Meanwhile, living up to Gagen’s statement that Sutter Health’s medical staff will still receive radiology services of equivalent quality could be a challenge. Both the medical staff at Sutter Roseville Medical Center and the medical executive committee voted unanimously to keep RAS, but this was a request that Sutter Health did not honor, the Sacramento Business Journal states. It also reported that in the days following the transition, a new radiologist assigned to Sutter Auburn Faith Hospital could not read mammograms and a neuroradiologist at Sutter General Hospital could not perform a myelogram. “We wish the severing of our relationship had not happened,” Gaschen says. “We think the local employers are going to suffer, the patients are going to suffer, and we’re going to suffer.”

Looking Ahead It is by design that RAS is positioned to survive the loss of the Sutter Health business. Large, horizontally integrated hospital systems have been a hallmark of the Northern California hospital market since

the late 1990s, when RAS recognized that Sutter Health had become a dangerously large part of its business. “We have spent the past dozen years or so bringing in new business,” Gaschen says. “It has worked. We started taking steps years ago, and I am going to say we are far from being done.” RAS is among few practices in the nation that have kept radiation oncology in their folds. RAS counts vascular surgeons, medical oncologists, urologists, a gynecological surgeon, and a thoracic surgeon among its partners. “I think all radiology groups need to start thinking differently,” Gaschen says. “I see us moving more and more into areas of symbiotic relationships with what we do. Imaging continues to be our foundation, and radiation continues to be our foundation. All of these other services are being pulled together to provide a better continuum of care for the patients, so that we have the physicians working cooperatively. The main issue is taking care of the patient, since we are all in the same group.” Gaschen sees the potential for physician organizations to contract directly with insurers to provide integrated care for a variety of conditions, competing on quality and price. He says that RAS might break new ground in providing integrated services, be they in orthopedics, neurosciences, or cancer care. “When you start talking about accountable-care organizations (ACOs), in some specialties and some areas of expertise, outpatient care rules and inpatient care picks up the pieces,” he says. “We would contract directly with payors (who, by the way, are very interested in contracting with physicians), putting RAS in charge of the total care dollars. Some of my physicians have started working with me on it. It’s the future, and how it comes about will be interesting.” He adds, “ACOs want to save money. I think there is opportunity out there.” —Staff Reference 1. Robertson K. Sutter Health, Radiological Associates of Sacramento end longtime contract. Sacramento Business Journal. sacramento/stories/2010/04/12/ ml. Published April 9, 2010. Accessed April 17, 2010. | April/May 2010 | RADIOLOGY BUSINESS JOURNAL 15


Financial Justification for Imaging Equipment BY PENNY OLIVI, MBA, FAHRA, CRA, RT(R)


laiming a share of the capital budget for imaging equipment is not always hard, but it certainly can seem overwhelming. The financial-justification step of capital budgeting can be particularly daunting, but it will be less difficult if it is preceded by an understanding of pro forma development and the concepts that underlie it, including total cost of ownership. Before financial justification begins, planning for the capital budget starts with consideration of the organization’s needs for the coming three or more years (especially equipment replacement, service expansion, and strategic positioning for the future). A prioritized list of these needs is drawn up, and financial justification is undertaken for one item at a time, beginning at the top of the list.

THE PRO FORMA Every item in a capital budget must be weighed against every other to determine which investments will make the most sense, both clinically and financially. For replacement equipment, costs are weighed against the current business that would be lost without the replacement; for expanded services, costs are weighed against the future business that would not be gained without the expansion. In either case, a good decision can only be based on solid predictions of expenses and revenues. The pro forma serves to organize those predictions, which are made for a period of three to five years using today’s best available data. Begin assembling the pro forma by gathering all applicable revenue and expense information, and record, as you go along, all assumptions on which this information is based. Revenue assumptions, for example, include not only how the proposed capital item will bring in money, but also how that revenue will be counted (typically, using CPT® codes). Be realistic in predicting how many referrals you can expect to obtain, procedures per day, payor mix, and future reimbursement changes. Use the average rev-

enue per applicable CPT code (including supply and contrast codes), multiplied by the expected procedural volume, to determine projected Penny Olivi, MBA, revenue. FAHRA, CRA, RT(R) Take special care in compiling all expected expenses for the pro forma, since overlooking a major expense can cause a serious loss of credibility. The basic categories into which expenses will fall are: • capital equipment; • other equipment; • space (including renovation); • infrastructure, such as IT, shielding, or extra cooling; • staff salaries and benefits; • supplies; • service and maintenance; • upgrades; • depreciation; and • other direct, fixed costs. A classic pro forma would not include the cost of capital (or would make the entire amount a first-year outlay), but it should be remembered that the financing method will affect return on investment. How capital is accounted for is a difficult point in constructing the pro forma because the person responsible for making the capital-financing decision is not usually the person responsible for achieving the predicted net return. Following your organization’s rules for accounting for capital, however, will allow consistency in evaluating returns.

PRO FORMA EXAMPLES Three examples will illustrate that various types of capital-budget items require different treatment in the pro forma (and throughout the financial-justification process). In example 1, we want to add a new 64-slice CT system to the hospital radiology department to perform cardiac procedures. Revenue will be predicted based on hospital CPT codes. Additional equipment needed for 64-slice CT procedures will


include a dual-head contrast injector, patient monitors, a crash cart, and an automated inventory-managing cabinet for contrast media. Additional lead shielding will be an infrastructure expense for this project. The pro forma will also include firstyear salaries and benefits for additional technologist, nurse, and physician time. In example 2, we want to start a new digital breast-imaging center (with global billing). Predictions of revenue will be based on global CPT codes, with the possible addition of some philanthropic contributions. In addition to the primary mammography equipment, the center will need a mammography-friendly PACS, surgical carts, handheld biopsy devices, and a vacuum-assisted biopsy system. Infrastructure expenses will include enhanced information-handling capacity for all modalities and workstations that are part of the center. In addition to first-year salaries and benefits for extra technologists, nurses, and physicians, the pro forma will include the same costs for schedulers, compliance/accreditation staff, and perhaps other personnel. In example 3, we want the radiology practice to begin covering an additional hospital. Revenue predictions will be based primarily on professional-fee CPT codes, but additional payments could be expected for specific services rendered by the radiologists (such as overnight final interpretations or committee work). The full list of necessary equipment will include workstations, IT infrastructure, and upgraded telecommunications lines. Costs for infrastructure enhancements (such as readingroom setup) should be the responsibility of the hospital, not the practice, but this must be negotiated in advance. First-year salaries and benefits will be added to the pro forma for a PACS administrator, for marketing staff, and for personnel who will make critical-results calls.

TOTAL COST OF OWNERSHIP For any capital asset, it is vital to understand the total cost of ownership, defined

"If you build a better mousetrap...

The Reevo 240G CT Replacement Tube

...the world will beat a path to your door."


We're confident we have. Introducing the Reevo 240Gâ&#x201E;˘ replacement tube for the GE Lightspeed ** VCT, Pro 16 and Select series CT systems. At Dunlee, every replacement tube we make is engineered to perform better, last longer and cost less than the original. So for radiology departments pressed to maximize the life of their existing systems, Dunlee provides a superior solution for quality, performance and competitively priced CT and X-Ray replacement tubes. GE, Siemens, Toshiba, Philips, and all other major brands â&#x20AC;&#x201C; Dunlee offers a larger selection of replacement tubes than any other competitor in the industry. So when fit, form, function, quality and price are the criteria, turn to the industry leader...Dunlee. For more information on the Reevo 240G and other Dunlee products, please call us at 800.238.3780 or visit

*Ralph Waldo Emerson **All products listed may be trademarked by the referenced OEM 45357-5085901

Our Focus Revolves Around You A





Dunlee Headquarters 555 North Commerce St. Aurora, IL 60504




Analysis of the total cost of ownership provides a cost basis for evaluating the economic return expected from the investment. It brings out the hidden, nonobvious costs of an asset and helps ensure that nonacquisition costs are not overlooked during financial justification. as the lifetime cost of acquiring, operating, maintaining, and disposing of that asset. Analysis of the total cost of ownership provides a cost basis for evaluating the economic return expected from the investment. It brings out the hidden, nonobvious costs of an asset and helps ensure that nonacquisition costs are not overlooked during financial justification. Evaluating the total cost of ownership also can provide a more realistic assessment of the financial effects of any variables associated with the asset. Outside radiology, for example, a car with a higher sticker price might have a longer warranty and better tires, or a house that costs more to build might require less energy for heating and cooling. Within radiology, competing equipment models will be associated with different optional features, upgrade capabilities, manufacturer’s incentives, and service agreements. Assessing total cost of ownership can clarify which of these variables are most worthwhile (in addition to the exercise’s broader function of yielding a more accurate long-term cost prediction for the asset). Other types of analysis are used in addition to total cost of ownership as part of financial justification, often due to the institution’s established preferences. Total cost of acquisition, for example, covers the beginning phase of the total cost of ownership, while whole-life cost covers everything that comes later.

Total cost of acquisition is a managerial accounting concept that includes all the costs associated with buying goods, services, or assets. It includes not only the net purchase price, but any other costs required to bring the asset to complete usability. Construction costs undertaken in preparation for the acquisition and special site modifications such as cooling or shielding are examples of the expenses included here. Whole-life cost is a separate assessment of all costs expected outside the total cost of acquisition. This type of accounting emphasizes the operating and maintenance costs of an asset, and it can therefore facilitate comparison of capital-budget proposals that involve similar acquisition costs.

AFTER JUSTIFICATION Once the entire process of financial justification has been completed and a capital-equipment request has been approved, negotiation of the purchase contract and service contract will follow. This is not the end of capital budgeting, however, because solid asset management for the life of the equipment will be needed. The best practice is to review the pro forma for each approved capital-budget item after a year, applying actual figures for expenses and revenues. This allows you to see how sound your predictions were; it also lets you adjust your projections for the second through fifth years of the project. If necessary, this annual review

The best practice is to review the pro forma for each approved capitalbudget item after a year, applying actual figures for expenses and revenues. can be repeated after the second year for even greater accuracy. In health care, the pot of money is clearly finite. Money for operations usually comes from the revenues of the present, but money for capital equipment often comes from the profits of some prior time period. Capital investments are expected to produce returns. Understanding total cost of ownership and preparing a sound pro forma can help you ensure that they do.

Penny Olivi, MBA, FAHRA, CRA, RT(R), is senior administrator, diagnostic radiology, at the University of Maryland Medical Center (UMMC) in Baltimore and is a past president of AHRA: The Association for Medical Imaging Management. This article has been excerpted from How to Create a Pro Forma and Total Cost of Ownership, which she presented at the UMMC Radiology Leadership Conference in Baltimore on October 23, 2009.




f you are like many physicians, you are lamenting the losses to your retirement plan after the financial meltdown. You might have lost a substantial amount, and you might wonder how you can quickly regain the losses. If you have a 401(k) account, you can contribute up to $22,000 for 2010 if you are 50 years of age or older and $16,500 if you are under 50. With a profit-sharing plan, you can contribute another $32,500. Once you have reached the annual maximum contribution of $54,500 (if 50 or over) or $49,500 (if under 50), then no


further contributions can be made on a pretax basis. Depending on prior losses and how long an individual has been contributing to a retirement account, this amount is hardly enough to fund a retirement, these days. Since the 2006 Pension Protection Act increased the contribution limits, cashbalance plans have become the solution that physicians have been seeking to accelerate retirement funding. In a cash-balance plan, contributions can be as high as $224,000 per year, depending on the participant’s age, with the added benefit of deferred-tax savings By combining contributions to a 401(k) account, a profit-sharing plan, and cash-balance plan, a physician (at the optimal age) can put $278,000 into a retirement plan, on a pretax basis, per year. There are more than 6,000 cash-balance plans in the United States, and medical groups own 20% of them. A cash-balance plan is an ideal retirement vehicle. Not only can physicians accelerate savings, but the plan’s contributions and interest also are not taxed until distributions are made. Contributions, which can be a percentage of salary or a flat dollar amount, are stipulated in the plan document. That document also details the interest involved, which is a guaranteed amount and not dependent on the plan’s investment performance. The rate of return changes each year, and for many plans, is equal to the yield on 30-year Treasury bonds, which recently paid 4.8%.

having 401(k) plans that have experienced recent significant losses (and wishing to make up those losses quickly), or electing to invest in the practice (rather than retirement) and therefore having relatively low retirement savings. Profitable medical groups that require tax deductions might find the cash-balance plan extremely attractive. Because the contribution is not discretionary, groups should demonstrate consistent profit patterns. It is possible, however, to reduce the

contribution or freeze the plan using a plan amendment. Another reason to opt for a cash-balance plan applies to medical groups that already have plans in place to contribute 3% or more of salaries to employees’ accounts. Although cash-balance plans are often established for the benefit of owners and highly compensated employees, other employees also benefit. Usually, plans provide a minimum contribution of 5% to 7% of pay for the group’s staff, which might be

One System Unlimited Solutions Too many products, too much complexity? Implementing a specialized application for every need is expensive, creates integration and IT complexity and forces users to learn many different systems to get the job done.

THE MECHANICS A cash-balance plan has relatively simple characteristics. Each participant has an individual account that resembles the accounts in 401(k)/profit-sharing plans. The plan actuary, who generates annual participant statements, maintains these accounts. Employers can designate different contribution amounts for various participants. Once participants terminate employment, they are eligible to receive the vested portions of their account balances, which are determined by the plan’s vesting schedule. Medical groups that exhibit one or both of the following qualities might be good candidates for a cash-balance plan:

Keep it simple, save money - schedule a demo! peerVue solves multiple compliance, quality & communication challenges in a single web-based and PACS-integrated solution.

Launch peerVue from any PC or PACS workstation

Site preferences determine follow-up, alerts & escalations

Successful communication ensures closed-loop workflow 877.572.9505

advantageous, given the alternative of paying taxes on that money. The types of businesses that are typically good candidates for cash-balance plans include professional-service businesses, such as medical groups; accounting and law firms; and family or closely held businesses in which there are a number of owners who are at their 401(k) and profitsharing contribution limits. Practices with high levels of concern about the effect of the financial markets on 401(k) and/or profit-sharing plans are advised to consider a cash-balance plan,

which provides a significant opportunity to boost contributions to a qualified retirement plan and, at the same time, defer taxable income.

Joseph F. Bert is a certified financial-planning practitioner and chair of the board for Certified Financial Group, Inc, Altamonte Springs, Florida; or Daniel Kravitz, a certified pension consultant, is president of Kravitz, Inc, Los Angeles, California, specializing in the design of cash-balance plans; dkravitz@ or


Tracking Radiation Dose: IT Implications


n February, the FDA announced a new initiative to reduce unnecessary radiation exposure from CT, nuclear-medicine, and fluoroscopy exams. The agency’s three-pronged approach will include issuing safeguard requirements for device manufacturers, incorporating qualityassurance measures in mandatory CMS accreditation for imagers, and creating national dose registries to aid in the development of diagnostic-radiation reference levels.

Philadelphia, explains. “For old film-based studies where we don’t have radiation exposure in a machinereadable form, we can compute an average dose based on the exam type, but the PACS holds the images with the DICOM headers, whereas the RIS has the historical record of all exams done and may extend back to before there was a PACS,” Horii says. Horii adds that DICOM has the elements necessary to transmit dose informa-

I think that’s going to be what it takes: a system where you can push information to the cloud, no matter where you are. The question is what kind of business model that is. How do you make money from it? —Steven Horii, MD, professor of radiology and clinical director of medical informatics, University of Pennsylvania, Philadelphia, PA

For imaging centers and hospitals, the renewed focus on radiation creates a conundrum: How can cumulative dose be efficiently and effectively tracked? “Both the PACS and the RIS need to be involved because one of the problems is including information from previous exams,” Steven Horii, MD, professor of radiology and clinical director of medical informatics, University of Pennsylvania,

tion, but there’s no database or archival standard for the information. “There are elements in the DICOM standard that will allow for communicating radiation exposure,” he says, “but we’re asking to have a lifelong record for the patient. That’s a huge length of time, so it’s a real challenge.” Another challenge is determining what, exactly, dose and exposure mean, and standardizing the definitions so that all stake-


holders are using the same language. “Do we mean skin dose or absorbed dose?” Horii asks. “What do we mean by exposure? Is it only medical exposure? What about people who are occupationally exposed? We have to agree on what is meant by these numbers so they can be compared.” If the challenge can be broken into two parts—determining how to transmit dose information and then determining how to track it—vendor cooperation is essential to achieving the first component effectively, Horii says. He compares the standardization of dose information to the advent of DICOM in the early 1990s. “With DICOM, the FDA said that it could mandate the adoption of this standard or it could make it voluntary, and the vendors decided they’d much rather do it voluntarily,” he says. “Integrating the Healthcare Enterprise and vendor groups like NEMA can put pressure on vendors to include dose data. Some of them put these data in private elements, but I think they could all be encouraged to put the data in standard groups and elements.” When it comes to the second component of the challenge, keeping track of dose information for many years and across multiple locations, Horii sees one promising route: cloud storage. “I think that’s going to be what it takes: a system where you can push information to the cloud, no matter where you are,” he says. “Microsoft has done something like this with its HealthVault. The question is what kind of business model that is. How do you make money from it?” Horii suspects that third-party companies will write applications that upload dose information to cloud-based medical records, and the cloud providers will charge them for the privilege—a model along the lines of that offered by Apple with the iPhone. “We’re looking at a record that has to be updated, potentially, every time a patient has radiography,” Horii says. “That’s a real challenge, but there are certainly applications that can do it. It’s going to take some hard work on the informatics side, but I think we will get there.” —Staff

This article appeared first in the spring issue of Medical Imaging Review, which can be accessed at

Has your radiology billing solution kept up with technology?

Old Method

New Method

Are you still using antiquated methods to collect your money? In todayâ&#x20AC;&#x2122;s payment environment, HSAs, high-deductible plans, and rising self pay accounts are putting pressure on collecting every dollar. In order to collect this revenue busy practices need the expertise of a trusted partner that has the technology to go beyond the typical billing statement or two. At Zotec, our people, processes and technology support a rigorous campaign that features up to eight patient touch points, including statements and customized phone contact. And with healthcare reform now a reality, it makes even more sense to look at outsourcing your billing and collections activities in order to reduce your overhead and increase your bottom line.

Learn more about our industry-leading technology and approach to collecting your revenue by calling us at 317.705.5050 or visit See us at the RBMA Radiology Summit--Booth #201

Call (317) 705-5050 or visit

COVER STORY | Strategic Radiology



RADIOLOGY: 15 Practices Align for Strength

A new, radiologist-owned corporation is taking tentative, careful steps toward a national practice


rl Van Moore Jr, MD, FACR, says, “I’m the 50,000-foot guy.” Van Moore chairs Strategic Radiology, LLC, a consortium of 15 major radiology groups linked to pursue cost savings, better patient care, data mining, and pure old-fashioned clout for radiologists. The trouble is that there are many 50,000-foot visionaries at Strategic Radiology. Incorporated in Delaware, Strategic Radiology has no headquarters and has only a single employee, paid as a consultant. It currently is seeking a nonphysician administrator. The bulk of the work at Strategic Radiology is shouldered by the member physicians and administrators as volunteers. Strategic Radiology is not, however, some agglomeration of amateur hopefuls tentatively moving forward. Its 15 members (see table) are all large, successful radiology practices. Their physicians (who number more than 892) and administrators know the professional radiology landscape. They have built their practices, over the years, from minor to major. Strategic Radiology, to them, represents a next step. The venture is so new, however, that nobody is sure what the next step will be. The group certainly isn’t saying that someday, the Strategic Radiology brand will be stamped on imaging centers across the United States, nor does it predict that Strategic Radiology will be contracting nationally with providers and payors for radiology services. These ideas are being discussed, but implementation

of a thoroughgoing national imaging service of the megagroup sort is still a glimmer on most Strategic Radiology members’ horizons. What Strategic Radiology has concentrated on, thus far, is what Van Moore calls the low-hanging fruit of expense reduction: consortium-wide purchasing agreements for supplies and equipment, along with data sharing on malpractice insurance, billing practices, and other topics. Van Moore, who is a past chair of the ACR®, is president of Charlotte Radiology, a North Carolina practice that is one of Strategic Radiology’s 13 founding members. Two groups have joined since. “We’re just doing the basic block-andtackle work at this point, having taken the long view of working more closely together,” Van Moore says, adding that savings to members so far “have been more than enough to pay for the capital calls to keep the organization running.” According to Steve Duvoisin, CEO of Inland Imaging, LLC (a Spokane, Washington, practice that is another of Strategic Radiology’s founding members), the savings seen through information sharing have, in some instances, been considerable. When Strategic Radiology’s members compared notes on malpractice insurance, he says, one group decided that the premiums for the coverage levels of $5 million per occurrence and $9 million per year were excessive. It followed the lead of most other members by cutting coverage back to $3 million per occurrence and $5 million per year. “It saved $140,000 per year,” Duvoisin says.

By George Wiley Both Van Moore and Duvoisin (Strategic Radiology’s finance chair) stress that Strategic Radiology is owned and operated by radiologists; this is something that the founding groups, themselves radiologist-owned entities, demanded from the very beginning. “We saw a need and wanted it physician owned and run,” Van Moore says. Indeed, there is no doubt that the consortium’s fundamental reason for being is to retain a radiologist’s hand on the tiller as the industry is reshaped by health reform, pay for performance, sophisticated utilization management, and the increasing shifting of private physician practices into hospital ownership.1 “We have no plans to go public,” Duvoisin says. “We’re there to serve our members.”

How Strategic Radiology Began Whether Strategic Radiology was born abruptly or emerged from a long developmental process depends on who’s telling the story. The versions of administrators and physicians are not contradictory, however. According to Duvoisin and others, administrators from Strategic Radiology’s founding groups had been seeing and talking to each other for years at meetings. “As we saw the evolution of radiology, we felt it was time for radiology groups to start working more closely together,” Duvoisin says. “There had been wake-up calls that things were changing.” Among those warnings, he adds, was the “increasing intrusion of for-profit, public companies,” particularly teleradiology providers with a mandate to meet share- | April/May 2010 | RADIOLOGY BUSINESS JOURNAL 23

COVER STORY | Strategic Radiology

effort. There’s no firm commitment to have, nationwide, a giant reading worklist, but there is a definite commitment to share images across practices,” Calendine says.

As we saw the evolution of radiology, we felt it was time for radiology groups to start working more closely together. There had been wake-up calls that things were changing.

Megagovernance What will be done with teleradiology inside Strategic Radiology (and, potentially, as an outside service to nonmembers) is a looming question within the consortium. Another big question is how to implement and pay for an IT infrastructure that will allow the necessary image sharing. Ronald J. Ruff, MD, is vice president and director of outpatient imaging for Mountain Medical Physician Specialists (MMPS), a Salt Lake City, Utah, group that is one of Strategic Radiology’s founding members. Ruff serves as treasurer of the consortium. An executive committee of officers and committee chairs (including both physicians and administrators) is empowered to make nonbinding decisions. Binding decisions must be made by a board of managers composed of physician representatives from each of the member groups. Currently, each of the 15 members is represented on the board of managers, Ruff says, but there is a provision in the Strategic Radiology bylaws to curtail the size of the board if membership grows. There is also a provision that some deci-

—Steve Duvoisin, finance chair, Strategic Radiology, Chicago, IL

holders’ profit demands, into radiology. It was a 2008 meeting called by a teleradiology company that served as the birth catalyst for Strategic Radiology, according to physicians now in the consortium who attended that meeting. Chad L. Calendine, MD, a musculoskeletal radiologist, is president of Advanced Diagnostic Imaging (ADI), a Nashville, Tennessee, group that reads for area hospitals and for three imaging centers that the group owns. ADI is one of Strategic Radiology’s founding members, and Calendine was one of several Strategic Radiology physicians to attend the Phoenix, Arizona, conclave. The teleradiology company that called the meeting was trying to put together a regional day-coverage service. Calendine recalls, “It wanted a premium from the groups it had called together to deliver this. Nobody was happy with that.” Calendine says that the teleradiology motive is an important one for Strategic

Radiology. “In the larger context,” he says, “day-coverage and night-coverage services have become increasingly predatory in local radiology markets. We don’t want to support those companies that are displacing radiologists. We want an initiative to cover the nighttime readings within Strategic Radiology, so that groups no longer have to outsource them.” ADI already markets daytime subspecialty teleradiology services “from Maine to Washington,” Calendine says. He is licensed to read in 15 states, and he does not see licensure as a big hurdle for Strategic Radiology, should it move into the teleradiology arena. “Most think we should address the night-reading needs within Strategic Radiology first and build into day-coverage services among the groups, functioning under Strategic Radiology rather than under each of the groups. There is a distributed-reading push, and it’s a significant

Table. Physician and Nonphysician Leadership of the 15 Strategic Radiology Member Practices GROUP





Advanced Diagnostic Imaging

Nashville, TN

Chad Calendine, MD

Michael Moreland


Advanced Radiology Services

Grand Rapids, MI

Kon Loewig, MD

Christopher Shride


Austin Radiological Association

Austin, TX

Gregory Karnaze, MD

Doyle Rabe


Charlotte Radiology

Charlotte, NC

Arl Van Moore Jr, MD

Mark Jensen


Diversified Radiology

Denver, CO

Steve George, MD

Chris McMillan


Hill Medical

Arcadia, CA

Christopher Hedley, MD

Greg Kusiak


Inland Imaging

Spokane, WA

William Keyes, MD

Steve Duvoisin


Jefferson Radiology

Hartford, CT

William Glucksman, MD

Lary Freni


Mountain Medical Physician Specialists

Salt Lake City, UT

Ronald Ruff, MD

Clark Davis


Northwest Radiology

Indianapolis, IN

Michael Skulski, MD

Linda Wilgus


Quantum Radiology

Atlanta, GA

Alan Zuckerman, MD

Adam Fogle


Radiology Associates of Sacramento

Sacramento, CA

Mark Liebenhaut, MD

Fred Gaschen


Radiology Ltd

Tucson, AZ

Dan Stricof, MD

James Palmer


Riverside Radiology and Interventional Assocs

Columbus, OH

Mark Alfonso, MD

Marcia Flaherty


Southwest Diagnostic Imaging

Phoenix, AZ

Rodney Owen, MD

Lisa Mead

69 Total 892


Achieve Growth.

t4JOHMF integrated viewer for efficiency gains t6OJWFSTBMBDDFTTUPBMMBVUIPSJ[FENFEJDBMEBUB t4UFBEZHSPXUIXJUIPVUCVTJOFTTEPXOUJNF Growing businesses face many challenges, especially for radiology groups that read and report for many facilities using multiple RIS/PACS with different IT environments, workflows, worklists, and viewing interfaces. InteleOne™ Distributed Radiology Solution streamlines medical imaging by leveraging the Intelerad® storage grid architecture and PACS neutral archive. InteleOne provides the interoperable, highly fault-tolerant, and scalable solution essential to achieve growth as you need it. Intelerad Medical Systems is a recognized leader in medical imaging PACS and workflow solutions. To learn more about how InteleOne benefits our clients, contact us:

1 888-246-9774


COVER STORY | Strategic Radiology

There is a level of trust between radiologists that’s higher than the trust level between radiologists and Wall Street. —Chad L. Calendine, MD, vice chair

sions require a supermajority, while most Each holding company made a contriburequire only a majority. Voting power is tion to Strategic Radiology, proportional to proportional, based on each group’s size. the number of physicians in each group. Technically, Ruff notes, since some That has been true for every group that has states bar physicians from direct owner- joined. Obviously, Strategic Radiology will ship of for-profit medical corporations, have future requirements, and the board of Strategic Radiology is owned through managers will make decisions on how to holding companies formed by each of the fund those. We made an initial investment, founding groups. “Mountain Medical and we haven’t had any more capital calls.” Group is the holding company for MMPS,” Duvoisin notes that collectively, the Ruff says. “Each MMPS physician has an Strategic Radiology member groups comequal share in the holding company.” plete about 12 million imaging studies per Ruff declines to disclose Strategic year. He estimates the original capital call Radiology’s original capitalization. “Right as “pennies per image,” and he joins Van 1269_Rad_Sprd_RBJ.qxd:Layout 1 4/16/10 PM inPage 1 the capitalization “definow, we have a budget,” he says. “We know 2:31 Moore calling how much money we have in the bank. nitely thousands, rather than millions.”

Teleradiology A question that Strategic Radiology members will have to answer soon is when (and how) to roll out any collective teleradiology or image-sharing capacity between the groups. Do they want a teleradiology presence only between Strategic Radiology members, or do they want to offer a broader service to nonmembers, too? The same question must be answered concerning subspecialty readings. There appear to be those, like Calendine, who want to move quickly into image sharing. He says, “If a group is having trouble, we will do everything we can to help. Would it join Strategic Radiology or become an affiliate? None of that has been worked out yet. We are never going to go in there and compete with radiologists in their own markets. If they need a partner that’s not going to take over, that’s what we could provide. There is a level of trust between radiologists that’s higher than the trust level between radiologists and Wall Street.”



There is also a faction that wants Strategic Radiology to progress at a lesshurried pace. “Strategic Radiology, at this point, has no intention of going into night coverage,” Van Moore says. “Each member group is doing internal night reading in different ways. Could there be something, in the future, for nighttime radiology, or in a subspecialized way? Yes, but there are no specific plans. There has been no attempt to cross-license.” Rodney S. Owen, MD, is a body and musculoskeletal MRI specialist at Southwest Diagnostic Imaging (SDI), headquartered in Scottsdale, Arizona. SDI is the parent of Scottsdale Medical Imaging (SMIL), for which he serves as group president. The combined group has 69 radiologists and completes about 1.2 million exams per year, Owen says. SDI is a Strategic Radiology founding member, and Owen serves as secretary of the consortium. On one hand, Owen counts himself as a slow-growth advocate. He notes that all member groups in Strategic Radiology went through their formative periods. “We are

Could there be something in the future, for nighttime radiology, or in a subspecialized way? Yes, but there are no specific plans. There has been no attempt to cross-license. —Arl Van Moore Jr, MD, chair

learning to crawl before we walk,” he says of Strategic Radiology. “We are at our nascent stage. We’re crawling now, we plan on walking, and someday we plan on running, but when and where are yet to be seen.” Owen does see Strategic Radiology developing image sharing, probably sooner rather than later. He estimates the nighttime reading volume across the entire Strategic Radiology membership at about 100,000 studies per year. SDI/SMIL currently does its own night reading, as well as some day reading for other entities, Owen says. “Strategic Radiology will be able to do that better and more efficiently than we do

it now,” he predicts. “Over time, we hope to link it all up through Strategic Radiology. The easiest transition should be consolidating nighttime services, and then will come the deeper consolidation of daytime services through Strategic Radiology’s IT infrastructure.” Of course, that infrastructure does not yet exist, but designing its implementation is underway.

Building IT Chris (Kip) McMillan is CEO of Diversified Radiology of Colorado, PC, based in Denver. Diversified Radiology has 55 radiologists and covers 12 hospitals, along with 15 to 20 outpatient centers, five

G EVERY IMAGING STUDY THE BEST IT CAN POSSIBLY BE. Radisphere is a special group of professionals. We staff only the best Radiologists in their areas of specialization and hold them to a higher standard of medical and business practice. Our extensive support team delivers these decisive, specialized reports within committed turnaround times – the kind of service delivery that increases medical staff satisfaction and expands referral volume and revenue. And yet Radisphere also lowers the costs you currently dedicate to managing radiology. Allow us to analyze your needs and design a solution where every study is read by the right Radiologist, raising the entire level of radiology for your facility.

8 6 6 -4 37 - 7 2 37 www.r adi s phe re .n et Formerly Franklin & Seidelmann Subspecialty Radiology

COVER STORY | Strategic Radiology

We all understood that the ability to share studies seamlessly was ultimately to be nirvana, so the question became, ‘Is that even possible?’ —Chris (Kip) McMillan, IT chair

We have the strong physician leadership assembled, but many believe it is time to seek strong administrative leadership fully dedicated to Strategic Radiology. —Rodney S. Owen, MD, secretary

of which it once owned. Diversified Radiology is another founding member of Strategic Radiology, and McMillan serves as Strategic Radiology’s chair of IT. “I think I missed the meeting when they picked the IT chair,” he jokes, but in fact, McMillan is a former programmer. For McMillan, the push for image sharing comes from Strategic Radiology’s quality initiatives as much as from a teleradiology incentive. “In talking about quality of care and the ability to have an interchange between physicians for consulting, we all understood that the ability to share studies seamlessly was ultimately to be nirvana,” he says, “so the question became, ‘Is that even possible?’” One way to share would be for all Strategic Radiology members to adopt the same PACS and RIS and interface those, McMillan says, but that would be too expensive. “We asked, ‘Is it possible to build a clearinghouse where I take PACS A and send to PACS B (different PACS in different states)? Can we build a common clearinghouse that could move those images around?’ It doesn’t exist out there,” he says. To get an answer, Strategic Radiology asked two vendors of radiology interface software to come up with a proof of concept. Both vendors believe that interoperability (or distributed reading) can be accomplished across all the Strategic Radiology member sites, McMillan says, and that it probably can be adapted to the hospitals served by the various Strategic Radiology groups, so that the entire enterprise would be seamless. The radiologist at

the workstation would not necessarily know where the image originated. “It’s a large architecture problem, but it can be done,” McMillan says. “As far as a roll-out goes, nothing has happened.” He says that’s because the effort would be costly, and the Strategic Radiology members are still weighing the benefits against the expense. He asks, “Do we need this great big functionality that we might not use all that often?” McMillan expects the demand for distributed reading to be stronger on the subspecialty side than for general night or day coverage. Diversified Radiology now uses outside teleradiology providers for night reading. McMillan says, “If I can do that better internally with Strategic Radiology and save money, I’ll do that. Am I looking for a way to get rid of my existing group? No; it provides a level of care I couldn’t provide from within my own group.” He adds that Strategic Radiology might first look at filling internal demand for subspecialization. Hospitals want the service, he says; in fact, hospitals have recently increased their requests for subspecialty readings to the demand level, but they don’t want the expense of staffing for them. “Can we (as Strategic Radiology members) have deeper staff support from subspecialists who are not in our own individual groups? Those are the directions in which our conversations are headed, but to do that, you’ve got to be able to move those studies,” McMillan says. The question of whether (and how) to initiate a distributed-reading capability


within Strategic Radiology raises a sensitive issue. What, exactly, is Strategic Radiology’s mission? Is Strategic Radiology intent on providing fee-based teleradiology and subspecialty interpretation across its membership and beyond? Does it see itself becoming a service provider, or is its true mission to help its members using best practices, quality-control methods, and utilization standards that can be applied across its membership? Some Strategic Radiology leaders seem eager to enter into service provision, at least on the teleradiology side. Others seem less sure. “I can think of 100 ways to provide service,” McMillan says. “It’s not part of the business model yet. Right now, Strategic Radiology is providing services (ideas) just for the members of Strategic Radiology. It’s a bunch of CEOs doing conference calls.” Concerning whether Strategic Radiology should enlarge its staff beyond one consultant, McMillan says, “Strategic Radiology is pro bono. There’s not a lot of dedicated cost structure to Strategic Radiology. All our projects are trial studies, and it’s not costing anything to keep Strategic Radiology viable. If Strategic Radiology says we need to staff up, it’s going to be because of something that justifies staffing up; right now, I’d be hard pressed to tell you what that would be.” Recently, Strategic Radiology let it be known that it was seeking a full-time administrator willing to assume the ultimate challenge of marshalling not just one, but 15 different groups behind a common strategy. Owen says, “The success of the member groups is, in large part, due to both strong physician leadership and strong administration leadership. We have the strong physician leadership assembled, but many believe it is time to seek strong administrative leadership fully dedicated to Strategic Radiology.”

Possible Conflicts The fact that some Strategic Radiology members are already marketing teleradiology services in the broader arena raises the question of what financial incentives there might be for those Strategic Radiology members to profit by selling services to other members. If more than one group can offer nighttime or subspecialty readings, who gets the work? The fact that Strategic Radiology has already engaged an Inland Imaging affil-

COVER STORY | Strategic Radiology

We are a privately held business, and we have all the resources of a business available for future funding. It could be a loan, or it could be a capital call; it could be a lot of things. —Ronald J. Ruff, MD, treasurer

We’re trying to identify those areas we all work in and then identify best-practice models and metrics that we can share. —Mark Jensen, operations chair

iate as a consultant raises the same sort of question. Do some Strategic Radiology groups stand to profit from by offering tools or expertise to other members? “Conflict of interest in service is potentially there,” Owen says, “but it hasn’t arisen. We’re trying to accomplish things most efficiently and effectively. If we find the best way to acquire a service is from one of the members, we’ll do it. First, we have to define ourselves better.” Duvoisin adds, “Inland Imaging is in a position to market its business and radiology services to other Strategic Radiology members, even though we all have fairly similar levels of infrastructure.” Antitrust violations aren’t something that anyone in Strategic Radiology seems concerned about, since the consortium’s 892plus radiologists constitute a drop in a bucket, compared with the estimated 33,000 radiologists in the United States. Moreover, Van Moore says, “The only way we could violate antitrust is if we attempted to price products, and since we’re not going into that business, we don’t have to worry about antitrust. If we did try to price products, that would be a long way down the road, 15 or 20 years from now. Nobody can predict the future, but we’ve got a lot of other things to do before we try to do national contracts.” Nobody seems to think that Strategic Radiology gives its members an advantage in raising capital; money is available on the group level. “I don’t see Strategic Radiology raising capital,” Van Moore says. “I see the individual members doing that.

They have their own governance structures and the ability to get their own financing. We don’t supplant the local practice. This effort is to help the local practices do a better job for patients.” The jumping-off point for Strategic Radiology in offering interpretation services (or edging toward a national practice) is certainly keyed to the creation of the ability to share studies. Once that is in place, a whole new range of options and choices will have to be deciphered and decided upon by Strategic Radiology’s member physicians and administrators. Strategic Radiology is approaching portability slowly. One reason might be that dividing the interpretation pie among the various Strategic Radiology members would be a tricky endeavor; this might create more hesitancy about infrastructure implementation than the infrastructure’s cost does. According to Ruff, capitalizing the infrastructure needed to share images shouldn’t be all that expensive. “As part of making any infrastructure decision, we would come up with a business plan to fund that,” he says. “We might look at what the income from that distributedimage solution would be and decide how much of that would go to Strategic Radiology to help fund the infrastructure,” he says. “We are a privately held business, and we have all the resources of a business available for future funding. It could be a loan, or it could be a capital call; it could be a lot of things. The nice part about the infrastructure is that other than a cloud-


level interface to connect us all, most of us have the major components of an infrastructure in place. The capital outlay that people imagine is not as great as it might appear, at first glance.” While Strategic Radiology’s physicians and administrators mull the complications of a distributed-reading implementation, however, other Strategic Radiology officers are moving swiftly on a second front: a set of quality and best-practice initiatives to strengthen Strategic Radiology and raise its profile.

Best Practices Strategic Radiology was formally incorporated in 2009. From the beginning, the corporation has stressed “a collaborative model in which data and best practices are shared [and] clinical practice information is interchanged.”2 During the formative period when Strategic Radiology was being put together, McMillan says, a survey was taken that asked respondents to name the most important things that would benefit Strategic Radiology, its members, its client hospitals and clinics, and the patients they serve. “The top five issues for the physicians were all quality related,” McMillan says, “and the top five administrative issues were all related to cost containment. We merged those two lists.” The best-practice and quality-control initiatives at Strategic Radiology run deep. Van Moore suggests that one day, Strategic Radiology might offer a cafeteria plan of basic practice-management services (such as billing, malpractice coverage, and purchasing) to small radiology groups, perhaps as affiliate members of Strategic Radiology. He stresses, though, that the most important impact of Strategic Radiology’s bestpractice effort will be to give an advantage to Strategic Radiology’s members and to raise the profile of radiologists generally. Strategic Radiology will cement radiologists’ eminence in the industry. Mark Jensen, COO of Charlotte Radiology, is Van Moore’s nonphysician counterpart and is chair of Strategic Radiology’s operations committee. He says that Strategic Radiology has already sent quality-standards surveys to its members and is about to analyze those. “We’re trying to identify those areas we all work in

Defining Radiology’s “New Normal”


Ronald Evens, MD, on the impact of the new health-care legislation

As medical imaging’s leaders struggle to find their footing in the post–health-reform era, one aspect is certain: The need for greater efficiency is more important than ever. The resulting changes from the new policy nationwide may be dramatic: Whereas the demand for efficiency once resulted in increased profitability, today it could mean the survival of the enterprise. This is because medical imaging appears to be taking a disproportionate reduction in reimbursements and an increase in the requirements to qualify for payment. Ronald Evens, MD, is the chief medical advisor and chair of the Medical Advisory Board of Compressus, Inc. In a recent interview, Evens had clear and direct views on the impact of the new health-care policy. “All the pundits describe the new health-care–reform legislation as primarily insurance driven and related to adding individuals to the insurance lists,” Evens says. “In fact, knowledgeable readers understand that the new legislation promotes old habits of continuing to cut reimbursements for all of imaging.” He continues, “This will continue for at least two or three more years, as imaging is perceived as overpriced and needing to cut back. While most of the new health-care–reform legislation only has serious interactions after 2010, the continued price cutting for imaging is already starting, not only for CT and MRI, but for all of our vascular studies. “ According to Evens, medical-imaging decision makers will have their hands full trying to determine not only where to reduce their overhead, but how to accommodate an anticipated increase in volume without a reduction in quality. “The impact on the individuals in the decision-making positions will be somewhat of a whipsaw,” Evens says. “First, there will indeed be more individuals with insurance who will be seeing physicians who are ordering imaging. Second, the number of imaging procedure increases that we will need to contend with nationwide will have less reimbursement.” Evens adds, “That, in turn, will drive some providers out of the market, allowing more volume for those who remain, but for those who remain, efficiency of service, utilization of their equipment, and especially utilization of radiologists will increasingly become important. This will require better IT, and better PACS and RIS solutions.”

To learn more… 0('[&RQQHFW


Tel: 202.742.4297 Email:

As Evens sees it, there could very well be fewer imaging enterprises competing for a larger market. That market, however, will contain volume that is burdened with decreasing profit margins. He says, “Other than hospitals and radiology groups, most nonradiology providers will only accept a short time of negative cash flow, and they’ll get out of the business. There are going to be many more short-term problems where these decision makers are going to have to review all expenses, even some that they believed were untouchable.” As the Chairman of the Compressus Medical Advisory Board, Evens could be considered a subjective observer, but his experience does support a thoughtful commentary on the need for change. “Compressus has an important role to play because more and more people will want to be increasingly productive with their current assets, and one of those assets is the interpreter,” Evens says. “By implementing a Compressus solution the number of interpretation sites can be reduced. Compressus can add efficiency to the overall number of interpreters and some enterprises even consider reducing the need for outsourcing and returning interpretations back to their own operations, by utilizing resources in the evening.” Evens adds, “Compressus also allows many facilities to expand their market by offering efficient, real-time, subspecialty services that they may not have otherwise had.” Evens notes that the water is now over the dam and that the first imaging enterprises to act and adjust may have an advantage over those who hesitate. He says, “Whether radiology has been singled out or not, there are estimates of $3 billion worth of cuts related to radiology over a 10-year period. Beware, now is the time to prepare!”

About MEDxConnect MEDxConnect from Compressus offers a holistic solution to connecting disparate systems. Designed to manage the workflow of an imaging health-care enterprise, the MEDxConnect system provides a suite of offerings that has the power to connect systems from multiple vendors, that offers proven interoperability, and that allows an organization with disparate multivendor systems to function as one virtual enterprise.

8 Related… Online Summary of Imaging Related Provisions in Health Care Reform Law From the ACR® Summary: Excellent and brief analysis of the medicalimaging components of the new health-care program

Online Crystal Ball: Toward True Enterprise Image Management By Cat Vasko Summary: Examines IT tools for imaging and image management evolving to improve clinical efficiency and bolster quality of care articles/view/crystal-ball-towardtrue-enterprise-image-management/

Online A Business Like No Other By Kip Hallman Summary: Executive-level analysis of opportunities and challenges in medical imaging articles/view/a-business-like-noother/

For copies of past columns, e-mail

COVER STORY | Strategic Radiology

We are sharing, at a high level, blinded data to benchmark and, ultimately, to identify best practices to bring back to each group. —Lisa Mead, RN, data-mining leader

We’ve had many meet-and-greet discussions with radiology benefit managers (RBMs) and decision-support companies. —Linda Wilgus, new ventures chair

and then identify best-practice models and metrics that we can share.” Likewise, he says, a billing survey has also been completed. Analysis of those results is underway, too. “One of the things I see is that there’s not a clear set of quality metrics out there. There’s a lot of discussion of pay for performance and subspecialty value, but not a lot of evidence on how to measure those things. One of our goals is to determine what the measurable quality factors are, perhaps sharing those results outside of Strategic Radiology to the benefit of all radiology,” Jensen says. Strategic Radiology also might try to create a billing solution usable by all its members. Jensen says, “If groups in Strategic Radiology have a way to drive down costs, how about sharing that information? There’s value in that.” He adds that Strategic Radiology’s members are sharing data on radiology workflow and radiologist productivity. “I think there’s enough variability out there that there is opportunity,” he says. “We’re trying to reconcile why that is: Is it subspecialty related, staff related, IT related, or because of the support staff?” To analyze the data it’s collecting from members, Strategic Radiology has contracted with a Colorado-based business-intelligence and data-analysis software company, Jensen says. “I think Strategic Radiology can be an industry leader in the quality arena,” he says. “I see early wins with economic savings, productivity savings, quality development, outcomes analysis, and best practices. Then, down the road, what are the opportunities

on the revenue side? How might we market Strategic Radiology business-intelligence tools or quality programs? That’s so far down the line it’s hard to say if those things are feasible. IT and common platforms are going to have to be part of that solution.”

Data Mining Lisa Mead, RN, is chief administrator for SMIL. She is a member of Strategic Radiology’s operations team, and when the effort ramps up, she will head the data-mining initiative. “Data drive good decision making,” she says. “Otherwise, you’re just doing anecdotal collection.” Mead says that the software company has already started compiling and arranging data for Strategic Radiology. “We have three years’ data populated from nine of the groups,” she says. The data do not include patient and practice specifics, she says, so there’s no chance of violating privacy rights or the proprietary interests of Strategic Radiology members. “We are sharing, at a high level, blinded data to benchmark and, ultimately, to identify best practices to bring back to each group,” Mead says. “We could create dashboards to gauge how our practices match up and then create an environment for sharing data and building relationships.” For now, Mead says, the software company is keeping access to the blinded data for each Strategic Radiology practice separated. A group can look at data on referral patterns, for instance, only for itself, but eventually, cross-practice benchmarks will be established, and groups will be able to query one another’s data, she says.


“We have outlined three areas to mine: productivity, referral patterns, and collections or revenue cycle. Productivity will be the first big benchmark,” Mead says. Strategic Radiology had its first user-group meeting at the end of February 2010, when it identified areas to clean up, categories of interest, and strategies for matching the data. “We’ll be able to look at anything, eventually, except contract rates,” Mead reports. Already, she says, Strategic Radiology’s members are querying each other on aspects of practice, such as how the various groups define high-tech imaging. Mead says that comparing data within Strategic Radiology will yield better insight than trying to assess group performance by looking at industry data. “We participate in the Medical Group Management Association, but we don’t know who the groups are that are represented,” Mead explains. “Are they fourphysician groups in Alaska or 70-physician groups in the Southwest? With Strategic Radiology, we know who we are.”

Managing Utilization At the same time that it is undertaking data mining and development of quality benchmarks, Strategic Radiology is moving forward in the area of utilization management. How should it define and implement utilization-management best practices? If Strategic Radiology ever becomes a national practice, and if it has a well-developed utilization-management methodology, it could have considerable clout with payors concerning appropriateness screening for high-tech imaging. “We’ve had many meet-and-greet discussions with radiology benefit managers (RBMs) and decision-support companies,” Linda Wilgus reports. She is committee chair of new ventures for Strategic Radiology and is executive director and CFO of Northwest Radiology Network, PC, a 42-physician practice in Indianapolis, Indiana, that is a founding member of Strategic Radiology. In developing a utilization-management strategy for Strategic Radiology, Wilgus says, there are several key questions to answer. Should it advocate computerized decision-support systems to enable referring physicians to choose the most appropriate exam for a patient, or

should it concentrate on working with RBMs in developing appropriatenessscreening standards? Should it do both? Wilgus says that Strategic Radiology has met with two vendors of decision-support software and three RBMs. “The decision-support vendors talk to us as a potential customer,” she says. “We’re in a lot of markets, and they have a product to sell.” With the RBMs, the contacts have only been discussions. Wilgus says, “We basically introduced ourselves and talked about our ideas and where we think the future of radiology is going. The future is utilization management, whether it’s through an RBM or using decision support. In the market, the RBMs do have a negative association because appropriateness screening creates a barrier. The RBMs hope that by conducting a dialog with us, maybe some of that negativity will fade.” Wilgus says that Medicare and private payors will rely increasingly on utilization management, going forward. “We want to help with appropriateness criteria for the greater good. We don’t have a defined plan or even a discussion of validating, rubber stamping, or putting our seal on anything,” she says. Before the Strategic Radiology members push too hard in any one direction, Wilgus says, “We need to pause and get to know one another. Nobody knows what the future holds. We don’t have preconceived ideas of where Strategic Radiology is going to take us.” There are those who wonder whether Strategic Radiology will take its members anywhere at all. “Call me a skeptic,” Philip Russell says. He is CEO of South Texas Radiology Group PA, a 60-radiologist practice that covers 12 hospitals and 21 imaging centers in the San Antonio area. “I guess I’m old enough,” Russell adds, “to be skeptical. As difficult as it is to hold 50 or 60 radiologists together, it’s hard to imagine, when you’ve got hundreds from different parts of the country, how they’re going to accomplish much.” If Strategic Radiology were to form a national practice, Russell asks, who would buy its services? “I understand the concept of nationwide coverage for a vendor organization, but I still hang on to the old adage that all health care is local as an important factor.” He notes that national-

To coalesce in a single mission requires compromise and concession, and I just don’t see that happening unless the environment changes drastically. —Philip Russell, CEO, South Texas Radiology Group PA, San Antonio, TX

footprint teleradiology vendors have not yet put themselves in a strategic position to contract with third-party payors. “I don’t know if this organization would, either,” he says. Even if it did, he argues, it would be little more than an independent practice association on a different scale. He says that if Strategic Radiology set price points, the geographic differences in payment per region (even using Medicare percentages as a guide) might leave some member groups happy, but would leave others feeling grossly undercompensated. “Some would be in the ballpark, and some would refuse to join because they wouldn’t want their rates to get beaten down so low,” he comments. Russell says that he’s in a circle of radiology-group CEOs who informally discussed an entity like Strategic Radiology. His group was even invited to join, he says, but he declined. He doesn’t see Strategic Radiology as a potential threat to his group’s practice, however. “I’m no more threatened than I am every day, when I wake up knowing there are these teleradiology companies that, because of the pressure of public funding, are required to grow.” He doubts that Strategic Radiology can coalesce to the point where it will have a mission of growing exam volumes. “To coalesce in a single mission requires compromise and concession, and I just don’t see that happening, unless the environment changes drastically,” he says. Nonetheless, he wishes Strategic Radiology well: “I hope it succeeds,” he says. If Strategic Radiology is able to establish transferable quality measures and best practices, it would benefit all of radiology, he adds, and smaller groups might be served by any practice-management standards that Strategic Radiology develops. “Radiology, as a profession, still has far too many radiologists who are not well served, from a management standpoint,” he says.

Commitment It’s not as though the administrators and physicians guiding Strategic Radiology fail to see the pitfalls that skeptics such as Russell enunciate. “The ongoing challenge is commitment,” Jensen says, “but every day, there is more confidence that this is a worthwhile effort, and the confidence is growing that we can execute our vision.” Can Strategic Radiology become a national megagroup? “It might happen,” Calendine says. “It’s not the intent or the focus of what we’re doing, but it might be one day in the future.” For now, Calendine and other Strategic Radiology respondents say that they are content to see the consortium pursuing more modest goals. “Ideally, we’re refining best practices, improving cost savings, and adding business opportunities for our groups, along the way, that might not have been there otherwise,” Calendine says. “We’d like to be good stewards in our groups across the country.” Whatever Strategic Radiology does in the future, there is a sense among its leaders that the high-level networking has already paid dividends. Van Moore says, “I think we’ve all surprised ourselves at how far we’ve come.” George Wiley is a contributing writer for Radiology Business Journal. References 1. Harris G. More doctors giving up private practices. New York Times. th/policy/26docs.html. Published March 25, 2010. Accessed April 1, 2010. 2. Regional radiology groups form a national consortium. Strategic Radiology Web site. regional-radiology-groups-form-consortium -0210.htm. Published February 23, 2010. Accessed April 2, 2010. | April/May 2010 | RADIOLOGY BUSINESS JOURNAL 33

WOMEN’S IMAGING | Building a Service

Building an Efficient, Effective Women’s Imaging Service By Cat Vasko


In a niche notorious for its comparatively low reimbursement, every step along the care continuum must be patient focused, yet investing in women’s health yields rewards


sk providers of women’s imaging services why they stick with the niche, in spite of declining reimbursement and the risk of malpractice suits, and the answer you’ll get is a simple one: patient interaction. It’s the ability to work directly with patients in potentially life-changing ways that continues to attract talented radiologists to the subspecialty, and that’s also the factor that makes mammography the unseen backbone of an imaging practice. Women have a unique opportunity to get to know their radiologists, and women are more likely to return to those radiologists for their other imaging needs. Kerry Chandler, MD, director of the breast-imaging section at Wake Radiology, Raleigh, North Carolina, says, “There’s a lot of satisfaction in it. You have a lot of interaction with patients, more so than in other subspecialty areas, and you can do something where you’re making a definite difference. You can see it and know about it. It’s not the most wellreimbursed imaging modality in radiology, and the malpractice issue has been a problem, but all in all, the positives outweigh the negatives.” Tina Hodge, RT(R), manager of breast imaging at the Montgomery Breast Center in Alabama, describes the business of providing women’s imaging as “investing in their influence.” She says, “We know that we can offer good services to women,

who will, we hope, direct their families’ care back to the center.” That notion is seconded by Stephen Feig, MD, director of breast imaging at the UC Irvine Breast Health Center (UCIBHC) in California, who adds that

low reimbursement, there also is a compelling need to construct an efficient patient flow. The process begins with scheduling; Montgomery Breast Center’s patients are sent reminder letters two months in

Breast imaging is good public relations. The hospital will gain downstream revenues from patients who are there for breast surgery, breast radiation therapy, oncology, and even pathology, because we’re there. —Stephen Feig, MD, director of breast imaging, UC Irvine Breast Health Center, Irvine, CA

women who receive their breast imaging in a hospital setting are more likely to return there for any further treatment that might be needed. “Breast imaging is good public relations,” he says. “It draws patients to the medical center. Although we may lose money on it, the hospital will gain downstream revenues from patients who are there for breast surgery, breast radiation therapy, oncology, and even pathology, because we’re there.”

Throughput Counts Clearly, there are strong business reasons for both hospitals and OICs to invest in building high-quality women’s imaging services. To keep the doors open despite

advance, and if they haven’t scheduled exams by a month after they were due for mammograms, another reminder is sent. UCIBHC sends reminder cards, while Wake Radiology sends yearly reminder letters and allows patients to request appointment times through its Web site. “Mammography is one of the few areas where we can let the patient initiate the scheduling,” Chandler explains. At UCIBHC, 15 to 20 minutes are allotted for a screening exam, while diagnostic time slots run up to 45 minutes; at Wake Radiology, screening patients are assigned five-minute slots, while 20 to 30 minutes are allotted for a diagnostic exam. Feig explains that because UCIB- | April/May 2010 | RADIOLOGY BUSINESS JOURNAL 35

WOMEN’S IMAGING | Building a Service

HC still uses analog mammography at one of its three sites, patient throughput can take slightly longer there. “We try to take as much of the preregistration and demographic information as we can when the patients call to schedule, so when they get here, we can avoid backups at the front desk,” he notes. Wake Radiology uses what Chandler calls a subwaiting area as an intermediate space between the front waiting room and the mammography suite; patients who have already changed into their gowns wait in the second room until it’s time for their exams. “We got them robes that aren’t skimpy so that they wouldn’t feel uncomfortable waiting in them,” Chandler says. “They could wear them to the mall. Now, the technologists aren’t always tied up helping patients undress and dealing with clerical issues.” Freeing the technologists to focus on the exams themselves has enabled the center to reduce total patient time for screening mammography to an average of 13 minutes. Similarly, UCIBHC’s center has been designed for optimal flow for both patients and technologists. “When you design a center, you want to make sure there’s as little walking time as possible for the technologists, and you don’t want the patient to have to backtrack. It’s a natural flow: registration desk to dressing room, dressing room to exam, and then out,” Feig says. Wake Radiology employs a specially trained group of staff members who are entrusted with calling women to notify them of a suspicious finding on a screening mammogram and to schedule the patient for diagnostic work-up. “They’re trained in how to talk to people, and we look for a certain type of person who can be empathetic and reassuring,” Chandler says. Wake Radiology has other protocols in place as well: “We don’t call anybody on Friday about abnormal screening results because we don’t want them staying anxious all weekend about their mammograms,” she continues. “Those who need to come back we schedule for the same day or a day after; if the recall time is over a day, I’m notified, and we reschedule some lessurgent screening mammograms.” Feig also emphasizes the importance of knowing how to discuss results with

The Cosmetic Frontier: BOTOX and Beyond


ccording to data1 from the American Society for Aesthetic Plastic Surgery (ASAPS), the number of cosmetic procedures performed in the United States has spiked in the past decade; ASAPS estimates that injections of botulinum toxin A (BOTOX®, Allergan, Inc, Irvine, California) increased by over 3,000% between 1997 and 2003, while collagen injections increased by a more modest 79%. In short: Beauty is big business, and Ziv Haskal, MD, professor of radiology and chief of vascular and interventional radiology at the University of Maryland Medical Center, Baltimore, believes that radiologists are uniquely positioned to take advantage of the rapidly expanding marketplace. “We’re already treating patients for varicose veins, which has a cosmetic element to it,” Haskal says. “We have all the tools and skills in place, we understand anatomy, we have the right kind of space, and we’re already seeing the patients. In my experience, many of these patients are interested and looking for those opportunities.” In 2007, Haskal organized a day-long symposium on cosmetic interventional radiology at the annual meeting of the Society of Interventional Radiology; over 350 radiologists attended. He says that the addition of cosmetic services to radiology practices is more commonplace than one might assume. “We have interventional radiologists who do just BOTOX, who do BOTOX and fillers, who run their own medical spas, and who do limited liposuction; this is in addition to treating peripheral arterial disease or cancer,” he says. “I would suggest that there’s no medical subspecialty you could name that does not have practitioners who also do cosmetic interventions.” Is it time to put an end to the stigma associated with offering these procedures? Haskal thinks so. “The reverse snobbery of saying, ‘We don’t do cosmetics,’ has, in my mind, fallen completely by the wayside,” he says. “It’s a valuable service to patients who already come to interventional radiolo-


gists for treatment of painful leg veins, and they can get it at the same location, from the physicians they already trust.” For centers interested in adding cosZiv Haskal, MD metic procedures to their rosters of services, Haskal offers a few tips. “You need trained and interested practitioners to do this,” he says. “Breast radiologists who do needle localizations could readily learn these skills, or an interventional radiologist could come during certain hours to offer cosmetic vein work, BOTOX, and (with experience) fillers.” He adds that imaging centers should not feel as if they need to “eat the whole thing: You can do a lot for patients with just BOTOX, but you must be committed to excellence. It is being explored for excessive sweating, there are new formulations that may have longer actions, and there are companies that are now developing topical versions.” At the end of the day, offering cosmetic interventions is another way that radiologists can better understand and adapt to patients’ needs, Haskal says. To that end, “there’s a need for both education and a clear desire for a very satisfied patient,” he cautions. “It’s not something you should simply bolt on to an existing center.” For centers willing to go the distance, however, ample returns could be waiting. “The overwhelming majority of women getting venous procedures are self-referred,” Haskal notes. “Women are often the health-care decision makers for their families, and this is another way to expose us to them.” —C. Vasko Reference 1. Cosmetic plastic surgery research: statistics and trends for 2001–2008. Published 2010. Accessed April 16, 2010.



WOMEN’S IMAGING | Building a Service

We always talk to the patients who come back personally, unless we call the physician and that person specifically wants to talk to the patient. We think you need face-to-face communication. It’s time consuming, but it really is worth it. The patients never forget it. —Kerry Chandler, MD, director, breast imaging section, Wake Radiology, Raleigh, NC

patients. “It’s important to handle that properly,” he says. “We speak to the diagnostic patients directly; it’s not a very costeffective way to do things, but the patients really like it. If I see something suspicious, I’ll talk to the patient and let her know she needs a biopsy, but I won’t mention the word cancer.” At UCIBHC, same-day results are available for patients with digital images who were examined in the morning; for those with film images, or whose exams were performed in the afternoon, results go out the next day. If a mammogram has a suspicious finding, “We have a staff member who is trained to talk to the patient, and that person lets her know that most of the time, it’s nothing serious,” Feig says. Patients are scheduled for follow-up care,

and results are tracked so that the center knows which have returned and which still need their diagnostic studies. Montgomery Breast Center also offers same-day results, when possible, “so patients can come in for a screening, and we can do everything (all the way up to a biopsy) during that same visit,” Hodge says. Biopsy results are returned within 24 hours. “We bring the patient back the next day to go over the results, and then, we help her go to the next level,” Hodge explains. “We make all the appointments for her.” Hodge plays the role often filled by a nurse navigator, facilitating this process for the patient. All three centers emphasize the importance of building personal relationships with patients. “We always talk to the patients who come back personally, unless we call the physician and that person specifically wants to talk to the patient,” Chandler says. “We think you need faceto-face communication. It’s time consuming, but it really is worth it. The patients never forget it.”

Reading-room Workflow The conversion from analog to digital mammography continues to create workflow hiccups in the reading room as breast imagers find ways to adapt to the necessary evil of switching back and forth between film and workstation reading. At UCIBHC, one of two screening centers uses analog mammography. “We have digital mammography in the diagnostic center and one of the screening centers, but at the other, our volume has not been sufficient for the hospital to purchase digital equipment,” Feig explains. “We have a higher proportion of diagnostic and con-


sultation work because we practice in an area where there are a lot of freestanding imaging centers.” Analog prior studies are pulled in advance, and the current studies are read the day after the study is performed, with voice recognition ensuring that the reports are ready immediately. Wake Radiology’s mammography equipment is all digital, but dealing with prior studies on film can often lead to delays in turnaround time. “With film prior studies, I want to see every single one the patient ever had,” Chandler says. “We try to look at as many prior mammograms as possible before we decide that a patient’s current mammogram is abnormal and she needs to return for more images. Prior mammograms performed in our own community are easy to obtain. If a patient has had mammograms performed out of our state, however, we may wait a week or so to get these studies for comparison before reading her current mammogram.” Likewise, the Montgomery Breast Center opened its doors seven years ago with digital equipment, and it uses a courier to retrieve analog prior studies within the community. “If the prior studies are out of town, we try to get somebody to go get those as well,” Hodge says. When analog prior studies are needed for comparison, Wake Radiology has the film jackets sent along with the current study to the reading area, where they are read on a viewbox. In the reading room, Chandler dictates her report to a staff member. “I have an assistant; all she does is enter what I say into the computer, and the second she does that, a report is generated with my name on it, and she signs that,” she says. “I can’t make it any quicker. The second I sit down and start reading, the report is generated. I haven’t found a reporting system I’m very happy with for diagnostics yet, so I just go ahead and dictate.” Because UCIBHC is part of an academic center, residents play a big role in its reading process, Feig explains. “The residents look at the screening cases, I review them with them, and then they dictate them,” he says. “We can easily get through 30 cases in an hour, but the residents have to review the exams first, and they do the dictation.”

Computer-aided detection is used at each of the three centers, though its overall contribution to sensitivity remains a matter of some debate. Hodge says that Montgomery Breast Center’s two radiologists appreciate what the software tool brings to the process. “There are times when it will show you things you know are benign, but there are times when it also picks up really subtle abnormalities,” she says. Chandler says that she likes the tool as well. “It’s good as a second reader. I find that it does make me take a second look at certain calcifications. Rarely do I ever call something back based on computeraided detection, but sometimes it catches things I already don’t like, and that’s a kind of confirmation.” Feig adds that computer-aided detection does not help every reader equally. “The people computer-aided detection will help the most are the least experienced people,” he says. “It’s excellent for calcifications, but it’s not as good for masses; that’s just the limitation of it right now.”

When Mammography Is Not Enough Breast imaging entails more than mammography, and depending on the location, scope, and affiliation of the practice, a range of modalities and technologies may be employed. The most frequently used are ultrasound and MRI, used as complementary exams when mammography alone is inadequate. For women whom the center has identified as high risk, Wake Radiology will “nudge the referring physician to consider breast MRI,” Chandler says. “We think it’s a decision the patient and the referring physician need to make together, but we do bring it up as something to think about. We don’t recommend it, however, unless the patient has dense breasts and some kind of risk factor.” UCIBHC is rolling out a new template for its patient letters (explaining results in lay terms for a patient’s records) in which MRI is recommended for high-risk women. “We recommend that they consider it,” Feig says. “We don’t want to recommend it outright because the referring physicians may be sensitive to it, or the patient’s insurance may not pay for it, but

we include a sentence about how the on the spot, if needed. Chandler concurs, patient should consider breast MRI saying, “If we can’t see it on mammograbecause she’s high risk.” phy, of course we’re going to do an ultraFor patients with palpable lumps that sound and look for it there; then, where to are not visible on a screening mammo- go next really depends on the physical gram, ultrasound is a reliable option. “We exam. Even if the ultrasound appears negalways go to ultrasound,” Feig says. He ative, we can decide to biopsy a lump explains that when a referring physician based on the physical exam.” writes an order, most of the time, that Emerging modalities play a role as order is for breast imaging (not mammog- well. Montgomery Breast Center has raphy alone), so there’s no reimbursement embraced breast-specific gamma imaging Project1:Layout 4/14/10with 10:41 AM Page 1(BSGI) and elastography, going so far as risk in imaging a 1patient ultrasound

Sensitive, Specific Imaging Breast-Specific Gamma Imaging (BSGI) with the Dilon 6800® Gamma Camera BSGI delivers a sensitivity that can detect sub-centimeter lesions — as small as 1 mm as reported in studies and clinical practice — very high specificity, and negative predictive values. BSGI with the Dilon 6800 is an ideal diagnostic adjunct to mammography. Even with diagnostic challenges such as dense breast tissue, multiple lesions, calcifications or implants, the sensitive, specific imaging of the Dilon 6800 comes through. BSGI with the Dilon 6800... • Aids in differentiating benign and malignant tissue. • Is sensitive to smaller, non-palpable and/or medially located lesions. • Reveals lesions independent of tissue density. • Helps evaluate the need for biopsy.

To Learn More about BSGI and the Dilon 6800 please visit or call 877-GO-DILON.

44-00128 | April/May 2010 | RADIOLOGY BUSINESS JOURNAL 39

WOMEN’S IMAGING | Building a Service

[An educational Web site] is very helpful for patients with questions. Several physicians in town have put videos on there about what to expect if you’re going through radiation therapy, breast biopsy, and so on. —Tina Hodge, RT(R), manager, breast imaging, Montgomery Breast Center, Montgomery, AL

to participate in a recent study of the modality. “Anything breast related, we’re doing,” Hodge says. “Our radiologists do a lot of research; they go to a lot of breast meetings and stay very current with what’s going on and what the buzz is. Our administrator watched BSGI for a couple of years and decided it was definitely something she wanted here.” Like Montgomery Breast Center, Wake Radiology offers BSGI, and the center participated in an elastography trial for a year and a half. “We don’t make new modalities part of our usual work-up until we’re absolutely convinced they have utility,” Chandler says. “We haven’t relied on elastography until the recent past. We had our own ideas about it, but we wanted to see data.” She notes that elastograms have proven challenging for technologists because the pressure on the breast has to be just right and must remain consistent. BSGI, by contrast, has become a go-to test for patients who aren’t eligible for breast MRI. “Our referring physicians seem to like BSGI a lot these days,” she says. “With insurers getting more stringent about breast MRI, they’re asking for it more and more.” At the two practice-affiliated breast centers, a range of complementary women’s imaging services also are offered. Wake Radiology has uterine-fibroid embolization, hysterography, bone densitometry, and pelvic ultrasound. Montgomery Breast Center also performs bone densitometry, and Hodge notes that offering these ancillary services and alternative breast-imaging modalities can help compensate for mammography’s relatively low reimbursement.

Community Effort In the event of a cancer diagnosis, it’s critical to ensure that patients receive the

care that they need as promptly as possible; as breast surgeons, oncologists, and other members of the patient’s future care team join the process, what began as a simple screening mammogram evolves into a community effort. Montgomery Breast Center is attached to a cancer center, so medical oncologists and radiation oncologists are part of the staff available to patients from the breast center. The center also has relationships with breast surgeons to whom it regularly refers. “It’s definitely a team approach,” Hodge says. New cases of breast cancer are discussed at a pretreatment conference, during which all the members of a patient’s care team, from oncologists to radiologists to pathologists, come together to discuss the best approach. The center once employed a nurse navigator, but its financial situation meant that it could not support her. “Because of reimbursement being the way it is, we were unable to keep her,” Hodge says. “It’s just not something that’s reimbursed.” At UCIBHC, surgeons and medical oncologists confer with breast-imaging radiologists throughout the day; weekly, multidisciplinary tumor boards enforce the collaborative approach. “It’s easy because we are all located in a single multidisciplinary breast center. It’s a situation many places don’t have the good fortune to have,” Feig says. “We’re there when the other clinicians look at the patients, so we can work them up at the same time. We review the images with the clinicians at our workstations. It’s not a very cost-effective system, but it’s good for patient care.” In Raleigh, similar weekly tumor boards at Rex Hospital bring together breast surgeons, oncologists, radiation therapists, and pathologists. “Problem


cases are presented and discussed at the conference,” Chandler says. “We share a building with our own radiation-oncology practice, and there is a medical-oncology practice in the building, but this practice is not part of Wake Radiology. These practices often share patients, making it easy for us to assist in providing care to their patients.”

Marketing and Outreach Because women’s imaging can be the linchpin of a practice or hospital’s overall business, patient-targeted marketing is of particular importance, and all three centers advertise to patients in local markets while maintaining referring-physician outreach. “We’ve run ads about our breast MRI in Orange Coast magazine and a few others, and that’s been very helpful,” Feig says. “We also just hired a marketing person to go out to physicians’ offices and talk about breast MRI, and we’re interested to see whether that works well.” Montgomery Breast Center advertises to patients in the local newspaper, and the center has branched out further to advertise on the Web and to sponsor an educational site, “It’s very helpful for patients with questions. Several physicians in town have put videos on there about what to expect if you’re going through radiation therapy, breast biopsy, and so on,” Hodge says. Wake Radiology also advertises in local newspapers and magazines, and it adds local medical publications to the list. “People pick them up here and there, and they do make an impact. We also sponsor things like public radio and local television shows, and we sponsor a lot of charity events that help to get our name out there in front of the public,” Chandler says. Marketing representatives visit referring physicians’ offices to discuss the modalities offered, and Wake Radiology’s radiologists will even meet with referrers to touch base on customer service. “The best way to market a women’s imaging practice is to take good care of your patients and to communicate well with them,” Chandler says. “That’s what they, and their referring physicians, appreciate.” Cat Vasko is associate editor of Radiology Business Journal.

 Ɖƌ ŽĨ ĞƐ Ɛ ŝ ŽŶĂ ů  Ă ƉƉƌ ĞĐ ŝ Ă ƚ ĞƐ  ƚ ŚĞ ĮŶĞƐ ƚ ͘

KŶů LJ  Ă  Ɖƌ ŽĨ ĞƐ Ɛ ŝ ŽŶĂ ů  Ŭ ŶŽǁƐ  ƚ ŚĂ ƚ  Ă ů ů  ƌ Ă Ěŝ Žů ŽŐ LJ  Ő ƌ ŽƵƉƐ  Ă ƌ Ğ ŶŽƚ  Đ ƌ ĞĂ ƚ ĞĚ ĞƋƵĂ ů ͘ Ɛ  Ă  ƉĂ ƌ ƚ ŶĞ ƌ  ƚ Ž LJ ŽƵƌ  ŚŽƐ Ɖŝ ƚ Ă ů ͕  KEZ Đ Ă Ŷ Ɖƌ Žǀ ŝ ĚĞ  ŵŽƌ Ğ  ƚ ŚĂ Ŷ ũ ƵƐ ƚ  ƚ Ğ ů Ğ ƌ Ă Ěŝ Žů ŽŐ LJ  ŝ Ŷƚ Ğ ƌ Ɖƌ Ğ ƚ Ă ƟŽŶƐ ͘ KEZ͛ Ɛ  Ğ dž Ğ Đ ƵƟǀ Ğ  ƚ Ğ Ă ŵ ĚĞ ǀ Ğ ů ŽƉƐ  Ɛ ƚ ƌ Ă ƚ Ğ Ő ŝ Ğ Ɛ  ƚ Ž ŚĞ ů Ɖ ŽƵƌ  Đ ƵƐ ƚ ŽŵĞ ƌ Ɛ  ďĞ  ŵŽƌ Ğ  Đ ŽŵƉĞ ƟƟǀ Ğ  ŝ Ŷ ƚ ŚĞ ŝ ƌ  ů ŽĐ Ă ů  ŵĂ ƌ Ŭ Ğ ƚ ͘

Wƌ ŽĨĞ Ɛ Ɛ ŝ ŽŶĂ ů  ZĂ Ěŝ Žů ŽŐ LJ  ^ ƚ Ă ĸŶŐ Ă ŝ ů LJ  KŶͲ Ɛ ŝ ƚ Ğ ^ ŚŽƌ ƚ  Žƌ  > ŽŶŐ  d Ğ ƌ ŵ

d Ğů Ğƌ Ă Ěŝ Žů ŽŐ LJ  Žǀ Ğƌ Ă Ő Ğ Ă LJ  Žƌ  Eŝ Ő Śƚ EĞ Ƶƌ Žů ŽŐ LJ  ^ ƵďƐ ƉĞ Đ ŝ Ă ů ƚ LJ Kƌ ƚ ŚŽƉĞ Ěŝ Đ  ^ ƵďƐ ƉĞ Đ ŝ Ă ů ƚ LJ

d ĞĐ ŚŶŽů ŽŐ LJ  ^ Ğƌ ǀ ŝ Đ ĞƐ Z/ ^ ͬ W^  ^ W d Ğ ů Ğ ƌ Ă Ěŝ Žů ŽŐ LJ  ŽŶƐ Ƶů ƟŶŐ

Ɛ  Ă  Ɖƌ ŝ ǀ Ă ƚ Ğ  ƉŚLJ Ɛ ŝ Đ ŝ Ă ŶͲ ŽǁŶĞ Ě Ő ƌ ŽƵƉ Ĩ Žƌ  ƚ Śŝ ƌ ƚ Ğ Ğ Ŷ LJ Ğ Ă ƌ Ɛ ͕  ŽƵƌ  Ğ dž ƉĞ ƌ ŝ Ğ ŶĐ Ğ Ě Ğ dž Ğ Đ ƵƟǀ Ğ  ƚ Ğ Ă ŵ Đ Ă Ŷ Ɖƌ Žǀ ŝ ĚĞ  Ă  Đ ƵƐ ƚ Žŵ Ɛ Žů ƵƟŽŶ ƚ ŚĂ ƚ  ŵĞ Ğ ƚ Ɛ  LJ ŽƵƌ  ŶĞ Ğ ĚƐ  Ă ŶĚ Įƚ Ɛ  ǁŝ ƚ Śŝ Ŷ LJ ŽƵƌ  ďƵĚŐ Ğ ƚ ͘   Ɛ  Ă  ǀ Ă ů ƵĞ Ě Đ ƵƐ ƚ ŽŵĞ ƌ ͕  LJ ŽƵ͛ ů ů  ĚĞ ǀ Ğ ů ŽƉ ŵĞ Ă Ŷŝ ŶŐ Ĩ Ƶů ǁŽƌ Ŭ ŝ ŶŐ  ƌ Ğ ů Ă ƟŽŶƐ Śŝ ƉƐ  ǁŝ ƚ Ś ŽƵƌ  ĚŽĐ ƚ Žƌ Ɛ ͕  ŽƉĞ ƌ Ă ƟŽŶƐ  Ɛ ƚ Ă ī͕  Ă ŶĚ Ğ dž Ğ Đ ƵƟǀ Ğ  ƚ Ğ Ă ŵ͘   ŽŶƚ Ă Đ ƚ  ƵƐ  ƚ ŽĚĂ LJ  ƚ Ž ů Ğ Ă ƌ Ŷ ŵŽƌ Ğ Ă ďŽ Ƶ ƚ Ă  ƉĂ ƌ ƚ ŶĞ ƌ Ɛ Śŝ Ɖ ǁŝ ƚ Ś KEZ͘

&  Ƶ ů  ů   ^  Ğ  ƌ  ǀ  ŝ  Đ  Ğ   Z Ă  Ě ŝ  Ž ů  Ž Ő  LJ   W ƌ  Ž ǀ  ŝ  Ě Ğ  ƌ sŝ Ɛ ŝ ƚ  ƵƐ  ŽŶ ƚ ŚĞ  ǁĞ ď Ă ƚ  ǁǁǁ͘ ŽŶƌ Ă Ěŝ ŶĐ ͘ Đ Žŵ

HOSPITALS | Imaging-delivery Strategy

How Hospitals Are Rethinking Imaging Economic and market forces are prompting hospitals in two Ascension Health hospital systems to reengineer the delivery of imaging By Julie Ritzer Ross


iagnostic imaging remains critically important to the bottom lines of individual hospitals and health systems alike, continuing to subsidize many less-profitable and unprofitable service lines while providing predictable growth. A rapidly changing imaging landscape, however, is spurring institutions to alter models for, and methods of, managing their imaging businesses on the inpatient and outpatient fronts alike. The languishing economy and the capital-intensive nature of this particular service line have placed a tighter-than-ever lid on access to capital. At the same time, reimbursement cuts are putting the squeeze on (as well as creating new opportunities for) hospital-affiliated freestanding outpatient imaging sites. Gary A. Fammartino, MBA, serves as system executive for ambulatory and out-

patient services at St Vincent Health in Indianapolis, Indiana. “In light of these elements,” he affirms, “the way we manage imaging now cannot be entirely the same as the way we may have done it even a short time ago.” St Vincent Health is a member of Ascension Health, St Louis, Missouri, the nation’s largest nonprofit Catholic health care system. With 19 facilities serving 45 counties in central Indiana, St Vincent Health is also the state’s largest health-care employer. St Vincent Health provides imaging services at 13 hospitals and six freestanding OICs. Eleven hospitals perform imaging services on an inpatient and outpatient basis, while two hospitals have only inpatient imaging services. Fammartino’s department is charged with expanding the outpatient services offered by the provider throughout the state


of Indiana. He characterizes St Vincent Health’s model for imaging management as blended, noting that the provider does not look at “inpatient versus outpatient, but rather, at hospital-based inpatient and outpatient together, versus outpatient alone in the freestanding centers.” Bottom-line responsibility for imaging services at each hospital rests on the shoulders of that institution’s own president, with Fammartino and his department lending support in all endeavors. He also presides over inpatient services at St Vincent Hospital in Indianapolis, the provider’s flagship. Management of the freestanding centers is a system-wide effort; Fammartino heads operations in line with the scope of his department’s function.

Clearing the Deck It’s not surprising that cracks in the

We can build your hospital’s radiology services from the ground up

Simply, efficiently, and with you in mind As radiology’s most important customer, you expect comprehensive services and an imaging partner who understands the significance of the new radiology–hospital relationship model based on trust, commitment, and reliability. As former hospital executives, the Avistar team members understand that regardless of how complex medicine becomes, it will remain a people business, and that relationships are just as important as the latest advances in technology. We know how important this is to you as a busy executive. Whether you need a full-service radiology group, on-site professional department management, staffing, or temporary coverage, Avistar Imaging is the solution and the partner that you have been looking for. Our full range of hospital radiology services is a turnkey process that allows you to have the best of both worlds—top-level clinical capability with none of the administrative burdens required to manage it.

Call us today to find out how we can turn your radiology problem into a world-class ser vice line—or check out our Web site for the complete list of our comprehensive radiology services. 888.579.XRAY (9729)

6900-29 Daniels Parkway, Suite 210 Fort Myers, FL 33912

HOSPITALS | Imaging-delivery Strategy

imaging landscape have spurred St Vincent Health to refine its imaging-delivery practices as a means of fostering growth. “Our vision for imaging,” Fammartino says, “largely entails moving away from tying up so much of outpatient processing on the hospital side to handle last-minute needs to serve inpatients, especially those who are in an emergency state. The inefficiencies of serving outpatients in the hospital are currently too great.” Moreover, he adds, it is impossible to compete effectively in the outpatient-imaging arena if the majority of patients must go to a hospital for service, as many individuals favor the freestanding-center experience over that of a hospital environment. Toward this end, the system is in the midst of shifting as significant a portion of its hospital-based outpatient services as possible to freestanding centers. This includes all modalities, with a particular emphasis on MRI and CT services. Patients who need more invasive procedures (such as biopsies), or who require multiple tests in addition to imaging, will probably still need to come to the hospital-based imaging department. Zip codes are being scrutinized to determine whether existing outpatient facilities are conveniently near the homes of sizeable existing patient populations, as well as to identify additional key markets for expansion. Fammartino and his colleagues believe that this strategy will help St Vincent Health strike a good balance between decreasing the cost of providing inpatient imaging services and increasing outpatient traffic. “Operating a freestanding imaging center, versus operating the same services associated with a hospital-based location, has significant advantages,” Fammartino says. “One clear advantage is the streamlined approach of less overhead and lower

fixed-cost structure associated with the freestanding imaging centers.” In a related effort to enhance operating efficiencies, improve its bottom line, and bolster its radiology business as a whole, St Vincent Health is also evaluating the option of partnering with operators of other freestanding imaging centers that compete with its own. Both parties would manage the facilities together, under the terms of such an arrangement. Fammartino says, “We see this as a symbiotic relationship wherein St Vincent Health would benefit from an extended market reach, as well as from the fact that nonhospital-affiliated centers have carved out a strong niche in which they function quite successfully.” He notes a heightened interest among outpatient imaging facilities in teaming up with health-care providers to mitigate the negative effects of declining reimbursements and similar impediments to profitability. “With this strategic alignment, it will then be possible to steer many of the outpatient procedures being performed at hospital facilities to conveniently located outpatient centers,” Fammartino explains. “In addition, having more facilities, to offer patients a choice of locations coordinated through a centralized scheduling system, will help support this outpatient steerage. Partnering with the freestanding centers brings into the St Vincent Health system additional imaging volume currently being handled by these facilities.” Fammartino believes that this strategy will enable St Vincent Health to adopt a more competitive pricing structure in the outpatient arena without negatively affecting profitability. “With this significant increase in volume being added to the bottom line, St Vincent Health will be able to reduce its outpatient pricing without an impact on its bottom line,” he says.


“Reducing volume on a percentage basis in relationship to increasing volume and holding net revenue neutral will enable St Vincent Health to position itself as the price leader among its hospital competitors.”

A Joint Effort Saint Thomas Health Services (STHS), another member of Ascension Health, is striking out in a similar direction with respect to a more global view and management of imaging resources. Headquartered in Nashville, Tennessee, STHS operates three acute-care hospitals, one criticalaccess hospital, and three freestanding imaging sites. The three OICs are joint ventures with local imaging providers in their areas; STHS holds a 49% share in one center, a 60% interest in another, and an 80% interest in the third. Sheila Sferrella, MAS, RT(R), CRA, FAHRA, arrived in Nashville in 2006, when she assumed the newly created position of vice president of ambulatory services. She reports to the president of Saint Thomas Affiliates, who reports directly to the system’s CEO. In 2009, Sferrella recruited Luann Culbreth, MEd, MBA, RT(R)(MR)(QM), CRA, FSMRT, executive director of medical imaging; the two have a matrix relationship. Each freestanding imaging site has its own manager and a separate board of directors; these report through STHS Ventures, and Sferrella has a seat on each board. Soon after arriving, Culbreth launched the formation of a medical-imaging council (with representation from all imaging stakeholders) to form consensus on shared interests, such as best practices, stewardship of resources, standardization/flexibility, and patient advocacy. The council identified five initial priorities and has been checking them off the list ever since. The first was systemwide implementation of voice recognition, an initiative that had stalled due to restrictions on leases imposed, in part, by the 2005 base used by bond-rating agents such as Moody’s and Standard & Poor’s. By working with the supply-chain vice president, Sferrella managed to upgrade an existing lease to cover all hospitals. The second priority was implementation of a centralized scheduling system

These Top Teleradiology & Reading Groups Run

Global Medical I M A G I N G

Final consults by board-certified subspecialists

DAC IMAGING Diagnostic Radiologists

More than just a Worklist and Viewerâ&#x20AC;Ś A highly configurable workflow solution capable of automating and managing the next generation of distributed reading practices.

Join the growing number of teleradiology and reading groups that run eRAD

HOSPITALS | Imaging-delivery Strategy

The inefficiencies of serving outpatients in the hospital are currently too great. —Gary A. Fammartino, MBA, system executive, ambulatory and outpatient services, St Vincent Health, Indianapolis, IN

across all hospitals, achieved through an arrangement with an application service provider that made the cost an operating expense. The third was a new, centralized RIS for all four hospitals, implemented with the help of Ascension Health’s IT department. The fourth priority was finding a compliance coordinator for imaging, and the fifth (not yet completed) is hiring a systemwide radiation-safety officer. The council supports the management of the in-house imaging departments under the auspices of individual directors and is headed by Culbreth. Sferrella states that STHS has come to recognize patients’ distaste for navigating hospital corridors and waiting for services while emergencydepartment patients are seen. “The whole concept,” Sferrella insists, “has to change. We cannot grow if we continue to depend on hospital-based services to drive outpatient-imaging growth.” New partnerships, in tandem with which the system might be able to operate additional freestanding OICs, are now being sought. Also under investigation is the idea of achieving economies of scale by structuring all three existing freestanding sites under a single operating umbrella, and possibly running any new OICs using the same common structure. Moreover, during the past 18 months to two years, Sferrella has put into place a performance-improvement dataset for each of the freestanding centers. Quality is monitored against these measures (including appointment availability and the matching of orders with completed tests) and results are reported to the system’s vice president of quality, as well as to the board of directors. Inpatient utilization rates are now tracked by modality to facilitate decisions that would result in cost and/or other savings. For example, it was recently deter-

mined that utilization rates at one of the provider’s hospitals did not warrant maintaining two aging interventional-radiology rooms, which had become increasingly costly to maintain due to the difficulty of getting parts for them. The two older rooms were replaced by one state-of-the-art room. “We not only saved the capital expense of the second room, which was around $900,000, but we also saved operating costs: The service contract would have been about $100,000 per year,” Sferrella notes. As a nonprofit Catholic hospital system with a core mission of meeting the needs of the poor and underserved, STHS has a keen interest in monitoring the amount of charitable care that it provides. “We track charity care at our joint ventures, as well as at our hospitals,” Sferrella reports.

Global Efficiencies Earlier this year, STHS began to implement a standardized electronic scheduling system across its hospitals and two of its freestanding sites, enabling the medicalimaging council to achieve further efficiencies by reviewing and standardizing exams’ time slots. Previously, all studies were scheduled for 60-, 45-, or 30-minute time blocks, but the executive director asked the modality managers to standardize examination times, where possible. “If you can do a head MRI in a 15-minute slot instead of 45 minutes, then you are not wasting two appointments,” Sferrella notes. Physicians can bypass the telephone system, sign into the scheduling application, and schedule patients electronically. When fully implemented, the scheduling system also will allow patients to schedule such routine screening procedures as mammograms, and it will let them indicate whether they would like appointment reminders to be delivered 24 hours in advance via email or telephone.


Managing labor costs is another key focal area, and refinements of staff schedules and allocations continue. Breast imaging’s utilization levels recently dictated that a coder of breast-imaging procedures should be hired. A certain number of hours of the individual’s time were allocated across three hospitals, but each facility was required to relinquish part of an FTE to compensate for the expense. “Staff used to be a fixed cost,” Sferrella notes. “It’s now a variable cost, and as a manager, you are supposed to flex up and down to meet your volume fluctuations. If you want to increase your volume, you have to have exceptional service, because it is all about service. In a freestanding world, it’s all about volume: The more volume you do, the more you cover your fixed costs. On the inpatient side, it’s about productivity, but the bottom line, in both settings, is service, service, service.” In a related vein, St Vincent Health is in its first year of a lean-processing endeavor aimed at improving patient satisfaction while minimizing or eradicating redundancies and extraneous expenditures. Encompassing all departments within the hospitals and the freestanding centers, the initiative calls for assessing all individual processes and practices. Within imaging, this will range from finding ways to expedite preparation time for given procedures to alterations in staff scheduling. Although St Vincent Health has barely scratched the surface in making changes related to lean processing (additional parttime staff hours were recently incorporated into the schedule, as a start on the manpower front), managers are confident that this represents a step in the right direction. Other health-care systems have gained efficiencies and achieved financial savings by migrating to a lean-processing model, and the same is true of myriad corporations in other industries, Fammartino observes.

Technology Acquisition Equipment procurement is being refined by hospitals and health systems in response to external pressures. In recent years, St Vincent Health has adopted a strategy under which 80% of the purchasing of capital imaging equipment (all of which occurs under the aegis of Fammartino’s


HOSPITALS | Imaging-delivery Strategy

Staff used to be a fixed cost. It’s now a variable cost, and as a manager, you are supposed to flex up and down to meet your volume fluctuations. —Sheila Sferrella, MAS, RT(R), CRA, FAHRA, vice president, ambulatory services, Saint Thomas Health Services, Nashville, TN

department) is executed through one vendor. The potential for access to better (volume) pricing, which St Vincent Health now consistently enjoys, was just one reason for migrating to this approach. St Vincent Health also saw great value in offering inpatient and outpatient services alike using a single manufacturer’s equipment. Specifically, Fammartino says, “We wanted to give our rural hospitals access to a talented pool of imaging professionals, so we took it upon ourselves to create an education-and-training program.” Because the program needs to cover only one manufacturer’s equipment, staff members can rotate among radiology departments at St Vincent Health’s hospitals without being retrained (or negatively affecting the imaging process). “You might think, for example, that a 64-slice CT machine is a 64-slice CT machine is a 64-slice CT machine,” Fammartino says, “but there are subtle differences between what comes from one manufacturer and what comes from another. Having one common platform eliminates complications.” Detailed roadmaps for each hospital and freestanding center play a significant role in determining the outcomes of requests for capital-equipment purchases and replacements. Among other elements, the roadmaps specify the optimal allocation of equipment and funds for the given facility, based on such factors as its size, its breadth of services, and the specific market that it serves. Any changes within the facility in question are taken into account when its roadmap is used as an acquisition-assessment tool. Solid evidence that a change warrants purchasing the requested equipment must be presented in order for a director to alter the roadmap and move forward with an acquisition. Using a hypothetical example, Fammartino says, “We would not approve a 3T MRI purchase for

one of our 25-bed hospitals without real documentation that something (demand or another factor) is different now.” Total cost of ownership also comes under the microscope. Fammartino and his team look at the expected volume and return on investment (ROI) to be yielded by the proposed acquisition. The issue of whether the equipment will help St Vincent Health and the individual facility attract new business, or do a more effective job of maintaining existing business, merits close examination; so do the recommendations of St Vincent Health’s vendor partner. STHS weighs inpatient equipment-procurement decisions against a template created by Ascension Health. For outpatient equipment, a business case for moving ahead with each proposed purchase must be formulated. Revenue-projection studies are conducted and five-year ROI projections are prepared; potential net revenue and the cost of operation are assessed. If operating expenses are found likely to increase as a result of acquiring the equipment in question, it cannot pass muster unless it melds with the values inherent in the STHS mission. Sferrella and Culbreth make equipment-acquisition recommendations, with involvement in the approval process extending upward to the hospitals’ CEOs.

Bolstered by Communication Fammartino and Sferrella agree that given current economic, operational, and logistical challenges, as well as emerging opportunities in the freestanding OIC sector, entities such as St Vincent Health and STHS cannot effectively execute imaging management without a solid communication structure. Accordingly, Fammartino holds quarterly meetings with the medical-imaging directors of all outpatient facilities. Meetings involve the sharing of best practices. New technologies and protocols are


often discussed, with individual teams assigned to prepare reports on them. Reviews are carried out on the degree to which the centers’ contracted radiologists are meeting key performance standards and targets set by St Vincent Health (and to what degree they will be compensated as a result). Information pertaining to equipment is frequently disseminated at the meetings by St Vincent Health’s vendor partner. “These meetings are extremely valuable from many standpoints,” Fammartino says, “but maybe most important, they keep the director relationships on a good, positive keel and prevent misunderstandings. For instance, sometimes a director will try to requisition a piece of equipment, not knowing why it isn’t a good fit for that particular center. When we communicate that, and maybe suggest alternatives, it works a lot better.” At the hospital level, a systems executive council meets monthly to discuss performance, technology strategies, and the like. Best practices frequently come up as well. Physicians are kept in the loop, and this step makes for more cohesive provision of services. STHS uses the medical-imaging council as a platform for the sharing of best practices; the group meets once each month to hash out issues and set priorities for undertaking initiatives, including those centered on equipment. “There is a lot of talk about what we need to do to compete,” Sferrella says. Fammartino describes a similar dynamic. He adds that the manner in which hospitals and health systems handle their imaging business will never be static; outside factors will always affect (and dictate refinements of) its execution. “Hospitals need to remain open to change. This, in itself,” he concludes, “is the mark of good management.”

Julie Ritzer Ross is a contributing writer for Radiology Business Journal.

RBJWebPlus To view an Outpatient Quality Metrics tool used by Saint Thomas Health Services, go to the online version of this article at


At APS, we have the technology and resources to reduce costs and increase revenue.

So you can focus on your practice. Todayâ&#x20AC;&#x2122;s challenging healthcare environment finds many practices facing common managerial and operational problems. Can you relate to these issues?

APS offers a free billing program analysis.

Higher Practice Operating Costs Lower Reimbursement & Collections Diminished Revenue Growth

Affiliated Professional Services, Inc.

Practice Management Services Selection

Through technology, experience, service and informationwe are APS. Your financial and practice management success is what drives us. So you can focus on your practice. APS Solutions Suite Includes: Revenue Management, Coding & Credentialing Services Scheduling & Registration, Charge-Capture Systems Electronic Medical Records (EMR) Practice Management Consulting Services

866.914.8719 | 2527 Cranberry Highway Wareham, MA 02571

CEO ROUNDTABLE | Hospital–Practice Relations

CEO Roundtable: Practice–Hospital Relations


eading an independent radiology practice has never been more challenging. Congress has escalated the timetable for reductions to the outpatient-imaging technical component to help pay for health-care reform. Health systems have embarked on a medicalpractice–buying spree across specialties and primary care, leading to some very well publicized meltdowns for radiology practices, and teleradiology providers are competing on a national level for hospital contracts. The CEOs of three leading radiology practices agreed to participate in an electronic roundtable discussion about the challenges of hospital–practice relations. Wayne K. Baldwin is CEO of Pueblo Radiology Medical Group, a 23-radiologist group based in Santa Barbara, California. The group provides professional services for five hospitals and operates two wholly owned imaging centers, and employs a staff of more than 100. Prior to assuming this position, Baldwin served as president of MD Services, and as general counsel and chief development officer of Comprehensive Medical Imaging. Dennis Carter is CEO of TRA Medical Imaging, a 52-radiologist group based in

Tacoma, Washington. The group provides professional services for six hospitals, and it operates five wholly owned OICs and three OIC joint ventures with a combined clinical, office, and support staff of 307 employees. Prior to holding his current position, Carter served as the executive director of Gainesville Radiology Group in Georgia and as CFO of X-Ray Associates of New Mexico in Albuquerque. Keith Radecic has been CEO of Radiology Alliance, PC, a 45-radiologist group based in Nashville, Tennessee, for seven years. The group provides services for seven hospitals and operates one wholly owned imaging center. Prior to serving in his current position, Radecic was national director of billing services for a national medical billing company, where he was responsible for six management services organization locations across the United States. RBJ: Leading an independent radiology practice has never been more challenging. What are the key external threats to the viability of the practice? Radecic: Many external forces can become perceived threats to an organization, including both local and national competition with other radiology groups.


By Cheryl Proval

For example, how do you balance the use of a night-coverage service while ensuring no impedance of competition from that group on your practice, since the service’s physicians are already credentialed at your hospitals? PACS has been a great asset to a radiology group, but it also enables other competitive groups to supply the service remotely and quickly. In a phrase: Commoditization of services is a threat. Other threats we see are payors’ impact on lowering professional reimbursements to the radiologists, governmental intervention through increased regulations, and general health-care reform and its impact on the industry. Another concern is other subspecialty physicians who generate potential service creep for almost all imaging modalities. Carter: For TRA Medical Imaging, hospital acquisition of the referring-physician community, declining government and commercial reimbursements, a growing disproportionate percentage of after-hours work, and erosion of interpretations (turf battles) are a few of the bigger challenges. Baldwin: An ongoing threat is the continued targeting of radiology reimbursement

Independent radiology practices grapple with declining technical fees, commoditization threats, and the hospital interest in captive practices, as practice CEOs face unprecedented challenges

Carter: Five years ago, the radiology group had a greater level of control in the relationship, as there were few options. Today, hospitals have greater choices in obtaining the services that the local radiology group has not been previously willing or able to provide. Those choices include teleradiology (for both night and day coverage), nonradiologists (including cardiologists, vascular surgeons, and others) providing radiology services, and the hospital’s ability to attract and hire a hospital-based radiology staff. Baldwin: Compared with five years ago, hospitals want more control, more radiology-based profit contribution, more radiology support for reduced expenses, and more of a sense that radiology groups have the best interests of the hospital at heart. They want to be treated more like important customers. Subspecialty expertise is more of an issue than it was five years ago, and one of our hospitals asked that we add more neurology reading capacity. All that being said, radiology is still a RBJ: How is the contract-negotiations climate between health systems and practices different relationship-based environment, and if today from what it was five years ago, and you deal with a health system, you need to have a good and open communication what are the factors driving that change? by government, with an ever-increasing burden of compliance with new regulations. Government has told us, in effect, “Radiology will get paid less, but we expect you to adopt and adapt to new technology, provide better service, and see more patients.” Another issue is that of taking action to demonstrate (and provide) value and service to our customers in a way that overcomes the trend toward the commoditization of radiology. A manifestation of commoditization is the greater role of radiology benefit management companies. Managed-care entities will only deal with you if they need you. If not, their primary focus is on sending patients to the lowest-cost provider. There are numerous recent examples of unilateral fee-schedule reductions by Anthem Blue Cross, CIGNA, Aetna, and HealthNet. Unless you have leverage, you are faced with lower fees.

line and to be responsive to their legitimate needs and requests. Many hospitals now feel radiology can be commoditized or provided remotely. If they have an outpatient component, they also know it takes real work to compete for the outpatient population, and that takes radiology buy-in from a group that does not have conflicts of interest. Radecic: In our local market, the environment is still collegial overall. Hospitals are under greater pressure to recruit topquality specialists to support the hospital’s service lines or to create new ones to generate revenues for the facility. Due to this mission set forth by the hospitals, facilities are under pressure to provide these physicians with access to the tools to be able to provide ancillary procedures, so the potential to extract them from the current radiology service offerings becomes more prevalent. The once well-defined exclusive contract is now becoming more blurred, with hospitals requesting more and more exceptions to exclusive agreements. Hospitals do seem more willing to negotiate on other factors in the contracts, | April/May 2010 | RADIOLOGY BUSINESS JOURNAL 51

CEO ROUNDTABLE | Hospital–Practice Relations

Hospitals do seem more willing to negotiate on other factors in the contracts, such as contractually agreed times of in-house coverage and how call will be covered, but it may come at a price related to exclusivity exceptions. —Keith Radecic, CEO, Radiology Alliance, Nashville, TN

such as contractually agreed times of inhouse coverage and how call will be covered, but it may come at a price related to exclusivity exceptions.

RBJ: What, in general, are hospitals looking for with respect to service, and does that sync with practice service missions? Carter: Increasingly, hospitals find themselves in a position to demand (versus request) certain levels of service. Those services include a local presence, subspecialized interpretations, voice recognition (including self-editing), timely/accurate turnaround of reports, and access to new lines of services (such as neurointerventional procedures), and all of this is to be delivered 24/7. In addition, hospitals expect a far greater level of participation on numerous internal committees. Radecic: Hospitals expect radiology groups to supply the standard 24/7 coverage needed to support their facilities. In recent years, local hospitals have worked with our group to match the practice missions and hospital missions, allowing such things as centralized reading of subspecialty imaging across jointly owned hospitals, use of night-coverage services, and other items that allow groups to become more efficient and supply the best services to their hospital facilities. The hospitals also want as many subspecialty radiologists supplying services to their facility as possible, so they can compete against the current direct outpatient private-office competition. The radiology

groups, of course, need to ensure that interpretation-turnaround times continue to be maintained at a minimal level to be competitive in the market area to support the service supplied by the hospitals Baldwin: Our hospitals want 24/7, highquality diagnostic interpretations and interventional-radiology services, provided in a timely manner, by a radiologist who does not cause problems. They are getting more concerned with subspecialty readings in some areas, but we have the expertise to accommodate those concerns. Problems are broadly defined as anything they don’t like, but in our experience, what they want and what we want to deliver are pretty much the same. More than anything, our hospitals want the assurance that they can rely on us to be there and to get a high-quality job done.

RBJ: Integrated-care initiatives are leading hospitals to go on a practice-buying spree across specialties and primary care. What benefits do captive medical practices offer to health systems? What are the potential drawbacks for the health system? Radecic: The major benefit to the health system is control. The intent of the captive medical practice is to ensure loyalty to the health system through an employer–employee relationship. Typically, an independent contractor determines how a job is to be performed best. An employer can specify how, where, and when an employee works for that employer. The employer has an obligation to provide a complete employee benefits offering to the employee and to pay state and federal payroll taxes on the employee’s behalf. There are additional legal obligations to the hospital facility in an employer–employee relationship that are not required when


dealing with an independent-contractor relationship. In the integrated delivery model, there continues to be ongoing demand by hospital administrators to push radiologists to provide expanded hours of onsite coverage, to ensure that appropriate numbers of radiologists are on-site (as defined by the hospital), and to make available a variety of subspecialty expertise. From the perspective of the hospital, these demands reflect the hospital’s desire to optimize patient care and facilitate diagnostic and therapeutic evaluations. The hospitals define it all as better patient care. Carter: I think the largest benefit derived by the hospital comes from keeping the patient contained within the hospital. The hospital-based physician is now encouraged to refer the patient to other physicians (specialists) within the health system, thus providing those physicians with a steady flow of patients. The hospital wins, as it provides all the ancillary services (such as imaging, pathology, surgery, and much more). Baldwin: I don’t think it is a fad. You sometimes hear radiologists talking about the old days, when things were different. The world has changed, and the integrated delivery system is a manifestation of that change. Much of this is driven by laws and regulations governing reimbursement relationships. When the pendulum swings in favor of hospitals, it should be no huge surprise that more services are consolidated under the hospital umbrella. What we are seeing now is driven, in large part, by the fairly extreme radiology reimbursement cuts either threatened or already enacted.

RBJ: Are there circumstances under which the employed model makes sense for a radiology practice? What are its dangers? Baldwin: Economic factors are largely driving the employment model. The biggest issue for a group always seems to be independence. For some groups, it will make sense, depending on a number of factors; these include the group’s stability, income levels, the terms of employment, whether the group can get guaranteed income with no real downside, whether it has any options, the group’s desire for independence, the group’s internal leader-

ship and governance capacity, the demographics of the group, the relationships of both parties, and so on. One perceived danger is the fear of what would happen if the employment arrangement didn’t work. You have given up your independence and may be left with nothing to show for it. The truth of this fear really depends on the situation, but it certainly is an issue that must be addressed. Carter: In some markets, there may not be enough exam volume to generate the revenue required to support the number of radiologists needed to provide comprehensive service/care. Other circumstances might be the group’s adversity to risk, or its lack of desire to operate the business side of a practice. Every group balances time off, quality of the day, and income. Generally, the more a group trends toward giving income the most prominence among these variables, the more likely it is to be independent. A couple of the possible dangers could be decreased innovation and loss of control. Employed models usually do not provide incentives that might stimulate creativity: Creativity usually leads to innovation, and innovation should generate improvements to the bottom line. As an employee, one’s ability to create change is limited and subject to a greater level of bureaucracy. This can lead to frustration (and, eventually, to apathy). Radecic: There are certain instances, in smaller markets, where hospitals force the radiologists to participate with all third-party carriers, eliminating the ability to negotiate in the best interests of the group. In that situation, a direct employee–employer relationship may, overall, be more beneficial for the radiologists. The danger is being unable to recruit qualified subspecialty radiologists to meet the needs of the referring physicians. Hospitals may also allow a greater service creep to other specialties to occur, thereby failing to supply radiologists with the work necessary to keep qualified radiologists occupied/engaged; turnover of radiologists may become more frequent, affecting the medical staff of the hospital. Historically, the salary scale in an employed relationship often falls below

industry averages, also forcing potential health systems. To accomplish this, a practice must offer something unique. In turnover of radiologists. order to prosper, a practice must provide RBJ: Is this trend having an impact on your the right blend of time off, quality/quanmarket? Is it a trend that will pass, or is it tity of work, and the opportunity for likely to be sustained? higher income. Ancillary sources of revRadecic: It is currently not affecting the enue help groups to thrive, and a thriving Nashville market, and I think this is a group will attract the best and the brighttrend that will eventually pass. In my est. The best and brightest are likely to experience, the employment model for deliver optimal patient care. A reputation specialty physicians who do not supply for providing better patient care will flow direct referrals to the facility historically through to the bottom line of the group has not worked long term for hospitals and its hospital partner. that have adopted the model. Baldwin: If a radiology group owns its Carter: I am not aware of any private- own technology, I assume that the group practice radiology groups in the area that would have an imaging facility separate

One perceived danger is the fear of what would happen if the employment arrangement didn’t work. You have given up your independence and may be left with nothing to show for it. —Wayne K. Baldwin, CEO, Pueblo Radiology Medical Group, Santa Barbara, CA

have opted to move to a hospitalemployed model. The trend is likely to continue and will succeed or fail based (in large part) on health-care reform. If the profitability of outpatient imaging is not completely stripped away, then I believe the trend (pendulum) will swing back toward independent groups developing outpatient services. On the other hand, if profitability is decreased to unsustainable levels, then there will be some increase in hospital-based groups, but I believe the majority of independent groups will remain independent and find new ways to meet their financial goals. Baldwin: The effect on our market is only indirect for now, but I would not be surprised if it became more of an issue in future.

RBJ: Independent radiology private practices have a tradition of technology ownership. Is this an asset or a drawback in contract negotiations with hospitals? Carter: I believe it is an asset. Hospitals understand the need to have a strong, viable radiology group supporting their

from a hospital. From a hospital administrator’s perspective, a radiology group’s technology can be a threat, an advantage, or a neutral factor. For example, a group’s superior expertise in the application of PACS technology can be an advantage to a hospital, and if PACS is managed properly, can be beneficial to both parties. It also can be a threat, if the group uses its advantage to compete with the hospital for outpatient business. On the other hand, PACS also could be perceived as a neutral element if the group is not in the same competitive market as the hospital. The same can be said of imaging technology. Groups may enter joint ventures with their hospitals to the hospitals’ advantage, or they may compete. Radecic: This is a drawback in negotiations in two instances. The first is if the privately owned center is in direct competition with the hospital’s facilities (by having the same coverage area, for example). Hospitals feel that you should be providing them with the ability to compete directly in the outpatient market, not | April/May 2010 | RADIOLOGY BUSINESS JOURNAL 53



Barbara Perez-Deppman 1HJRZVU /LHS[O :`Z[LT :V\[O -SVYPKH 4PHTP -3

“I read Radiology Business Journal because it goes beyond imaging to encompass a full range of services and has information of value to every health-care department in any hospital. Radiology Business Journal covers the subjects I need to help make our facility successful.”



Alan David Kaye, MD

Sheila M. Sferrella



“RBJ fills an important niche in the spectrum of radiology publications, and it provides me with a wealth of inform ation on the entire breadth of the socioeconomic, political, and administrative aspects of imaging services.”

“RBJ has a lot of information about practices, structuring relationships with physicians, and outpatient businesses. Since this is where I live, it has been a very valuable resource for me.”



James T. Whitfill, MD

Steve Duvoisin



“Radiology Business Journal has the inform ation to go beyond the press releases and hardware specifications, really explaining how leaders across the country can use IT to further their goals.”

“I often send specific inform ation from RBJ to other members of our management team to help them gain a better understanding of the challenges in today’s practice of radiology.”



Richard A. Jensen, MD

Richard S. Helsper



“…if anyone wants to get up to speed on the problems and opportunities facing us, I can think of no better place to start than the Radiology Business Journal.”

“I look for sources that enable me to rem ain connected in topics that are of strategic importance in terms of the five pillars: people, service, education/research, quality/safety, and finance/growth. I find that RBJ accomplishes this in regard to imaging…”



EXPERIENCE Q Responsible for strategic planning Q Sets annual budgets and revenue projections by modalit yand profit center Q Identifies new business opportunities including avenues for revenue/business diversification Q Provides feasibilit yanalysis, proformas and business plans on any new business venture or capital equipment acquisition Q Physician group practice management including compensation, recruitment, productivit y, professional contract s, credentialing, and malpractice/risk management Q Negotiates and executes all provider contract s, research agreements and case rates including HMO/Managed Care organizations Q Oversees qualit yand compliance program

EDUCATION University of Redlands Q B.A., Business Administration (Healthcare Emphasis) University of Central Arka nsas Q A.S. Radiologic Technology with minor in Physics Baptist Medical Center Q Radiologic Technologist Program, Little Rock, Arkansas

“RBJ guides those running busy imaging centers today by providing articles which are relevant to the challenges we face on a daily basis. The realtime information and the thought provoking dialogue which often includes a hard dose of reality provide invaluable support in making difficult recommendations and encourage thinking outside the box.”

CEO ROUNDTABLE | Hospital–Practice Relations

operating your independent center. Hospitals often feel that independent technical ownership by the group leads to loss of hospital business. The second issue relates to the first in that hospitals fear that radiology groups will place their best subspecialty readers only at their owned facilities, thus the perceived

ship, from an administration perspective, is not personal. For most hospital administrators, the relationship is purely business. They are motivated by what they perceive as the hospital’s best interests. Groups that can help the administrators achieve their objectives will deliver value. Groups demonstrating that they

Try to develop ancillary sources of revenue outside the competitive market of your hospital; proactively approach your hospital with joint-venture opportunities. —Dennis Carter, CEO, TRA Medical Imaging, Tacoma, WA

belief of providing better coverage than the hospital facilities receive. This normally is not an accurate perception. Groups need to be very sensitive to this belief when negotiating their agreements and prove that they will continue to supply the best coverage at hospitals. Managing this impression and being able to dispel the hospitals’ fears must be handled in a fashion that assures the hospitals that their needs are today, and will continue to be, met.

RBJ: What does a practice need to do in order to preserve both its relationship with the hospital and its independence? Carter: First, a practice needs to be patient focused, delivering high-quality, consistent patient care. Make sure your hospitalbased services are delivered at the same high standards as your outpatient services. Second, understand the needs of your client (hospital). Make every effort to meet those needs and those of the medical staff. Take the time to meet with administrators and members of the medical community to explain why certain needs are difficult to meet, and work collaboratively to resolve differences. Try to develop ancillary sources of revenue outside the competitive market of your hospital; proactively approach your hospital with joint-venture opportunities. Baldwin: Listen to the hospital’s administrators. Treat them as valued customers and respond to legitimate needs. Be active in the hospital’s affairs. Sit on committees and boards. Remember that the relation-

provide more to the hospital community than just interpretation of images can differentiate themselves from the trend toward commoditization. Radecic: Radiologists must be willing to provide reasonable service to their referring physicians, their patients, and the hospitals. Radiologists must be visible and available in their hospitals, and they must embrace their roles as consultants. If radiologists cannot or will not provide added value, they will not be appreciated as contributing medical-staff members. Next, radiologists must integrate themselves into the medical, social, and political aspects of their hospitals and their communities. They must sit on the important hospital committees and, if possible, must seek medical-staff offices or seats on hospital boards. Radiologists must be seen as important participants in their hospitals, aligning their incentives with those of the hospitals they serve. Radiologists must also strive for loyalty from referring physicians and patients. Radiologists must be cognizant of the effects their behavior has on those with whom they interact, and they must demand good citizenship from all of their group members. All radiologists must work to protect and build their practices. Cheryl Proval is editor of Radiology Business Journal and vice president, publishing, imagingBiz, Tustin, California;





Affiliated Professional Services (800) 841-5200 .............................................. 49 A-Life Medical (888) 224-6300 .................................... 13 AMICAS (800) 490-8465 .............................................. 3 Avistar Imaging LLC (888) 579-9729 ................................ 43 CompONE (800) 300-6717 .................................... 59 Compressus (202) 742-4297 .................................... 31 Dilon Diagnostics (757) 269-4910 ................................................ 39 Dunlee (800) 238-3780 ..............................................17 eRAD (864) 234-7430 FUJIFILM Medical Systems (800) 431-1850 .............................................. 5 GE Healthcare (800) 886-0815 .................................. 60 Hitachi Medical Systems America (800) 800-3106 ........................................ 2 imagingBiz (714) 832-6400 ................................ 54–55 Imaging On Call (888) 647-5979 .................................. 11 Intelerad Medical Systems Inc (514) 931-6222 25 MMP (800) 895-0002 .......................................... 7 NovaRad Corp (877) 668-2723 ........................................ 29 OnRad (800) 848-5876 41 PCH Philips (800) 934-7372 .......................... 37 peerVue (877) 572-9505 ..........................................19 Radisphere (866) 437-7237 .................................. 26–27 RamSoft (888) 343-9146 option 2 47 RBMA (888) 224-7262 ................................................ 57 VMG Health (214) 369-4888 ........................................ 9 Zotec Partners (317) 705-5050 .............................................. 21

In the shadow of the Rocky Mountains is a place where beauty and luxury abound. Beneath majestic peaks, The Broadmoor, a historic five-diamond resort, provides visitors with carefree and peaceful surroundings in which to experience, absorb, and learn. Join RBMA this spring for a program that could change your life, your work, and your future! ANNOUNCING the RBMA Keynote Lecture Series

sponsored by

The 2010 Radiology Summit is pleased to host Keynote Speaker Stephen M. R. Covey As co-founder and CEO of CoveyLink Worldwide, Mr. Covey is a sought-after and compelling keynote speaker and advisor on trust, leadership, ethics, and high performance. He is the author of The SPEED of Trust, a groundbreaking and paradigmshifting book that challenges our age-old assumption that trust is merely a soft, social virtue and instead demonstrates that trust is a hard-edged, economic driver—a learnable and measurable skill that makes organizations more profitable, people more promotable, and relationships more energizing. Radiology Business Management Association • 888.224.7262 • •

Final READ

The Tortoise and the Stack Burner It is all too common for practices to devalue organization building in the race to productivity By Curtis Kauffman-Pickelle


ou know the tale. In the end, the steady pace of the tortoise won out over the supreme confidence and sheer speed of the hare; the hare simply did not value the focus, commitment, skill set, and tenacity exhibited by the tortoise. There are lots of lessons to be learned from this story, and over the years, most of us have learned how to apply at least some of them in our careers. In radiology practices around the country, however, there is one lesson that still seems elusive. Among the many questions that I am asked about productivity and stack time is the consistent dilemma of how to value off-stack time. In other words, when partners in the group step up and perform functions other than meeting the required daily RVU count, how are these functions—this time away from the socalled real work—valued? Whether the function is the preparation of a CME lecture for the medical staff, a marketing luncheon for a referring office, administrative time spent on the business of the practice, or a meeting with hospital administration, off-stack time is valuable to the practice. It is real work in every sense of the word. I would argue that these activities are equally important to the production of RVUs: The ability to build lasting relationships and customer loyalty will be among the factors that will separate tomorrow’s successful practices from those that will struggle for survival. Not everyone is equally adept at burning through the stacks, and not everyone is cut out to manage the business side of the practice. Practices need to identify which partners have the unique skill set required to work through particularly thorny contract issues, or to use communication talents and powers of persuasion to build a customer relationship with a difficult referrer. Who in

the practice seems most attuned to leadership and building a strong collegial culture? It’s not likely to be everyone. In far too many of today’s practices, though, the discussion still focuses on yesterday’s model, in which everyone is expected to produce equal amounts of output, measurable only by the number of work units attributable to each partner. Don’t get me wrong; it is supremely impor-

issues makes it imperative that partners skilled in dealing with these issues are the ones who are empowered to manage them. This makes it incumbent upon the rest of the partners to support those who might, by assuming these duties, become unable to produce the daily volume of studies that they would otherwise be able to manage. That is the essence of the message. Today’s radiology practices require a cer-

I would argue that these activities are equally important to the production of RVUs: The ability to build lasting relationships and customer loyalty will be among the factors that will separate tomorrow’s successful practices from those that will struggle for survival. tant that partners produce, and it is never acceptable to have the pendulum swing too far away from a minimum level of productivity. Accommodations need to be made, however, for the equal valuation of time spent by those in the practice who take on extra duties running the business side of the enterprise: those who help build the practice, and those whose skills help sustain it for future generations. What is that contribution worth? At the very least, those who contribute in these ways should be supported and encouraged by finding ways to endorse their work and make the processes involved easier. One school of thought is that each partner in a practice has a distinct responsibility to build the practice, to participate in the business, or to be otherwise involved in a committee or project in support of the practice. This is true on one level, and one cannot argue with the logic; however, today’s reality of increased competition; decreased reimbursement; complex business issues with hospital contracts; and sophisticated compliance, human-resources, and other


tain level of sophistication on the business side. The interrelationship among business development, expense controls, staff alignment, customer service, and negotiation is not something that very many radiologists enter practice understanding. Those who take the time to learn these things (and who dedicate long hours, on behalf of the group, to get the combination right) need to be valued, not derided for being off the stacks and doing supposedly frivolous stuff. Who will win the race? I am betting on the practice that supports the effort that it takes to stop and develop the right relationships along the way. Curtis Kauffman-Pickelle is publisher of Radiology Business Journal and is a 25-year veteran of the medical-imaging industry. He facilitates strategic-planning retreats for radiology groups, is a strategic business consultant to more than 30 imaging centers and radiology practices, and is CEO of imagingBiz, Tustin, California. He is publisher of, where this article first appeared on April 14, 2010.

#200 Visit Us in Booth Summit logy RBMA Radio ay 23-26 gs, M Colorado Sprin

Number ONE in Radiology and Teleradiology Billing. • Proven longevity since 1987 • Dedicated implementation team • Addressing the unique needs of Radiology and Teleradiology • 15% average increase in collections

GE Healthcare

Find the hidden resources inside your hospital Asset Management Solutions from GE Healthcare. To manage rising costs in a competitive healthcare environment, your success depends on getting more from the assets already under your own roof. The key is ensuring the right assets are always in the right place, at the right time, and in the right condition. Our Performance Solutions team can help you find underutilized resources, optimizing your capital and operating budgets to support daily operations and fund strategic growth. To learn how, visit

Š2010 GE Healthcare, a division of General Electric Company.

Radiology Business Journal April-May 2010  

Welcome to Radiology Business Journal, a bi-monthly print journal published by ImagingBiz. This next-generation economics journal is publish...