Radiology Business Journal | October/November 2013 by imagingBiz

October/November 2013

Merger Mania:

Radiology Seeks a Foothold in a Consolidating World page 18

Featured in this issue

What I Did on My Summer Vacation: Building a Federated Image Exchange

page 14

Consolidation and Imaging IT: Implications for Radiology page 30 Technology Acquisition: Implementing the New Normal

page 38

www.imagingBiz.com

Read how Intelerad provides big benefits for little patients at Connecticut Children's Medical Center. Download your complimentary copy of October's Harvard Business Review article "The Strategy That Will Fix Health Care", a new approach for providers to lead the way towards a value-based system.

October/November 2013

Merger Mania:

Radiology Seeks a Foothold in a Consolidating World page 18

Featured in this issue

What I Did on My Summer Vacation: Building a Federated Image Exchange

page 14

Consolidation and Imaging IT: Implications for Radiology page 30 Technology Acquisition: Implementing the New Normal

page 38

www.imagingBiz.com

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CONTENTS

October/November 2013 | Volume 6, Number 5

Features

Merger Mania: Radiology Seeks a Foothold in a Consolidating World

Payors, health systems, and radiology practices bulk up in their bids for intellectual capital, IT expertise, and strength in numbers.

Merger Maniaâ&#x20AC;&#x2122;s Implications for Imaging IT

Consolidation among health-care providers is creating challenges and opportunities for imagingâ&#x20AC;&#x201C;IT teams across all delivery settings.

Technology Acquisition: Implementing the New Normal

Eight years of reimbursement cuts, slowing innovation, and consolidation have resulted in new acquisition strategies across delivery sites.

By Greg Thompson

By Cynthia E. Keen

By Julie Ritzer Ross

4 Radiology Business Journal | October/November 2013 | www.imagingbiz.com

Synapse PACS Synapse RIS Synapse TeleRIS Synapse Financials Synapse Cardiovascular Synapse 3D Synapse Communications Synapse Mobility Synapse Virtualization Synapse Cloud Services

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CONTENTS

October/November 2013 | Volume 6, Number 5

Publisher Curtis Kauffman-Pickelle · ckp@imagingbiz.com

Departments

EDitor Cheryl Proval · cproval@imagingbiz.com

AdView

Art Director Patrick R. Walling · pwalling@imagingbiz.com

Blink By Cheryl Proval

Technical Editor Kris Kyes

The Bottom Line

Another Perspective

Priors 12 Value-based Care | The Value Agenda:

Associate Editor Cat Vasko · cvasko@imagingbiz.com

By Jeffrey Leef, MD

Online Editor Lena Kauffman · lkauffman@imagingbiz.com

When the Prescription Kills the Patient 14 Imaging Informatics | Building a Federated Image Exchange: My Summer Vacation By Jordan Handy and Matt Simpson 16 Numeric | Physicians Are Leery of Exchange Participation 17 Health-care Reform | Lessons Learned From a Pioneer ACO

42 44

Production Coordinator Megan Runyon · mrunyon@imagingbiz.com Webmaster Robert Elmquist · relmquist@imagingbiz.com

Advertiser Index Final Read From the imagingBiz Web Journals

Contributing Writers Jordan Handy; Cynthia E. Keen; Jeffrey Leef, MD; Julie Ritzer ROss; Matt Simpson; Greg Thompson

Corporate Office imagingBiz 210 W. Main St., Suite 101 Tustin, CA 92780 (714) 832-6400 www.imagingbiz.com PResident/CEO · Curtis Kauffman-Pickelle VP, Publishing · Cheryl Proval VP, Administration · Mary Kauffman

Radiology Business Journal is published bimonthly by imagingBiz, 210 W. Main St., Suite 101, Tustin, CA 92780. US Postage Paid at Lebanon Junction, KY 40150. October/November 2013, Vol 6, No 5 © 2013 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, 210 W. Main St., Suite 101, 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.

Please address all subscription questions to Cheryl Proval at cproval@imagingbiz.com.

6 Radiology Business Journal | October/November 2013 | www.imagingbiz.com

AdView Blink

Health care is consolidating, but the tough work lies ahead: true integration

une, a month long prized by brides, had a strong matrimonial pull on health-care providers, with a pair of announced mergers/ acquisitions that created two massive health systems, one for profit and one nonprofit. Several other key mergers announced and expected to be completed this year highlight the diversity of the hospital players and their deals, but all share a common denominator: There is a pervasive ambition to grow. Many attribute the consolidation trend to health-care policy promulgated by the Patient Protection and Affordable Care Act. Government regulatory bodies, however, are scrutinizing every deal for signs of unfair competition. Others see the consolidation of health care as a necessary step toward building greater value. A recently issued report1 commissioned by the AHA sought to minimize the trend, at least as it relates to anticompetitive effects. It makes a good case that the merger activity not only isn’t at the mania level that our cover story (page 18) headline suggests, but is not creating anticompetitive entities. The report did show an increase in transaction activity between 2007 (45 transactions) and 2012 (71 transactions). Some of the key hospital deals announced this year are remaking the health-care landscape. Continuum Health Partners and Mount Sinai Hospital: In September, two nonprofits merged to create the Mount Sinai Health System, a 3,571-bed network that includes Beth Israel Medical Center, St Luke’s Hospital, Roosevelt Hospital, the New York Eye & Ear Infirmary, and Mount Sinai Hospital (all of New York, New York). The system will create centers of excellence at each hospital. Tenet Healthcare and Vanguard Health Systems: On October 1, Tenet acquired Vanguard in a $4.3-billion deal; Tenet’s hospital count jumped from 49 to 79. A

stated objective of the acquisition was access to Vanguard’s experience with accountable-care organizations. Baylor Health Care System and Scott & White: This September merger created Baylor Scott & White, the largest not-forprofit health system in Texas (with 43 hospitals, more than 500 patient-care sites, 6,000 affiliated physicians, and 34,000 employees). This $7.7-billion transaction involved more than $8 billion in assets and $6 billion in annual revenue.

There is a pervasive ambition to grow. Community Health Systems (CHS) and Health Management Associates (HMA): This merger, announced in July, will create a network of 206 hospitals in 29 states. In a deal worth $7.6 billion, CHS will acquire all of HMA’s outstanding shares and will assume HMA’s debt. The deal offers CHA an opportunity to increase patient-entry points for its system by developing physician and outpatient-care networks. Scottsdale Healthcare and John C. Lincoln Health Network: In August, these Arizona competitors announced that they will join their five hospitals under an umbrella company to be called Scottsdale Lincoln Health Network. While assets will remain separate, health IT will be integrated. The deal presents two viable organizations with the opportunity to collaborate on managing population health, improving quality, and lowering costs.

What Now, Radiology? In radiology, consolidation has been underway for some time in the outpatient setting, where reimbursement reductions have been particularly extreme. We’ve also seen a good deal of consolidation on the private-practice side, as well as

8 Radiology Business Journal | October/November 2013 | www.imagingbiz.com

the emergence of umbrella organizations to represent allied practices in quality improvement and revenue-cycle enhancement. Some of this activity is likely to be defensive, but Michael Porter and Thomas Lee2 see consolidation as essential to achieving physician-led integrated care (page 12). The defragmentation of the US health-care system, they write, offers huge opportunities for improving value by defining the scope of service, concentrating volume in fewer locations, and integrating care across locations. While mergers/ acquisitions are rampant, true integration is not much in evidence. Porter and Lee offer some acid-test questions for health-system leaders: “Are you ready to give up service lines to improve the value of care for patients? Is relocating service lines on the table?”2 Radiology departments and practices, along with outpatient-imaging companies, must begin assessing how the answers to these questions affect their service-delivery models, as they reimagine their futures in a defragmented health-care world. Taking a classic reactionary stance toward change, Sen Rafael Edward (Ted) Cruz (R–TX) told Republican lawmakers to dig in their heels in the fight against healthcare reform. “Don’t blink,” he urged them. I say: Blink, think, and waste no more time in solving the problem of poor value in US health care. Cheryl Proval cproval@imagingbiz.com References 1. Center for Healthcare Economics and Policy. How hospital mergers and acquisitions benefit communities. www.aha. org/content/13/13mergebenefitcommty. pdf. Published September 18, 2013. Accessed October 3, 2013. 2. Porter ME, Lee TH. The strategy that will fix health care. Harv Bus Rev. http://hbr. org/2013/10/the-strategy-that-will-fixhealth-care/ar/1. Published October 2013. Accessed October 7, 2013.

The Bottom Line

Another Perspective A reader responds to an article in the previous issue of this journal with a story of his own

read with interest the recent article by Cynthia Keen, “When a Hospital Replaces a Private Practice.”1 The featured group is portrayed as an example of the type of practice that currently is being replaced by teleradiology companies. Poor customer service, substandard turnaround times, suboptimal call coverage, and lack of peer review are among the alleged failings. If that’s true, the group’s demise is understandable, but it should be viewed as the exception, rather than the rule. I again stress: If that’s true. Allow me to tell a story that I feel better exemplifies what really is happening in our radiology community. I am an associate professor of radiology at the University of Chicago and a fellowship-trained interventional radiologist. For the most recent 10 of my 22 years at the university, I served as the medical director of radiology at Louis A. Weiss Memorial Hospital, a 236bed hospital in Chicago’s North Side. Weiss Memorial Hospital was one of the four Chicago hospitals owned by Vanguard Health Systems (purchased by Tenet Healthcare Corp on October 1, 2013). My radiology practice was staffed by 3.5 FTE radiologists: a fellowship-trained neuroradiologist (with 35 years’ experience), a fellowship-trained musculoskeletal radiologist (with 10 years’ experience), a second fellowship-trained interventional radiologist (two years out of training), and me (with 22 years’ interventional-radiology experience). Mammography was covered by two fellowship-trained mammographers who were part of the Breast Center at the University of Chicago. We provided 24/7 interventional coverage, as well as specialty backup by fellowship-trained faculty in all modalities. During our 10-year stay, our service garnered the highest ratings in the hospital—from both physicians and patients—on Press Ganey surveys. Statistics tracked and addressed included turnaround times, reporting of critical values, reader discrepancy, peer review, proceduralcomplication rates, biopsy results, and more. We also achieved ACR® accreditation in mammography, CT, and MRI.

Despite these achievements (and despite maintaining the highest level of care), we lost the contract. The hospital’s CEO never relayed a single complaint, never requested that we change our practice in any way, and never instigated a meeting to discuss renegotiating our contract.

by Jeffrey Leef, MD

What Matters Most

soon to arrive, many established groups, both private and academic, have stopped hiring. Radiologists are feeling the squeeze. In September 2012, Vanguard administrators made the announcement that they would no longer be paying stipends to supplement a group’s income. For most medical practices at Weiss Memorial Hospital, regardless of the specialty, this is almost unworkable, as the payor mix is approximately 60% Medicare and 20% Medicaid. Around the same time, Crain’s Chicago Business reported2 that William Foley, then the Chicago-based senior vice president of operations, received 47,598 shares of Vanguard stock—worth about $461,0000— as a bonus. The Vanguard Chicago market generated 12.7% of the company’s $4.9 billion revenue for 2011 (about $628 million).2 A conscious decision had clearly been made: Pay the administrators instead of the radiologists. A week after my group left Weiss Memorial Hospital, Vanguard sold all of its hospitals to Tenet Healthcare. Vanguard’s stock doubled in value on the day of the sale. Currently, hospital administrators and corporate investors hold most of the cards. With time, this may change, as the job market improves. History shows, however, that radiologists have never been stagnant, and they continuously reinvent themselves and their field. I believe that part of the answer lies in expanding partnerships between private practices and academic institutions. While it did not save the Weiss Memorial Hospital practice, that does not mean that the model was a failure. Universities need to change their way of thinking and expand their vision as to how to provide health care. In the meantime, as my former chair of radiology told me, always take the high road; work hard, provide excellent care, and do the right thing. I would add: Thank God that you have a job.

Unfortunately, radiologists have encountered a perfect storm. Jobs are scarce, particularly in major cities, and the reasons for this are multiple. With a constant trend of decreasing reimbursements in imaging (since 2006, CMS has cut radiology payments 12 times) and unprecedented cuts

Jeffrey Leef, MD, is an interventional radiologist and associate professor of radiology at the University of Chicago. Note: The references for this article can be found in the online version of this article at www.imagingbiz.com/rbj.

Why We Lost the Contract Vanguard—or more directly, the equity company that owned Vanguard, the Blackstone Group—was an investor in its own teleradiology company: Imaging Advantage. In fairness, the radiologists employed by Imaging Advantage for teleradiology coverage seemed to have excellent credentials. What was of no consequence to the hospital administration was our level of excellence, documented using all criteria. In addition, a teleradiology company cannot remotely provide state-of-the-art mammography service or 24/7 interventional coverage, especially with our level of training and experience. Again, none of this mattered. Weiss Memorial Hospital hired two radiologists who had just completed their fellowships (in neuroradiology and musculoskeletal radiology), and created a part-time position for our most senior radiologist. Mammography was to be covered by whichever radiologist was willing to read the exams and perform biopsies, regardless of experience or training. Interventional radiology is now covered by a fellowship-trained interventional physician who is one year out of his training. Each day, he splits his time between Weiss Memorial Hospital and West Suburban Medical Center (Oak Park, Illinois), another former Vanguard hospital in the Chicago market. A radiologist without fellowship training has recently been covering his scheduled vacations.

10 Radiology Business Journal | October/November 2013 | www.imagingbiz.com

Attn: RBJ Readers

“Any APS billing discrepancy for covered client services will be reimbursed at the allowable provider rate.” A partner in a 17-person radiology group was surprisingly candid with me about why he had not outsourced his billing to us. “There are two main reasons,” he said. “First, I’m concerned that the billing-department head will be out of a job. There’s also this feeling that if we don’t directly control the billing and collections, we’re not going to get what is coming to us.” “There is something I want you to understand,” I replied. ”APS is directly involved in a crucial aspect of our clients’ businesses. If you don’t get every penny that is coming to you, I’m going to hear about it—and fast—because we hold ourselves accountable to you. We would not have been in business for over 30 years if we made those types of mistakes.”

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I made those statements because I was confident that our • Full-service medical billing experience, our expertise and our dedication to his success were • IcD-10 transition services going to make this one of the best business decisions he’d ever made. I was right: After the customary ramp-up period, collections increased, expenses were reduced and the entire operation ran smoother. That department head who’d been there for years is now the liaison between the practice and APS. Today, outsourcing your billing comes down to the fact that in the current health-care environment, conducting business as usual is not a good growth strategy. Here’s my guarantee to you: We are so confident in our systems and service levels that any billing discrepancy generated by APS for covered services will be immediately reimbursed to you at the allowable provider rate. to find out how to get started, call me directly at (866) 914-8719.

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{priors} value-based care

The Value Agenda: When the Prescription Kills the Patient

rom the man who imprinted the definition of value on health care’s collective forehead comes a prescription for the rescue of global health: Business guru Michael E. Porter (with Thomas H. Lee)1 shares “The Strategy That Will Fix Health Care” in the October issue of Harvard Business Review. The article builds on everything that Porter has written on health care in the past to provide a solution with sheer simplicity at its center: Maximize value for patients by achieving the best outcomes at the lowest cost. What is not simple is that it requires almost everything about the organization of, delivery of, and reimbursement for health care to change, effectively killing health care as we know it. As Porter and Lee point out in their 19-page manifesto, however, there are pockets, across the United States and beyond it—such as the Cleveland Clinic in Ohio and the Schön Klinik network (throughout Germany)— where the transformation is already underway. Before the process can begin, a healthcare provider must embrace the goal of improving value for the patient—a departure, for hospitals focused on increasing volume and preserving margin. What the authors call the strategic agenda for the transformation of health care has six components. The first component is to organize physicians into integrated practice units (IPUs) based on the patient’s condition, rather than the physician’s specialty— to treat not just the disease, but the associated complications, conditions, and circumstances. Working as a team, physicians meet regularly to review data on their performance, continuously working to improve outcomes and minimize wasted time and resources.

The authors contrast IPU solutions with fixes such as the use of care navigators, which they say are not working. Patients at the Spine Clinic at Virginia Mason (Seattle, Washington), for instance, can call a toll-free number and get a same-day appointment. They miss an average of 4.3 days (versus nine days) of work and need 4.4 physical-therapy visits (versus 8.8). Where does radiology fit into an IPU? Radiologists already are working with breast-care and stroke teams, but colocation is not enough. The team must take responsibility for the entire cycle of care for the condition; must conduct patient education and followup care; and must regularly engage in the measurement of outcomes, costs, and processes. Spine, transplant, trauma, and various cardiac-condition IPUs would also benefit from a radiologist team member. To solve the many mysteries in hospital patient admissions, a diagnostic IPU might include radiology, pathology, genetics, and biology. The second component is the regular

12 Radiology Business Journal | October/November 2013 | www.imagingbiz.com

measurement of outcomes and costs for every patient. Wherever in the world the authors see systematic measurement of health-care results, improvement is seen, yet the great majority (of both providers and insurers) fails to track outcomes and costs by medical condition. Outcomes measurement, where performed, is largely limited to mortality and safety, but in Porter and Lee’s system, outcomes must be measured by medical condition and must cover the full cycle of care. The authors express amazement that no one in health care seems to know what the care being delivered costs, let alone the cost of an entire cycle of care for a patient with a particular medical condition—a truth they attribute to department-based (rather than patient-based) accounting. “For a field in which high cost is an overarching problem, the absence of accurate cost information in health care is nothing short of astounding,”1 they write. Providers must measure costs at the medical-condition level to determine value, and the method recommended by the authors is time-driven, activity-based costing. The third component requires the abandonment of fee-for-service reimbursement and the adoption of bundled payments for (again) care cycles for a specified medical condition, adjusted for severity and including care guarantees and mandatory outcomes reporting. The authors dismiss global capitation because it fails to reward providers for improving outcomes. The fourth component calls for truly integrating care systems. While the consolidation of health care has created many multistate health systems, there are great opportunities to eliminate fragmentation and duplication of care— and to optimize the care that is delivered at each location.

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To do that, an organization has four choices to make: define the scope of service, concentrate volume in fewer locations, choose the right location for each service line, and integrate care for patients across locations. This is a massive strategic undertaking, fraught with political ramifications, and it might entail giving up or relocating service lines, the authors caution providers. To increase value further, the fifth component calls for expanding geographic reach (because providers with excellent outcomes for a particular condition need to expand their service areas through the strategic use of IPUs). The authors say that buying hospitals or practices in new geographic areas is rarely efficient. The two principal forms of geographic expansion include the hub-and-spoke model, in which an IPU is established and then surrounded by satellite facilities, and clinical affiliation, in which an IPU partners with community providers or local organizations (to use their facilities,

rather than acquiring its own). The authors note that the University of Texas MD Anderson Cancer Center (Houston) has used both approaches: hub-and-spoke networks (which enable patients to receive chemotherapy, radiation treatment, and some surgeries in lower-cost settings) and clinical affiliations, such as its association with Banner Health (Phoenix, Arizona). The final component might be the most elusive of all. It’s an IT platform that enables caregivers to follow patients across sites; that uses common data definitions; that includes all patient data; that provides access to all caregivers; that employs templates and tools for each medical condition; and that is based on an architecture that makes it easy for users to extract the data needed to measure outcomes, track costs, and control for patients’ risk factors. The authors describe their value agenda as a journey, beginning with the adoption of a patients-first goal, and they suggest that most providers should

begin with the creation of IPUs and the measurement of costs and outcomes. Above all, the authors recommend that providers not wait for regulatory change. “Providers that cling to today’s broken system will become dinosaurs,” they write. “Reputations that are based on perception, not actual outcomes, will fade. Maintaining current cost structures and prices in the face of greater transparency and falling reimbursement levels will be untenable.”1 Porter and Lee insist that rewards await those organizations, both large and small, that can produce the fruit of the value agenda: excellence in outcomes at the lowest possible cost. —Cheryl Proval Reference 1. Porter ME, Lee TH. The strategy that will fix health care. Harv Bus Rev. http:// hbr.org/2013/10/the-strategy-that-willfix-health-care/ar/1. Published October 2013. Accessed October 7, 2013.

i m ag i n g i n f o r m at i c s

Building a Federated Image Exchange: My Summer Vacation by Jordan Handy and Matt Simpson

he Inland Northwest, which we call home, is fortunate to have a legacy of healthinformation sharing among many organizations. These include the 97-radiologist private practice Integra Imaging (Spokane, Washington), formed through the merger of Inland Imaging and Seattle Radiology. Integra Imaging’s PACS archives host images for more than 100 sites. As more organizations in the greater region want to move images beyond regional borders, we are faced with an increasing need to share images across disparate PACS to meet the needs of the health-care organizations we are affiliated with—in the Pacific Northwest and beyond. We hear a lot about image exchanges hosted in clouds and about making it possible to share images with anyone, anywhere. Such exchanges, however, come with a cost. For sharing images with organizations on a routine basis, the cost

per transaction of sharing 7,500 images (the number of CDs that we burn per year) exceeds the cost of burning the CDs. While this calculation doesn’t account for efficiency gained, it’s a clear signal that alternative approaches should be considered. The 2011 publication of supplement 148 by the DICOM Standards Committee1 opened the door to using Web services to share images over the Internet in a manner that’s much simpler than the HTTP approach that was specified originally. This inspired us to look at building an alternative to cloud-based exchanges by using federated sharing, directly, among participants. To see whether this approach was technically feasible, we endeavored to build a proof-of-concept project using standards, technical specifications, and frameworks from Integrating the Healthcare Enterprise® (IHE), NEMA, and the RSNA to demonstrate the exchange of images among federated PACS using standards-based Internet transactions.

14 Radiology Business Journal | October/November 2013 | www.imagingbiz.com

Just the Specs, Please While there are many different standards that could be used to share images, IHE has published a set of technical specifications as the Crossenterprise Document Sharing for Imaging (XDS-I.b) integration profile2 to facilitate the development of systems that can publish, find, and retrieve images, across enterprises, over the Internet. In essence, this profile describes a federated approach to image storage that uses a patient-identity manager and recordlocator service. Each participating site is responsible for the local storage of its images and for registering them with the central registry. Only basic patient demographics and image lists (but no actual images) are stored in the central registry. Each site is able to query the central registry for a list of images available at foreign sites. Data from this list enable a site to download the appropriate images from the foreign sites directly. This federated architecture

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allows an installation to connect to a virtual cloud while using its existing PACS infrastructure. The XDS-I.b profile, however, is currently in the trial-implementation phase. During this phase, certain components might be speculative and subject to revision/modification. Health IT vendors are presented with the opportunity to implement and test the profile at this time. To explore options on behalf of Integra Imaging, we developed and implemented a working PACS–XDS-I.b proxy agent that, together with separate IHE registry/repository software, fulfills the requirements of the XDS.I-b profile. We call this proxy the Edge Gateway. Because it was written in Java, the Edge Gateway could theoretically run on any major operating system, on any basic computer or server. The Edge Gateway runs on RSNA code, which (in turn) uses OpenHealthTools and Apache Axis. It also makes use of dcm4che code for DICOM–related tasks. All of the code is based on free and open-source software. A primary function of the IHE registry is to reconcile different facilities’ medicalrecord numbers to a single master patient index. The Edge Gateway acts as a broker for the publishing, finding, and retrieving of images. The registration process begins when image acquisition occurs. The site’s PACS then notifies the Edge Gateway, which provides an image manifest to the IHE repository and registers it with the IHE registry. The image manifest is now available to trusted foreign sites for perusal. The Edge Gateway also provides a site with the ability to find images that are available from other sites. Search functionality is initiated when a patient is registered with the site’s health-care information system, which then notifies the Edge Gateway. The Edge Gateway then queries the IHE registry/repository, which sends a list of available image manifests corresponding to studies at trusted foreign sites. This list is presented to a user, such as a nurse or physician, who then makes a selection. Once the user has selected the image manifest for the desired study, that image manifest is downloaded to the Edge Gateway, which then directly contacts the foreign site that is in possession of

the desired images. When a querying site wishes to retrieve a patient’s images, the querying Edge Gateway sends a request to the foreign site’s Edge Gateway. The foreign Edge Gateway then queries its PACS for the appropriate images and sends them to the querying Edge Gateway. Upon receiving the response, the querying Edge Gateway copies the images into the querying site’s PACS. Proof of Concept By using the described standards to build a proxy agent capable of sharing images between PACS over the Internet, we were able to propose a possible solution to our region’s increasing need to share images. We successfully moved images from one test site to another. Each test site consisted of a PACS and an Edge Gateway. The Edge Gateways were able to negotiate a successful exchange of images among sites using four different virtual machines. Because the solution is standards based, the cost and complexity of implementing it can be mitigated by using open-source, off-the-shelf, or existing regional resources (such as a master patient index and document registry) to facilitate image exchange. We hope that

the potential to reduce costs and increase quality of care across the region inspires us (and our sharing partners) to look at standards-based solutions. When we began the project, the task at hand seemed insurmountable, within the given timeframe. The primary author had no familiarity with IHE profiles, DICOM, HL7, or any health-care software, in general. Portions of the free source code were often undocumented and difficult to understand. Some portions were even broken, requiring the debugging of the original code. Through access to documents detailing specifications, great mentorship, and teamwork, however, we achieved our objective: the construction of a low-cost, federated image-sharing prototype. Jordan Handy is a computer-science intern at Integra Imaging (Spokane, Washington) and a senior at Brigham Young University. Matt Simpson is manager of integration and development for Integra Imaging’s IT managementservices organization. Editor’s note: References for this article are posted in the online version at www. imagingbiz.com/rbj.

numeric

Physicians Are Leery of Exchange Participation

ome observers have commented on the narrow networks associated with many insurance products being offered by the state and federal insurance exchanges mandated by the Patient Protection and Affordable Care Act (PPACA). A new survey1 of members of the Medical Group Management Association (MGMA) suggests why insurers may be having trouble attracting broader physician panels. The MGMA received more than 1,000 responses from practices representing more than 47,500 physicians. More than half of respondents believe that PPACA exchanges will have an unfavorable effect on their practices. Just 29.2% plan to participate in products associated with the exchanges, while 40.2% are evaluating participation, suggesting that they might sign on, ultimately. Of those participating, 57.7% will do so to remain competitive in their local markets,

16 Radiology Business Journal | October/November 2013 | www.imagingbiz.com

Table. Why Practices Are Not Participating1 Administrative/regulatory burdens Collections burdens (patients’ high deductibles)

64% 61.9%

Financial risk (low reimbursement rates)

59%

Financial liability during 90-day grace period

59%

Uncertainty/confusion about exchange products

53.2%

and 26.8% cite all-products contract clauses that require participation. More than half (51.2%) say that the opportunity to replace charity care (when uninsured patients obtain coverage) is a factor. Reference 1. MGMA Legislative and Executive Advocacy Response Network (LEARN). ACA Insurance Exchange Implementation, September 2013. Englewood, CO: MGMA; 2013.

h e a lt h - c a r e r e f o r m

Lessons Learned From a Pioneer ACO

n July 16, 2013, CMS announced the results1 of its accountable-care organization (ACO) program, the Pioneer ACO Model. The program was designed to test the impact of higher levels of shared savings and risk on ACO success, and it attracted 32 participants from around the country. After the first year of participation, seven Pioneer ACOs that did not produce shared savings announced their intention to transition to the lower-risk (and lower-reward) Medicare Shared Savings Program, while two dropped out of the ACO model entirely. Among the participants staying in the Pioneer program is Bellin-ThedaCare Healthcare Partners (Appleton, Wisconsin). As David Krueger, MD, MBA, executive and medical director of the ACO, explains, “Bellin-ThedaCare was organized to create and deliver higher value before ACOs were really the rage. We have been continuously improving— driving toward better outcomes, lower readmission rates, and better value for consumers. In a fee-for-service world, we knew we were losing revenue because of that. There comes a point when you have to reengineer your financial structure to support your goals.” The Pioneer ACO Model was a good fit for the health system, which was five years into its initiative to improve quality and lower costs when it enrolled. “We entered the program because it is a system of reimbursement that recognizes the creation of better value, and I think a lot of the success we’ve seen in the first year is owed to the work we had done before that. I look at these kinds of programs as accelerants: They create environments that encourage a drive to produce value over volume. Once the infrastructure is in place, then the clinical entrepreneurship can take off,” Krueger says. Bellin-ThedaCare takes advantage of its electronic medical record extensively in tracking measurements related to quality and outcomes, establishing the

benchmarks for improvement necessary to create savings. Claims data on its patients allow the system to take the next step, linking those data to outcomes. “With the Pioneer program, we receive information on all patients attributed to us—where they’ve been and what they’ve had done, for all of their care,” Krueger explains. “We’re taking on accountability for their care being coordinated, no matter where they go. Now, our challenge is to figure out how to take these claims data and embed them in our clinicalimprovement work: We want our physicians concentrating on the patients in front of them, not the screens next to them.” Critical to this process will be finding a way to plug the existing gaps in patient data, Krueger says. “From a clinicaldata perspective, we’re able to track and follow metrics, report scorecards, and drive improvements using data,” he says. “The drawback is that we can only see the care we deliver. Any care outside our network, we’re blind to, and that means we’re missing the total care experience of the patient. Patients with chronic conditions are vulnerable to needing additional, unnecessary services because of those gaps.” Clinical Collaboration As a component of care, imaging often falls in the unnecessary-services category because of inappropriate utilization or duplication of studies owing to incomplete records. “One of the gaps we know we have, in health care today, is the appropriateness of imaging,” Krueger says. “On the clinical side, the questions we are asking are when a test should be done—and in what way. If it’s the right test, it shouldn’t matter what it costs. What I don’t want are primary-care physicians who aren’t sure what to do (and don’t have the support they need) ordering the wrong test.” Krueger stresses that he believes that the answer to this conundrum lies in deeper clinical collaboration, in which

radiologists assume a leadership role in gauging appropriateness. “Who better to identify and create guidelines than the radiologists on the receiving end of the orders?” he asks. “That’s one of many areas where we’d like to see more collaboration and consultation between the various points in the care spectrum. We want to see efficiencies that don’t rely on rationing or cutting fee schedules, and I see more and more pulling of our radiologist colleagues to the table to help us work on patients’ total care.” Krueger adds that providing incentives for collaboration will be critical to making it a permanent part of health-care culture. “Today, physicians are penalized for taking the time to collaborate,” he says. “They want to do things of value for patients, but they’re frustrated by a payment structure that tells them there should be more care, without regard for quality. It’s an incomplete incentive structure.” Programs like the Pioneer ACO Model might not be the wave of the future, Krueger says, but he views them as an invaluable step forward. “Programs like this recognize that there is so much more to medicine than fee-for-service care,” he says. In terms of outcomes, he adds, “A large part of why we don’t stack up against other countries is that our incentives don’t support that direction. We have a lot of smart folks in health care, however, and if the incentives are right, look out: We’ll go a long way.” —Cat Vasko Reference 1. CMS. Pioneer accountable care organizations succeed in improving care, lowering costs. http://www.cms. gov/Newsroom/MediaReleaseDatabase/ Press-Releases/2013-Press-ReleasesItems/2013-07-16.html. Published July 16, 2013. Accessed October 6, 2013. Note: This article originally appeared in the August 2013 edition of Medical Imaging Review.

www.imagingbiz.com | October/November 2013 | Radiology Business Journal 17

Cover | Merger Mania

Merger Mania:

Radiology Seeks a Foothold in a Consolidating World Payors, health systems, and radiology practices bulk up in their bids for intellectual capital, IT expertise, and strength in numbers

t’s not a figment of your imagination: Radiology practices are getting larger via mergers/acquisitions. Hospitals are broadening their reach, using the same tactics, in their efforts to maintain regional influence. One example of this phenomenon, in the private-practice realm, is Charlotte Radiology in North Carolina, which has grown from having 61 FTE radiologists in 2008 to having 85 in 20121 (an increase of more than 40% in four years). Arl Van Moore Jr, MD, FACR, led the group through much of that growth as president; that role was assumed in 2012

By Greg Thompson

Preload: Preview v Health-care providers and vendors are undergoing consolidation, fueled by health policy, peer pressure, and (sometimes) defense—and the radiology sector is not exempt. v Health systems are reacting to payor consolidation, physician practices are reacting to hospital consolidation, and all players are responding to the changes made by the Patient Protection and Affordable Care Act (PPACA).

18 Radiology Business Journal | October/November 2013 | www.imagingbiz.com

v The benefits to be found in consolidation include enhanced operational capabilities—including IT, billing, supply-chain, and physician-alignment optimization—and access to new intellectual capital. v Consolidation’s costs are expected to include greater investments in IT.

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be disruptive and cost-prohibitive to acquire them. When practices voluntarily unite under an affiliation model, the collaborative approach allows them to meet the nascent IDN’s objectives while remaining independent, sparing all parties the angst and turmoil of attempting to meld cultures, financial structures and operational entities. The time and energy saved can be focused on the development and articulation of network goals and measurable outcomes.

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Cover | Merger Mania

Mandates found in the PPACA are requiring increased collaboration—not only vertically, within a single specialty, but horizontally, across multiple specialties. —Arl Van Moore Jr, MD, FACR

Managing the health of 20,000 patients probably won’t cut it. You need to be managing the health of hundreds of thousands, if not millions. —Steve Duvoisin Integra Imaging

by Robert Mittl Jr, MD, freeing Moore to focus on his role as chair and CEO of Strategic Radiology LLC, a consortium of 17 independent radiology practices. Government policy is shaping the current merger environment, Moore believes. “A lot of the government programs are not small-business oriented; they are big-business oriented,” he says. “Mandates found in the PPACA are requiring increased collaboration— not only vertically, within a single specialty, but horizontally, across multiple specialties.” The consolidation trend reshaping the provider realm also is reflected in the radiology-vendor community, according to Jeff A. Younger, past president of the Florida RBMA and CEO of a new entity, Preferred Radiology Alliance, that is trying to align private radiology practices in Florida. Peer pressure—and even fear— are fueling merger/acquisition activity because corporate entities (including some of the large teleradiology and billing companies) want assets on their books, he says. “Corporations are acquiring to hold on to market share,” Younger says. “They’re concerned that if individual practices end up working with someone else, or are acquired by someone else, they

could end up losing their teleradiology business or billing business. They also see an opportunity to solidify their financial bases by picking up hospital contracts.” The rationale, he says, goes back to the nature of hospital contracts, which tend to have a long-term window. Teleradiology and billing contracts, however, can be much more fluid, with periodic turnover not being uncommon. The Reimbursement Factor Contracts always circle back to reimbursement, an element of imaging hit hard in the past seven years. Steve Duvoisin is CEO of Integra Imaging (Spokane, Washington), a Strategic Radiology member practice. Integra Imaging was founded this year through the merger of Inland Imaging (Spokane) and Seattle Radiologists to form a 97-radiologist megapractice. Duvoisin says that health systems have also felt the pinch, with regional players attempting to grow and large players getting even larger. “The health systems are getting bigger,” he says, “because they need to drive down costs to address lower reimbursement.” Consolidation has been going on for years among both health systems and payors, but Duvoisin reports that this

20 Radiology Business Journal | October/November 2013 | www.imagingbiz.com

trend has accelerated, particularly within the past year. “Health systems, specifically, are consolidating because they see the payors getting bigger and bigger, on a national basis,” he says. “I’ve heard that somewhere in the neighborhood of $20 billion in annual net revenue will be needed for a health system to compete, in the future.” Another reason for accelerated merger activity is what Duvoisin describes as the need for a critical mass of patients, as health systems and accountable-care organizations (ACOs) move toward risk assumption. “Managing the health of 20,000 people probably won’t cut it,” he says. “You need to be managing the health of hundreds of thousands, if not millions. The CEO of Ascension Health said that his company’s goal was to manage the cradle-to-grave health of 30 million people. Fragmented markets, on the other hand, are inefficient. You have a lot of small shops out there, and it’s difficult to drive efficiency. All of those factors have accelerated consolidation among health systems.” Costs for insurance, employees’ health care, and equipment have increased for health entities, big and small—just as they have for many businesses. “The formation of ACOs is causing groups to see if they need to be larger to cover a larger geographic region,” Younger says. “There’s been an increased emphasis on subspecialty interpretations. Every group cannot have every subspecialty represented 24 hours a day, unless it becomes tremendously larger.” Horizontal and Vertical Much of the recent consolidation has been horizontal (through the acquisition of similar businesses), but there have been notable exceptions, such as UnitedHealth Group’s purchase of Monarch HealthCare (Irvine, California), an association of more than 2,300 physicians. The Wall Street Journal described the 2011 transaction as “the latest example of how lines are blurring between insurance companies and health-care providers.”2 Californian deals involving control of medical groups must be structured to comply with rules that block many entities from directly employing

practicing physicians. A company such as UnitedHealth may, however, buy nonclinical assets and sign a long-term management agreement with an IPA such as Monarch HealthCare. Moore calls the Monarch HealthCare acquisition a curiosity, but he hesitates to call it the beginning of a trend. “You’ve got an insurance company starting to get into the business of practicing medicine,” Moore says. “I’d love to hear what its top five goals are for the next three years.” David Cyganowski, managing director of Kaufman, Hall & Associates, points out that in addition to the Monarch HealthCare deal, several more horizontal moves have taken place. “In Pennsylvania, Highmark acquired West Penn Allegheny Health System (Pittsburgh), as well as Saint Vincent Health System (Erie) and Jefferson Regional Medical Center (Clairton),” he says. “There, you have an example of an insurance company acquiring hospitals. We’ve also seen insurance companies acquiring physician groups. We are seeing vertical integration and new market entrants jumping into the traditional hospital business.

Traditional lines and roles of what were once distinct and separate vertical entities are now blurring.” In radiology, a prime example of this trend is that imaging-center chain RadNet announced, in September 2010, that it would acquire a PACS provider; later that year, it announced its intention to acquire a teleradiology company. In 2011, another imaging-center operator, Alliance Imaging, acquired a teleradiology company. Getting Bigger Strategic Radiology does not represent a true merger of its 17 member practices. Instead, it is “a strategic alliance of large, like-minded radiology groups across the country that have gotten together and are looking at quality, data sharing, developing best practices, and ways of clinically integrating night work and day work,” Moore says. True to its name, Strategic Radiology has pursued its mission strategically, bringing into its fold noncompeting practices in geographically dispersed locations. In June 2013, Strategic

Californian deals involving control of medical groups must be structured to comply with rules that block many entities from directly employing practicing physicians.

Radiology announced that Radiology Associates of South Florida (Miami)—a prominent, subspecialized group of 67 radiologists and the 10th-largest private radiology group in the country1—had joined the consortium. Just a month later, Strategic Radiology announced a new deal with University Radiology (East Brunswick, New Jersey) that brought Strategic Radiology an international teleradiology presence.

www.imagingbiz.com | October/November 2013 | Radiology Business Journal 21

Business Intelligence Series #7

Strategic Positioning for Optimal Patient Care: Imaging Healthcare Specialists Imaging Healthcare Specialists (“IHS”), a 30-radiologist practice based in San Diego, California, has a simple ethos driving its business decisions. “We view ourselves, first and foremost, as a medical practice,” Thomas Cleary, president and COO of Imaging Healthcare Specialists, explains. “Every day, every employee who works for us—from the person who schedules the patient, to the technologist who provides the exam, and from the radiologist delivering the report to the IT person—is making an impact on patients’ lives.”

“Zotec mines the data in the information systems, which we find very useful in improving our efficiency.” — Thomas Cleary, president and COO of Imaging Healthcare Specialists

Cleary’s philosophy of care involves attention to three key tenets of patient satisfaction. “We make sure we address the three needs of the patient,” he says. “I learned, a long time ago, that when patients are coming to you, it’s not because they woke up that morning and thought they would get an MRI. They have an immediate medical concern, a financial concern as a result of the treatment plan, and a spiritual side that may or may not be affected by the first two.” The IHS philosophy of patient care makes it a natural fit for accountable-care organizations (ACOs), which have been springing up in San Diego since the passage of the Patient Protection and Affordable Care Act

Zotec Partners. The total solution.

(PPACA). “We are working to position ourselves as a specialty provider for these ACOs,” Cleary says. “At the end of the day, that means we need the ability to provide excellent care under a capitated payment arrangement.”

Efficiency Imperative Efficiency has always been important to the group, Cleary says—which is why, nine years ago, it entered into a relationship with Zotec Partners, enabling the company to take over billing for IHS. “We decided our core business was imaging,” he recalls. “Accounts receivable should be someone else’s business.” IHS currently staffs two hospitals—one a tertiary-care facility and the other a community hospital—and operates 10 outpatient imaging centers in San Diego County. “We’re always trying to become more economical, to deploy more efficient technologies, each year, than the year before,” Cleary says. The group’s relationship with Zotec has evolved accordingly, and today, it is about much more than back-office efficiency. As IT capabilities advanced, IHS began feeding information from its PACS platform into a business-intelligence software module developed and maintained by Zotec. “All of our information is fed to them, and we use it to look at our services in the inpatient and outpatient environments, in the emergency department, by payor, by patient, and by employer,” Cleary says. “Zotec mines the data in the information systems, which we find very useful in improving our efficiency.”

“Using the Zotec system makes us more productive and more efficient.” — Thomas Cleary For instance, Cleary says, IHS uses a night-hawk service for some of its night and weekend hospital staffing, but business intelligence from Zotec has enabled the practice to conduct its staffing more efficiently. “We use our night-hawk service for fewer hours than we did two or three years ago,” he says. “Using the Zotec system makes us more productive and more efficient.” In addition to the measurements that are automatically generated by Zotec’s software, Cleary says, at last count, IHS was receiving between 150 and 200 customized reports from the company. “That represents their approach: If you ask for it, you can get it,” he notes. “It’s one of the big reasons we stay with Zotec. We’ve never heard the phrase, ‘To get that would be an enhancement.’”

Positioning for Post-PPACA Business Business intelligence has become particularly vital to survival in the post-PPACA era, Cleary observes. “With the changes in health care and payment that are happening now (and will happen for the next several years), we have to understand our business to the best of our ability,” he says. “We have to demonstrate that we are having positive outcomes, if we want to continue our business. There are more regulations to meet every year, and they are not going to go away; your business has to have the tools to adapt and grow.” With Zotec and other informatics solutions in place, Cleary says, IHS feels prepared for participating in an accountable era in health care. “When we think about participating in a capitation model, we have Zotec to

help us look at those arrangements,” he says. “The company does the modeling for us. That gives us the ability to understand exactly what we can expect to be paid—and then, to determine whether we can deliver those services for less than that amount.” As a result of this modeling capability, he adds, “We’re performing profitably with several capitation arrangements in place right now—one for the inpatient practice and others for work done on an outpatient basis.”

“We take care of the whole patient, and Zotec is one of our partners in making that happen.” — Thomas Cleary

Looking forward, Cleary says, IHS is hoping to grow its market share by 5% to 10% over the next three to five years. “Under the PPACA, there’s a large portion of the population in San Diego that will now have some kind of insurance, and if those people have insurance, there will be some kind of compensation for us,” he says. “Of course, we are physician owned, and one of the ways we think we can gain market share is that we make being a medical practice our first priority.” That means maintaining the high patient-care standard that the practice has established, in spite of the reimbursement vagaries that it has already endured (as well as those to come). “We take care of the whole patient,” Cleary says, “and Zotec is one of our partners in making that happen.”

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Cover | Merger Mania

It’s happening because health care is in the midst of a changing business model. —David Cyganowski Kaufman, Hall & Associates

University Radiology, composed of more than 115 board-certified radiologists with advanced subspecialty training, is the largest provider of subspecialty radiology and teleradiology services in New Jersey. “I think you’re going to see further consolidation. Everybody is getting bigger. If you don’t get bigger while everybody else around you is getting bigger, by scale, you are automatically getting smaller, and your impact is going to be diminished. If you want to stay relevant, you must grow to maintain your relative balance to those you are working with,” Moore says. Moore believes that the consolidation trend among hospitals is fueled by many

of the same drivers seen among radiology groups. “There are a few ways to increase your size,” Moore explains. “Hire a bunch of people and find a lot more business or combine with radiology practices to maintain relevance. Until the merger mania across the country slows down— predominantly with hospitals and the entrepreneurial companies trying to get into the business—I do not foresee a reduction in the impetus for mergers to continue.” Change and Opportunity Venture capitalists have not failed to notice merger mania, and Moore believes that this private-sector interest

24 Radiology Business Journal | October/November 2013 | www.imagingbiz.com

is likely to continue, as long as investors see the potential for making money. “They are trying to get involved to make a profit,” he says. “Traditionally, most of health care was delivered by not-for-profit organizations, with the institutions reinvesting the dollars in the communities. Now, small hospitals are no longer able to compete. Cost sharing and cost reduction have been very important—simply to survive.” Cyganowski believes that the effects of this survival mode can readily be seen in significant consolidation among hospitals. “The number and size of mergers, partnerships, and affiliations have increased dramatically, over the past couple of years,” he says. “It’s happening because health care is in the midst of changing its business model.” The phenomenon can be seen nationwide, largely due to health-care systems’ use of their brand names to extend market reach and managementservice agreements, he says. “We have health-care systems selling a minority interest in their institutions: virtual mergers that don’t combine assets, but combine the operations of hospitals via

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Cover | Merger Mania

Some states are being more heavily targeted because of population density and Medicare population. Florida is targeted by a lot of the national companies, and I think Texas has been targeted as well. —Jeff Younger Preferred Radiology Alliance

joint operating agreements,” Cyganowski explains. “We’re seeing not-for-profit and forprofit entities form joint ventures. We’re seeing regional superpowers emerge. Catholic health care is consolidating. Insurance companies are acquiring hospitals. Health-care systems are acquiring physician groups, and we’re seeing new people getting into the health-care market who weren’t there before,” he adds. While Younger agrees that the consolidation of health care is pervasive, he adds that there are hotbeds of activity. “Some states are being more heavily

targeted because of population density and Medicare population,” he says. “Florida is targeted by a lot of the national companies, and I think Texas has been targeted as well.” The Morning After Not all marriages are made in heaven, and Cyganowski says that some entities occasionally declare victory on the day of closing—when in fact, that is when the real work begins. Postmerger integration can spawn of host of challenges; they include back-office support problems, IT challenges (see related article, page 30),

26 Radiology Business Journal | October/November 2013 | www.imagingbiz.com

supply-chain difficulties, and physician alignment. Judging by the pace of consolidation, Cyganowski says, the pros are clearly outweighing the cons. In addition to operational advantages, adding new talent to the mix can’t be underestimated. “Intellectual capital to support the transformation to new business models is an important factor,” he says. “Additional benefits are enhanced physician platforms, integration, and recruitment— which lead to a larger market presence, a more competitive position, better care coordination, better quality of care (at a lower cost), improved branding, and mitigation of risk.” Younger and Duvoisin note that all the recent consolidation probably improves subspecialty coverage, reduces costs, and improves efficiency—but does it improve the actual delivery of radiology services? “From the patient’s perspective, it’s probably somewhat unknown,” Younger says. “Many radiologists are well trained, but we can’t say that they all are. Some of the larger national companies are trying to fill positions, and I don’t think patients recognize the difference.”

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The largest and busiest children’s primary care center between New York and Boston, Connecticut Children’s Medical Center (CCMC) has 2,200 employees and a medical staff of nearly 1,100 across two hospitals, five specialty care centers, and 10 practices. The center’s radiology services are provided by Jefferson Radiology, the largest radiology private practice group in Connecticut. With the use of InteleOne®, a unified diagnostic platform, radiologists benefit from instant sub-specialty consultation, seamless access to priors, and improved collaboration. Unnecessary exams are eliminated, saving significant time and money.

“The value is in better and more accurate interpretations, the value is in more satisfied referring clinicians, the value is in being able to optimize a schedule that is more convenient and productive for the radiologists.” -Dr. Stephen Poole, Head of Pediatric Imaging, CCMC

Advanced workflow features enable cases to be routed to the most qualified sub-specialist on Jefferson Radiology’s staff. Thus, studies that need sub-specialty interpretation are completed just as quickly as any other. “We don’t have to wait until a neuroradiologist is in the hospital tomorrow,” says Dr. Stephen Poole, head of pediatric imaging at CCMC. “There are always three neuroradiologists available, today.” Read more at intelerad.com/ccmc

New mandates to improve quality of care, in the context of declining reimbursements, means an enterprise-wide imaging strategy is now critical. Aligning your hospital, distributed imaging departments and affiliated facilities will require tightly connected and simplified workflows. From image-enabling and integrating the EMR with a zero-footprint viewer, to serving physicians with attractive portals, aligned and competitively successful hospitals depend on strong interoperability. Will your current imaging technology partner help you overcome today’s challenges? Join the visionary hospital networks, leading children’s and specialty hospitals, and critical access facilities that are transforming their approach to better health care with Intelerad.

Meet Your VNA’s Best Friends Singled out with the Frost & Sullivan 2013 North American Entrepreneurial Company of the Year Award in Medical Imaging Workflow Solutions, Intelerad delivers adaptive and flexible solutions to hospitals seeking high-quality and timely outcomes. Flow™ is a proven workflow solution that streamlines processes across the imaging chain. The perfect companion to an enterprise VNA, Flow enhances radiologists’ productivity through its unified interface, intelligent worklists, embedded subspecialty tools, structured reporting tools, and full integration with industry-leading voice recognition solutions. Improving collaboration with technologists and referring physicians, Flow helps provide patient care smarter, faster.

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One of radiologists’ preferred diagnostic viewers, InteleViewer™ enables fast and streamlined interpretation, anywhere, anytime, and for any case. Built for multi-site distributed organizations, InteleViewer propels reading productivity by funneling all studies into a single reading and reporting platform, providing a unified worklist and single viewer experience. InteleViewer delivers robust and powerful image display for all modalities, using web-enabled smart streaming technology to increase the speed of image retrieval for all current and prior images. With its universal clinical viewer, InteleConnect® provides physicians with zero-footprint access to internal or third-party image archives from their desktop or mobile device. From GPs to ED physicians, InteleConnect’s powerful clinical worklist manager presents tailored views, filtering relevant orders and images for clinicians, while the patient activity dashboard provides a close watch on real-time order statuses on the go. With clinical intelligence and a collaboration suite to manage sharing, discrepancies, messaging and customized notifications, InteleConnect facilitates truly patient-centric care teams. This month, strategist Michael E. Porter and Chief Medical Officer Thomas H. Lee released a Harvard Business Review article in which they propose a new approach for providers to lead the way towards a value-based system.

New State-of-the-Art Facility to Play Crucial Role in Training the Next Generation of Radiologists

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In 2015, the McGill University Health Centre (MUHC), one of Canada’s largest medical institutions will open a mega-hospital in Montreal, bringing together three of the MUHC’s six standalone hospitals under one roof. In the mid-90’s, Intelerad’s founders designed, developed and implemented one of Canada’s first large-scale filmless PACS at the MUHC. IntelePACS® is deployed across their network of hospitals and used to read almost 500,000 studies today, by their 40 radiologists. Read more at intelerad.com/muhc

Delivering Big-City Standard of Care to Critical Access Facilities

Trigg County Hospital is a critical access facility serving Western Kentucky’s Trigg County, home to a large recreational area surrounding the region’s popular Lake Barkley. Most of the year, the population of this hospital’s service area is a modest 20,000, but that number can triple in the summer months, yielding a higher proportion of fracture and head trauma cases in the 24-hour emergency department.

However, the rural location means there are very few radiologists in the region, making an on-site radiology model impractical. Until recently, most emergency cases were outsourced; a local radiologist performed on-site readings for non-emergency cases. Outpatient readings typically required a 24-48 hour wait. The addition of digital mammography services in 2010 prompted a radiological service overhaul. Today, a relationship with Chicago-based Radiology Imaging Consultants gives Trigg County Hospital patients access to highly specialized radiologists, around the clock. Readings are typically provided in less than an hour; emergency cases are read in a matter of minutes. This extraordinary increase in service level is possible due to RIC’s use of InteleOne, a distributed radiology solution from Intelerad that provides seamless access to studies, priors and reports, regardless of where the radiologists – or patients – are located. Read more at intelerad.com/trigg

Enhancing Patient Care at Leading Hospital Network Through their network of hospitals, clinics, centers, health units, and residential facilities, Island Health (Vancouver Island Health Authority) provides healthcare to more than 765,000 people located in a massive geographic area of approximately 34,800 square miles. A partner for over 15 years, Island Health uses IntelePACS® and InteleViewer™ to read over 800,000 studies per year across Island Health’s network of hospitals. Read more at intelerad.com/viha

He continues, “In terms of impact, I don’t think we’ve seen that yet. We’ll know better in two or three years— because certainly, the larger corporations are going to make money doing this, which will mean fewer radiologists and fewer hours of staffing. If you have people working longer shifts and reading more studies, there’s going to be a natural fallout: You’re going to have more misses and more discrepancies, but right now, you can’t say that there’s been major change.” Duvoisin hesitates to say whether all this growth is a good. “Health systems such as Cleveland Clinic in Ohio are physician driven, as opposed to hospital centered,” he says. “That’s an evolution that needs to occur.” Maintaining Autonomy In the Preferred Radiology Alliance, Younger envisions a business model that allows physicians (and particularly radiology groups) to work together without the necessity of being owned by a corporate entity. It’s not that Younger and his colleagues have an inherent distrust of corporations, but more that they want to preserve autonomy and independence. Discussions began in January 2013, and six months later, the Preferred Radiology Alliance entity was formed under the direction of Radiology Associates of Daytona Beach in Florida, a 23-person radiology group. “We’ve already started talking to groups around the state about joining, and there seems to be a really high degree of interest,” Younger reports. “I’ve met with eight groups in the past three weeks.” Younger says that radiologists are attracted to the organization because it resembles a managed-services organization that allows practices to get accustomed to working with one another, sharing services, reading for one another, and working together on billing and practice management. “There are a lot of groups that know they want to merge and become larger, but they don’t want to give up their imaging center, teleradiology company, or something else,” he says. “Our setup allows them to do that. They can keep that separate and take all revenue from it.”

Ultimately, the relentless pace of consolidation activity is an undeniable sign that the industry is changing and fortifying itself for new market realities.

Cultural objectives for the alliance include applying best practices to govern subspecialty interpretations and teleradiology, in addition to reducing costs for hospitals through utilization management. “We want to demonstrate to the hospitals that there is real value in affiliating with us and having a contract with us,” Younger says. “The idea is that over the next two to three years, this alliance will continue to integrate to where we form one operating group— without having to merge the assets, because that’s typically where the barrier lies.” According to Younger, each practice will have one seat on the board, which will help determine which services are offered. IT will be a priority. “If you are a four- or five-person group, you’re just not going to have the resources to do that,” Younger says. “That’s part of what has made some of the national teleradiology companies attractive to smaller practices: They have that technology—now. That is not inexpensive, by the time you buy the equipment and have the IT staff available 24 hours a day.” Preferred Radiology Alliance’s business model enables it to acquire the software, but access IT staff from the component organizations. “We’re starting with the Daytona Beach group, with their IT people (who are well qualified), and we’ll use them to move images among other groups as those groups join,” Younger explains. “I think IT is going to be one of the largest investments, as entities continue to grow.”

Ultimately, the relentless pace of consolidation activity is an undeniable sign that the industry is changing and fortifying itself for new market realities. Many executives, including Duvoisin, are keen to embrace the change and make the best of it. “Radiology still has a lot of potential and opportunity,” Duvoisin says, “and at some point, consolidation has to hit an endpoint. The FTC will see to that. The strategic reasons to consolidate are not going away anytime soon, however, and doing things the way we did in the old days is not going to work.” Greg Thompson is a contributing writer for Radiology Business Journal. References 1. Proval C. The 100 largest private radiology practices. Radiology Business Journal. http://www.imagingbiz.com/ articles/rbj/the-100-largest-privateradiology-practices. Published December 27, 2012. Accessed October 5, 2013. 2. Mathews AW. UnitedHealth buys California group of 2,300 doctors. Wall St J. http://online.wsj.com/article/SB100 0142405311190389590457654255342 2509280.html. Published September 1, 2011. Accessed October 5, 2013.

www.imagingbiz.com | October/November 2013 | Radiology Business Journal 29

MERGERS | Implications for IT

Merger Mania’s Implications for Imaging IT Consolidation among health-care providers is creating challenges and opportunities for imaging–IT teams across all delivery settings

sk any health–IT executive for a synonym for change, and a probable response is merger/ acquisition. The rapid pace of consolidation among physician practices, individual hospitals, hospital enterprises, and hospital-chain corporations has generated an unprecedented level of organizational, operational, and technological change. From a radiology perspective, what happens to the installed base of legacy imaging-informatics systems of merging entities? What are the strategies and decisions that have an impact on imaging informatics? From an operational perspective, the best and most enduring strategy, in Geisinger Health System’s experience, is to install the same RIS, PACS, and related software across an enterprise and to consolidate long-term archives. Over the long term, Geisinger Health System has found this to be as cost effective as (and potentially more cost effective than) keeping an acquired hospital’s legacy systems. In addition to its hospitals, Geisinger Health System has nearly 60 community-practice sites serving 44 Pennsylvania counties. In the past 2.5 years, the organization has added three Pennsylvania hospitals (Geisinger-Community Medical Center of Scranton, Geisinger-Shamokin Area Community Hospital in Coal Township, and Geisinger-Bloomsburg Hospital) through mergers/acquisitions. Geisinger Health System is awaiting approval from the Pennsylvania attorney general to add Lewistown Hospital through merger/ acquisition. On September 9, Geisinger Health System and Holy Spirit Health System (Camp Hill, Pennsylvania) announced

By Cynthia E. Keen

Preload: Preview v Health IT is a significant factor in mergers/acquisitions, and imaging IT is a key consideration. v In the health-system setting, Geisinger Health System (Danville, Pennsylvania) hit delete on the PACS, RIS, and electronic health record (EHR) solutions deployed by acquired sites for quality and economic reasons. v In the outpatient-imaging setting, Center for Diagnostic Imaging (CDI)

the signing of a letter of intent to explore ways that the health-care organizations can work together. Holy Spirit Health System includes the 315-bed Holy Spirit Hospital (Camp Hill). John A. Cardella, MD, associate CMO and systemwide chair of radiology, explains, “Our IT strategy is to absorb any new health-care facility that joins our health system by providing it with IT systems that it is not likely to be able to afford on its own. We replace all IT systems with what has been deployed at Geisinger Health System. This includes the RIS, PACS, speech-recognition/ dictation systems, the archives, and the EHR—everything.” The capital investment and other resources allocated to implementing these changes are expensive, but the up-front financial outlay is more cost effective, in the long run, than allowing an acquired facility to continue to use the systems that it has in place. Cardella explains, “With disparate IT systems, a merged enterprise can turn out to be a Tower of Babel, so to speak.”

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in Minneapolis, Minnesota, decided to convert all sites to a common platform. v When Scottsdale Medical Imaging Ltd in Arizona merged with Valley Radiologists (Phoenix, Arizona), the two organizations maintained their respective PACS, but chose a common RIS. v The consolidation trend does appear to be fueling vendor-neutral archive (VNA) adoption.

He adds, “To deal with the challenges of integration and transparent interoperability of disparate legacy systems, it is necessary to invest a lot of time integrating systems, building interfaces, and writing custom code (to get disparate systems that are not designed to communicate with each other to do so). Even after investing that effort,

the end-result IT environment will not be efficient. Human effort will be required to overcome the limitations of the cobbledtogether systems.” He says that expediency (or financial constraints) at the time of an acquisition might be the rationale for keeping two or more different RIS and PACS in operation, but in the long term, the actual cost of doing so at many different operational levels tends to be much greater than the cost of replacing the systems and unifying the informatics environment at the time of the merger. Technical Aspects Mike Leighow, vice president of operations of Geisinger Health System’s radiology service line, says that the most challenging aspect of a conversion is migrating images from a legacy archive to the system’s PACS. Geisinger Health System contracts with an application service provider, so a fee is charged for each archived exam. Assigning medical-record numbers, consolidating the files of patients who might have used more than one identity, and other data-migration issues all are challenges that the radiology IT team expects to face. Geisinger Health System’s long-term archiving strategy is to add a VNA, although basing this archive in the cloud remains a challenge because it involves protected health information. At Geisinger Health System, a radiology-informatics oversight group carefully plans every known aspect of the conversion and implementation; the group consists of key leaders from the IT department, physicians and staff from the radiology department, and the radiologyinformatics staff. The group sets the agenda and priorities, which tend to

Our IT strategy is to absorb any new health-care facility that joins our health system by providing it with IT systems that it is not likely to be able to afford on its own. —John A. Cardella, MD

No matter how often we do this, the project is challenging, and it may take months to develop an integrated plan. —Mike Leighow Geisinger Health System

change somewhat as planning proceeds. “No matter how often we do this, the project is challenging, and it may take months to develop an integrated plan,” Leighow says. Training teams are sent to each site in advance, and on-site support is provided, around the clock, for as long as it’s needed after activation. Informally, this is called the big-bang go live, a term used at Geisinger Health System to describe the practice of making all information systems live at one time. Cardella attributes the success of each conversion to two factors. The chair of systemwide radiology and the vice president of the radiology service line are held accountable for the quality of the radiology practice and for the care that patients receive at the new sites, from both clinical and technical perspectives. They have accountability, and they are given a

considerable amount of latitude in terms of committing resources; performing security analyses; making equipmentreplacement decisions (for example, for diagnostic workstations); garnering resources; and prioritizing projects. Another important factor that Cardella says contributes to the organization’s successful conversion of new sites is the fact that most of them, to date, have had outdated legacy RIS and PACS. For this reason, most radiologists and technologists welcomed the change and the opportunity to use up-to-date systems. No acquisition has generated a layoff of IT staff; in fact, the number of IT personnel has increased. The geographic dispersion of Geisinger Health System’s facilities requires on-site radiologyinformatics support teams, as well as a

www.imagingbiz.com | October/November 2013 | Radiology Business Journal 31

MERGERS | Implications for IT

The cost of maintaining more than one system is always going to be greater than that of maintaining only one, even if there is a large initial implementation cost. —Jon Copeland

large team at the Danville headquarters. “The tight integration of our systems and the use of a single platform across the enterprise are responsible for improving the quality of care our patients receive. The patient, the technologist, the radiologist, and all clinicians have access to a lot of the same information. This foundation of IT uniformity enables our providers to serve our patients better— and more safely,” Cardella concludes. A Dual Approach Inland Imaging (Spokane, Washington) was formed in the 1930s and had grown to six members by 1985. The practice was up to 60 radiologists last year when it merged with Seattle Radiology, a 37-radiologist practice, to form Integra Imaging. Now 97 radiologists strong, the practice serves the entire state of Washington and adjacent regions of the Northwest. As an early adopter of PACS and imaging-informatics innovations, it spun off a technology-services company in June 2012 for health-care, utility, and business-service sectors across the United States. Jon Copeland served as Inland Imaging’s CIO from May 1996 through May 2006. During this time, he oversaw the implementation of the practice’s PACS at more than 40 different sites. What began with three small outpatient facilities that performed 50,000 radiology exams annually has grown into a business that now serves more than 100 clients and manages more than 2 million exams per year. When Inland Imaging acquires an outpatient facility or obtains a new professional-interpretation agreement with a facility or hospital, it installs the RIS and PACS that it uses. It is much better to have all entities using the same system, Copeland emphasizes.

He says, “It is very expensive to operate and support multiple systems, and the radiologists are much less efficient if they need to work on multiple systems. The cost of maintaining more than one system is always going to be greater than that of maintaining only one, even if there is a large initial implementation cost.” He adds, “We’ve determined that some hospitals and radiology practices do not know how to evaluate the total cost of maintaining a PACS (or grossly underestimate the cost). They capitalize and depreciate the investment, but they may not factor in the cost of ongoing IT support, the annual maintenance agreement, the need to replace server hardware every four to five years, and the cost of off-site storage required by HIPAA and the Health Information Technology for Economic and Clinical Health, or HITECH, Act. They also may underestimate additional IT costs: all overhead allocations, all network and data-center costs, and all depreciations of equipment associated with this.”

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The practice’s hospital clients sign interoperability agreements, if they are not using the same PACS as Inland Imaging. The practice has gone one step further: It has created a de facto health information exchange for any hospital in the region to use, whether or not it is a client of Inland Imaging. A hospital that needs to send a study to another hospital can push the study from its PACS to a short-term PACS cache, where the image can be retrieved by the recipient hospital. Copeland says that this network service, which is free of charge to the hospitals, has had a major impact on improving patient care, particularly for trauma patients, and on reducing costs through a reduction in duplicate studies. With respect to archival storage, acquired entities tend to retain the storage solutions that they have, unless they specifically want to convert to Inland Imaging’s system. Relevant prior exams are shown in a patient’s electronic file, and if a radiologist wishes to review them, the process of transferring them to the PACS is very rapid. Living With Complexity Doing what makes sense for a local imaging center, especially when that also aligns with a corporate IT strategy, seems easy enough. It is dizzyingly complex, however, to achieve radiology-informatics harmony for CDI Management (Minneapolis, Minnesota). CDI Management oversees a coastto-coast network of 110 imaging centers located in 22 states—including the facilities of CDI, as well as the mobileimaging business of Insight Imaging (Lake Forest, California). As the two companies came together, in July 2012, CDI Management began discussions about moving the two national imaging providers to a common platform. It takes a large team to manage IT: about 90 people, according to Linda Bagley, CDI’s senior vice president of business process and technology. Out of the gate, Bagley and her colleagues evaluated the technological infrastructure of each company, the functionality of each product, and contractual agreements with vendors. They evaluated the market needs and

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MERGERS | Implications for IT

factors at each location, as well as what the companies needed to do to provide support for patients and physicians. The process was complex and challenging, and it did not yield easy or obvious solutions. The analysis evaluated dozens of elements, the foundations of which (from a radiology perspective) were RIS, PACS, and speech-recognition/ dictation systems.

There were similarities and differences. Each company had customized its RIS. In fact, Insight Imaging was using an internally developed RIS. With the additional software that CDI had developed with its vendor, the RIS not only supported four or five PACS used by hospital clients, but also included sophisticated features designed to support meaningful-use attestation.

Will Mergers/Acquisitions Spur VNA Adoption?

re mergers/acquisitions stimulating the adoption of cloud-based vendor neutral archives (VNAs) to solve interoperability problems? It’s too soon to make a definitive assumption, but in all likelihood, the wave of hospital acquisitions is promoting the adoption of this technology.

“The acceptance of VNAs is increasing, not only in the United States, but also globally.” DICOM is the native language for VNAs, but there is another module that sits on top of a VNA: an enterprise data-sharing protocol. This protocol opens up the range of content that a VNA can store, allowing it

The acceptance of VNAs is increasing, not only in the United States, but also globally. —Anthony Perry The Advisory Board

The Center for Healthcare Economics and Policy1 identified a total of 348 transactions, involving 607 hospitals, for 2007 through June 2013. This total did not include acquisitions by private-equity companies or physician groups, nor did it count vertical transactions or nonhospitalto-hospital transactions, according to the AHA–commissioned study. Anthony Perry, senior research analyst with the Advisory Board in London, believes that VNAs solve the problem of efficient transfer of medical images from one PACS to another, as well as being able to transfer non–DICOM medical images that PACS might not be able to manage at all. “The idea of a VNA is to store the images in a system that is impervious to a vendor product’s idiosyncrasies. VNAs provide a way for hospitals that work together to share content with each other, without the need to burn CDs or to develop intricate and potentially expensive software,” he says.

to include scanned documents and non– DICOM medical images. All these can be made accessible to hospitals and providers in other care settings that need to see them, thereby supporting integrated care delivery. VNAs are not a panacea for problems related to transparent interconnectivity among different PACS. Perry predicts that hospitals might increasingly rely upon VNAs to store archival images and to facilitate the transfer of images among hospitals, but that PACS will still be used for the retention of current and recent exams. —C. Keen Reference 1. Center for Healthcare Economics and Policy. How hospital mergers and acquisitions benefit communities. www.aha. org/content/13/13mergebenefitcommty. pdf. Published September 18, 2013. Accessed October 3, 2013.

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Insight Imaging was using a legacy PACS (which was sunsetting) and a thirdparty vendor to provide archival storage. CDI’s PACS function incorporated a mix of older and newer systems, from the same vendor, that were used primarily for viewing—with image transfer, management, and storage provided by another vendor. CDI also had received images from various PACS of the hospitals and providers where it provided professional services. Both companies used the same speech-recognition/ dictation vendor, but with different systems. “We wanted to retain our RIS-driven workflow, and we wanted to keep our ability to send images easily, across the country and between our markets. Those were our overriding goals,” Bagley says. The joint planning team evaluated commercially available RIS and PACS to determine whether better, more costeffective options were available. They decided that CDI’s RIS should be retained and that Insight Imaging’s facilities should transition to it. It worked well, and it was meaningful-use certified. With respect to PACS, the most sophisticated product in use at CDI would be retained, as well as the vendor providing image-management, -transfer, and -storage services. CDI sites with older PACS versions would upgrade, and Insight Imaging sites would convert to this. The most comprehensive speechrecognition system was selected. Facilities that had the other system quickly switched. The complex conversion process began in January 2013, market by market. Priorities were determined based on market requirements, greatest need, and number of integrations required. “Our focus has been primarily on Insight Imaging facilities, this year,” Bagley explains. “By the end of the year, all facilities should be using the same RIS. About 70% of the facilities are now converted to the PACS, with their archives transferred, as well, from Insight Imaging’s third-party vendor provider to CDI’s vendor.” The project is huge. Making it happen are an IT operations team responsible for networks, security, and servers; a

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MERGERS | Implications for IT

When you form a single tax ID, the requirement of consolidating billing takes precedence over everything else. —James Whitfill, MD

software-development application team that is performing the integration; a business-intelligence team; an installation team; a training team; a go-live team; and a PACS–administration team. “We’ve developed and are using a comprehensive, flexible template. There are, however, unique things for each market. We are doing an implementation each month, which starts with a conference call. Conversions take place over weekends. We are moving quickly, but we want to make sure that the process is smooth, thorough, and efficient,” Bagley says. In July, the company acquired two of the MRI Centers of New England (in Peabody and Woburn, Massachusetts) and moved them to its new centralized platform. A Slow Burn When Scottsdale Medical Imaging and Valley Radiologists decided to merge into a single business entity called Southwest Diagnostic Imaging Ltd (Scottsdale, Arizona), they did it as a merger-inprogress, from 2003 through 2011. Ultimately, they decided to consolidate their two RIS platforms, but keep the legacy PACS of each group intact. James Whitfill, MD, former CMIO, says that this was a pragmatic decision, made after a thorough analysis. When the merger was announced, a committee was formed to evaluate the technology that each practice was using and to prioritize what needed to be done. First on the list was the creation of a uniform platform for billing. “When you form a single tax ID, the requirement of consolidating billing takes precedence over everything else,” Whitfill notes. Infrastructure IT, email services,

websites, intranets, instant messaging, and telephony also were consolidated, but later in the merger timeline. The RIS was the next priority. The committee evaluated what was available, in the commercial market, with the features and functionality of the two systems in use. Of benefit was the fact that both practices were using the same speech-recognition/dictation platform. One existing RIS was selected, and the other group converted. “One of the first things that the IT department did was develop the ability to see across the entire patient jacket. DICOM tools are used to pull or push studies between the two PACS, and that has worked pretty well,” Whitfill explains. “From an interoperability perspective, it is possible for a radiologist to obtain prior exams for review that have been stored in the remote archive.” This is not a perfect solution, but it is working well. Whitfill notes that the radiologists in each of the former practices liked their own PACS. Unifying the two PACS also did not rank high on the immediate-

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priority list. The IT–evaluation team created a matrix that scored the cost and complexity of merging a function, and it ranked the value that a consolidated system would have for users. The complexity of consolidation was also assigned a rank that estimated the staff resources needed and how laborious the project would be. It became easier to prioritize projects. One benefit of the merger was that each practice previously had operated a sophisticated data center, with backup power and backup air conditioning. As these centers were about 10 miles apart (and because there is little regional concern about potential destruction by hurricane, tornado, or earthquake), Southwest Diagnostic Imaging had ready-made disaster recovery facilities. Backup tapes from each PACS are taken to the other. Each facility is building the capacity to support the other, in case archives are destroyed at one site. Another benefit of the merger was the opportunity to evaluate its firewalls and security against intrusion from a new perspective. “The merger enabled us to take a fresh look at how well we were secured. Some vulnerabilities were identified, and these were corrected,” Whitfill reports. “Merging the IT teams was more challenging. When you have two departments come together, the process is challenging, but ultimately rewarding. It’s necessary to understand cultural issues and philosophies—and to create a new environment that works well for everyone.” Whitfill continues, “We were especially fortunate in having an imaginginformatics manager who had worked with both of the PACS in her career. Her experience and knowledge were respected, and this made the process a lot smoother.” With mergers/acquisitions continuing to play out across the health-care landscape, health-care IT professionals will be challenged to create an integrated whole. The solutions, however, are as varied as the organizations. Cynthia Keen is a contributing writer for Radiology Business Journal.

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Strategy Report | Technology Acquisition

Technology Acquisition: Implementing the New Normal

Eight years of reimbursement cuts, slowing innovation, and consolidation have resulted in new acquisition strategies across delivery sites By Julie Ritzer Ross

eimbursement cuts, market consolidation, and health-care reform have sparked significant changes in the imagingtechnology strategies being implemented across the radiology landscape. Practices, imaging centers, and hospital radiology departments alike not only are altering the manner in which they formulate decisions on imaging-equipment acquisition, but also are adopting different approaches to demonstrating the need for new technology, to acquiring capital for equipment purchases, and to maintaining the assets that they already have. Rick Long is COO of Center for Diagnostic Imaging (CDI), Minneapolis, Minnesota, which currently owns, manages, and operates more than 110 imaging centers throughout the United States. CDI’s network includes a mobileimaging division, Insight Imaging (Lake Forest, California), and a collection of partnerships with radiologists, hospitals, and health systems. He says, “In many ways, it’s a very different ball game now than it was before these trends started taking hold. It’s definitely not all bad— and there are a lot of positives—but it is different.” The average age of CDI’s equipment has increased, Long notes, but not significantly—in part, because a slowdown in research, development, and innovation by manufacturers has made the prospect of upgrading technology a less compelling one for the imaging-center chain. Deciding whether or not to upgrade or replace imaging equipment has indeed become more difficult, however, with self-referral and the reimbursement cuts of the past eight years being the primary catalysts. “Overall,” Long explains, “we use

Preload: Preview v Buyers report a slower pace of technological innovation and longer replacement cycles.

v New considerations mean new decision makers, including COOs, biomedicalengineering staff, and referring physicians.

v Any new technology undergoes expanded scrutiny by a greater number of stakeholders.

v With RSNA on the horizon, bright spots include MRI, ultrasound, and advanced digital-mammography technology.

greater discretion in our decision making, asking ourselves many questions before moving ahead with any initiative.” Such questions include how the technology being evaluated will improve patient care and whether it will deliver enhanced diagnostic capabilities to radiologists, along with better patient outcomes. Also addressed is the issue of whether

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the technology will meet the growing diagnostic requirements of referring clinicians. Similar criteria are applied to determining when (or whether) additional modalities should be introduced—or upgrades should be executed—at a particular imaging center or in a specific market. For example, a

64-slice CT system was recently installed at one imaging center to accommodate its high and increasing vascular-imaging volume, but another center will continue to use a 16-slice CT system because the nature of its imaging business does not warrant an upgrade. “We might have upgraded our scanners, 10 or 12 years ago, more consistently in step with clinical advances released by equipment manufacturers,” Long states. “Outside forces, however, have made it very important for us to look at whether there is a demand for a particular modality at every one of our facilities or if it is appropriate only for one (or a few) centers. We are very focused on the clinical need for technology and whether it will improve outcomes for our patients, but with research/development being slowed by equipment manufacturers, healthcare reform, cuts to reimbursements, and the like, we are forced to make more discriminating choices.” In truth, Long says, high-quality diagnostic exams can be achieved as long as imaging-modality protocols have been optimized and staff members have been trained to tailor studies to the unique needs of the referring clinician and the patient. He adds, “Wholesale, systemwide upgrades are not a good use of capital, in today’s environment.” The Hospital Perspective An academic center has needs that are quite different from those of an imaging-center chain. When it comes to technology deployment, though, their needs are surprisingly similar, according to Geoffrey D. Rubin, MD, FACR, George B. Geller distinguished professor of cardiovascular research and professor of radiology and bioengineering at Duke Clinical Research Institute (and former chair of the department of radiology at Duke University School of Medicine). Duke Radiology (Durham, North Carolina), with which Rubin is affiliated, provides imaging services to Duke University Medical Center. In recent years, Rubin says, the hospital has seen a heightened emphasis on aggregating the value of imaging-equipment purchases across departments and lines of service.

Outside forces, however, have made it very important for us to look at whether there is demand for a particular modality at every one of our facilities or if it is appropriate only for one (or a few) centers. —Rick Long Center for Diagnostic Imaging

No one is saying, for example, that we need a faster CT scanner because it’s cool. —Richard J. Helsper, MBA, FACHE Genesis HealthCare System

This helps facilities do more with less while maintaining high-caliber patient care; economies of scale are sought, wherever feasible. Richard J. Helsper, MBA, FACHE, is COO of Genesis HealthCare System (Zanesville, Ohio). Genesis operates nonprofit hospitals—Genesis-Bethesda Hospital and Genesis-Good Samaritan Hospital— at two Zanesville sites, as well as multiple outpatient-care centers throughout the region. It is currently building an addition to Genesis-Bethesda Hospital; Genesis-Good Samaritan Hospital will close once the new facility, which is being constructed at a cost of approximately $160 million, opens (in 2015). Funding for the project was obtained through a combination of bonds and a $15 million capital campaign; it includes $40 million earmarked for new equipment and furnishings. While Genesis expects to make significant investments in imaging technology for the new facility, declining volumes—and the resulting reduction in access to capital—have limited, and will continue to limit, equipment replacement, in many cases. Instead of adhering to set replacement schedules, Genesis investigates, wherever possible, the viability of performing upgrades to

extend the equipment’s life cycle. Recently, a C-arm that had been slated for replacement (at a cost of approximately $200,000) underwent an upgrade instead; this rendered it DICOM compatible at a cost of $10,000. Helsper says, “What we have done here has bought us an extra two years of equipment life. A replacement might have lasted 15 years, but it might also have had a life of just five years.” Taking a long, hard look at whether conditions truly warrant purchasing more of the same imaging equipment (or whether initiating another type of change might eliminate such a need) constitutes another effective strategy for Genesis. For example, when considering the acquisition of a new CT system, based on perceived need, management conducted a review of emergency-department traffic patterns. The review revealed that, given patient volume, the department was overstaffed from 7 am to 4 pm and understaffed from 7 to 11 pm. Helsper notes, “We saw that we didn’t need new equipment—just an adjustment in staffing patterns to distribute resources more effectively.” Current best practices implemented by Genesis also dictate shopping for technology not necessarily because

www.imagingbiz.com | October/November 2013 | Radiology Business Journal 39

Strategy Report | Technology Acquisition

The department of radiology maintains a strong role in selecting the equipment. —Geoffrey D. Rubin, MD, FACR

radiologists want it, but according to the degree to which it will help other service lines attain their objectives. “No one is saying, for example, that we need a faster CT scanner because it’s cool,” Helsper states. Instead, a better CT system might be needed because it will allow a particular service line to do specific things. Genesis also reviews input from its clinical-engineering department prior to finalizing any decision pertaining to a proposed equipment upgrade or replacement. Such feedback was not solicited before health-care reform and other factors affected the technologyprocurement strategy at Genesis; instead, department members learned

of acquisitions only after purchases had been made. More Considerations The new normal for imagingequipment acquisition also has given rise to a different approach to demonstrating the need for new technology, as well as to procuring capital to fund technology investments. According to Long, CDI maintains a healthy balance sheet that has enabled it to earmark funds for technology, when acquiring that technology has been deemed a strategic choice. On the purchase-justification side, however, changes have been significant.

The RSNA Shopping List

hough technology-acquisition strategies have changed, technology continues to be central to the field of radiology, and it is best celebrated—and seen—during the annual meeting of the RSNA (to be held December 1–6, 2013, in Chicago, Illinois). Rick Long, COO of Center for Diagnostic Imaging (CDI), Minneapolis, Minnesota, says that body MRI has been particularly interesting to watch, over the past few years, because of the growing number of applications launched in the marketplace. At the RSNA meeting, he will be looking for technology with the potential to deliver improved workflow, productivity, and efficiency to CDI’s group of more than 110 imaging centers. He is especially interested in learning about emerging developments in ultrasound technology, based on his belief that it represents a sweet spot, in light of the demand for more cost-effective imaging using a lower radiation dose (or none). CDI’s ongoing focus on patient safety will also

lead Long to look for “advances in CT dose management,” he says. Solutions that enhance radiologists’ efficiency in interpreting what he calls “astoundingly larger datasets than ever before” are on the shopping list of Geoffrey D. Rubin, MD, FACR, George B. Geller distinguished professor of cardiovascular research and professor of radiology and bioengineering at Duke Clinical Research Institute. In recent years, Rubin has been impressed by pulse-sequence and gradient performance improvements in MRI (particularly as they pertain to imaging of the brain) and by the enhanced efficiency of solid-state detectors used for PET. Richard J. Helsper, MBA, FACHE, COO of Genesis HealthCare System (Zanesville, Ohio), will be looking for interventional imaging equipment. He sees some of the highest concentrations of research/ development activity occurring in the areas of ultrasound and mammography (especially tomosynthesis). —J. Ritzer Ross

40 Radiology Business Journal | October/November 2013 | www.imagingbiz.com

A wider swath of constituents and considerations comes into play, with radiologists, clinical-operations leaders, and sales/marketing personnel all brought to the decision-making and negotiation table. Referring clinicians also are asked to weigh in, given that they are the first point of contact along the patient-care continuum. “Once we establish that there is a need for certain technology in a market,” Long says, “we perform a full analysis to ensure a complete understanding of what it will deliver—or what the impact of the decision will be on our business. It’s a critical step.” At Genesis, attempts to justify equipment acquisition have become— and will remain—closely tied to whether the technology is proven, has a strong potential return on investment, and (most important) can yield new benefits, particularly in support of the growth of high-priority programs. Helsper notes, “Finding a champion and freeing up capital are easier when these elements are in place. Our priority, right now, is justifying the purchase of equipment that will support neurology, pediatrics, cardiology, and orthopedics. These are the programs we need to grow, at the moment.” At Duke Radiology, University School of Medicine, purchasing decisions are based upon business plans for the equipment, with an eye toward supporting top-notch patient care and profitability. Capitalpurchase decisions originate in radiology and are then approved and negotiated through central purchasing, which reports to the CEO. Rubin says, “The department of radiology maintains a strong role in selecting the equipment.” Perhaps it’s not surprising that proving the need (and finding capital) for some modalities can be a simpler process than winning the case for others. Sheila M. Sferrella, MAS, RT(R), CRA, FAHRA, is a partner in Collaborative Consulting Solutions LLC, a health-care consultancy, and was formerly vice president of ambulatory services for Saint Thomas Health (Nashville, Tennessee). She notes, “The modality that I see many managers able to justify is MRI, because the reimbursement still covers

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Strategy Report | Technology Acquisition

The modality that I see many managers able to justify is MRI, because the reimbursement still covers costs, if you manage your expenditures well—that is, know your cost per unit of service and per study, and balance that against staffing. —Sheila Sferrella, MAS, RT(R), CRA, FAHRA Collaborative Consulting Solutions

costs, if you manage your expenditures well—that is, know your cost per unit of service and per study, and balance that against staffing. I have, however, looked at venture-capital funding and joint ventures, which for hospitals, get the capital off the books.” Sferrella also suggests that eschewing new equipment in favor of used equipment constitutes a viable alternative strategy for handling equipment acquisition, especially in situations where justifying the need for technology proves difficult. She says that few outpatient imaging centers, especially facilities that are joint ventures with radiologist partners, currently pursue the new-technology route. “Since the new reimbursement model raises volume to even greater importance, the breakeven point is shorter for used (versus new) equipment,” she explains. The Importance of Maintenance Given market trends and the subsequent push to maximize the value of imaging equipment, repair and maintenance have become an increased area of focus for practices, imaging centers, and hospital radiology departments. On the repairs front, Sferrella observes, some players are now considering options from which they might have shied away, in the past. Those with aging equipment, for example, are purchasing insurance policies that put a cap on repair expenditures. In many cases, entities that outsource repairs to third-party companies are able to obtain such coverage without changing outside service providers. Those that use one of a carrier’s in-network service providers, however, gain additional savings over the cost of obtaining repair assistance from a vendor.

Sferrella says that some of her clients and other industry constituents have paid 25% to 35% less for repairs by engaging a service provider to which they were referred by their insurance carrier. Not long ago, one of her company’s clients sought price quotes for the repair of two CT systems. The vendor reported that the repairs would cost $60,000, but a thirdparty service provider allied with the organization’s insurance company agreed to do the work for $20,000. At Duke Radiology, University Medical Center, every attempt is made to handle equipment service in-house, at least as a first line of defense, Rubin reports. Calls to manufacturers are reserved for more serious problems, and preventive maintenance occurs on a regular schedule. Uptime is monitored very closely, with significant attention paid to improving internal processes (for instance, balancing patient loads on identical machines) as a means of further reducing downtime and placing less strain on equipment. CDI now employs field-service engineers in larger markets. A combination of preventive maintenance and the ability to address equipment problems immediately (instead of waiting for assistance from outside the organization) keeps a lid on downtime, Long observes. As positive and effective as these tactics and practices might be, however, practices, imaging centers, and hospital radiology departments are bound to make additional changes to their approaches as conditions dictate. For the radiology segment, procurement always will be a moving target. Julie Ritzer Ross is a contributing writer for Radiology Business Journal.

42 Radiology Business Journal | October/November 2013 | www.imagingbiz.com

advertiser index Affiliated Professional Services (800) 841-5200 www.affilprof.net............................................. 11 American College of Radiology (703) 648-8900 www.acr.org..................................................... 43 eRad (864) 234-7430 www.erad.com................................................ 15 Esaote (800) 428-4374 www.esaoteusa.com....................................... 33 Fujifilm Medical Systems (800) 431-1850 www.fujimed.com........................................ 5, 41 Hitachi Medical Systems America (800) 800-3106 www.hitachimed.com........................................ 2 Integrated Medical Partners (877) 816-1467 www.integratedmp.com.................................. 19 Intelerad (514) 931-6222 www.intelerad.com.............................. 27–28, 46 Intersocietal Accreditation Commission (800) 838-2110 www.intersocietal.org...................................... 37 McKesson Enterprise Medical Imaging (800) 661-5885 www.mckesson.com/medicalimaging............ 13 MMP (800) 895-0002 www.cbizmmp.com........................................... 7 Optimal Radiology Partners (877) 833-2242 www.optimalradiology.com............................... 3 RamSoft (888) 343-9146 option 2 www.ramsoft.com........................................... 45 Red Rock Diagnostics, LLC (877) 362-6077 www.redrockdiagnostics.com......................... 35 Sectra (203) 925-0899 www.sectra.com.............................................. 25 VMG Health (214) 369-4888 www.vmghealth.com......................................... 9 Zotec Partners (317) 705-5050 www.zotec.com......................................... 22–23

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For Leaders in Medical Imaging Services

Fair Market Value Versus Investment Value in Imaging By William Teague

he standard of value must be established in performing a valuation of any imaging business. The standard of value defines the hypothetical conditions under which a valuation will be performed. These hypothetical conditions affect many of the underlying assumptions that an appraiser or valuator would employ in establishing a value opinion. In current valuation methodology, three standards of value usually apply: fair market value, investment value, and fair value. Fair market value and investment value are the two standards most often used for transactional purposes, while fair value is

most often employed for accounting and financial-reporting purposes. In the distinction between fair market value and investment value (as they apply to imaging transactions), issues such as physician ownership, health-system synergies, and Stark regulations can complicate the understanding of value.

Population-health Management: A Formula to Improve Health and Finance

Technology Groups Face Pressure to Consolidate

By Deborah Hauss

n today’s transaction-based service model, patients make their own appointments, the care they get varies depending on the provider’s memory and skill level, and it is up to patients to coordinate and manage their own follow-up. The population-health–management business model moves patients away from accessing the health-care system on an as-needed basis—using whatever benefits their insurance will allow—

Fair Market Value

Fair market value is defined as the price at which property would be exchanged . . . Continued at www.imagingbiz.com/imagingbiz_ ejournal

By Cat Vasko

Disaster Recovery: Planning for the Day You Hope Won’t Happen By Cynthia E. Keen

isaster recovery is an event that PACS administrators hope that they never will have to confront, but it is increasingly clear that it needs to be a top-of-mind concern. Natural disasters, particularly tornadoes and floods, seem to be occurring more frequently, with greater intensity and with more resulting damage. Hospitals and imaging centers are not exempt from their effects. The impact along the Gulf Coast of Hurricane Katrina in 2005 (with the subsequent levee breach in New Orleans, Louisiana) was a wake-up call to health-care . . . Continued at www.imagingbiz.com/radinformatics

Hospital–Radiology Alignment for Increased Quality: OSF HealthCare By Cat Vasko

adiology-practice consolidation has become more than just a trend: It’s an imperative for future survival, according to Michael Brant-Zawadzki, MD, Ron and Sandi Simon endowed executive medical director chair at the Hoag Neurosciences Institute (Newport Beach, California). “Scale is becoming much more important,” he notes. “Smaller groups are looking for help and are being overtaken by corporate entities like national teleradiology groups—or by larger, independent group practices . . .

Continued at www.imagingbiz.com/medpracticebiz

Continued at www.imagingbiz.com/health_it

hen OSF HealthCare (Peoria, Illinois) transitioned from analog to digital imaging, one aspect of the radiology continuum proved challenging: quality assurance (QA). Tom Cox, director of radiology at OSF Saint Francis Medical Center, recalls, “We had a fairly robust, paper-based QA process when we were using film and paper. When we went to PACS and went paperless, however, we virtually stopped getting feedback from the radiologists . . .

Continued at www.healthcxo.com/healthcxo_ ejournal

Visit www.imagingbiz.com to view the complete articles published in the imagingBiz Web Journals.

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