Radiology Business Journal August/September2011

August/September 2011

Fight or Flight: Radiology

Radiology Radiology Faces Faces Faces the Firing Squad the Firing the FiringSquad Squad Featured in this issue Distributed Reading: Leveraging PACS for Growth | page 32 The Top 20 Imaging-center Chains: Second Annual Report | page 40 A Radiology Whodunit: Mystery of the Missing Collections | page 54

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August/September 2011

Fight or Flight: Radiology

Radiology Radiology Faces Faces Faces the Firing Squad the Firing the FiringSquad Squad Featured in this issue Distributed Reading: Leveraging PACS for Growth | page 32 The Top 20 Imaging-center Chains: Second Annual Report | page 40 A Radiology Whodunit: Mystery of the Missing Collections | page 54

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CONTENTS

August/September 2011 | Volume 4, Number 4

22

Features

22 Fight or Flight: Radiology Faces the Firing Squad

By George Wiley The CMS proposal for a blanket professionalcomponent reduction for multiple procedures performed on the same day has put medicine on the edge.

32

Leveraging PACS for Growth

By Greg Thompson PACS technology continues to fuel the distributedreading movement, but an old-school devotion to boots-on-the-ground radiology remains strong.

40 2011’s Top 20 Imaging-center Chains: Second Annual Report

32

By Cheryl Proval Growth among the top imaging-center chains stalled in 2011, but the overall market saw a slight increase, and procedural volumes per center hit a decade’s high.

49

Managing the Revenue Cycle: Optimized Coding and Billing

By Julie Ritzer Ross Lean manufacturing processes, automated coding, and the right human resources are all part of the solution in three practices’ efforts.

54

The Mystery of the Missing Collections

By James A. Kieffer, MBA In this inquiry into an imaging center’s accounts receivable, the suspected culprits were exonerated and a surprising perpetrator emerged.

4 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

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CONTENTS

August/September 2011 | Volume 4, Number 4 Publisher Curtis Kauffman-Pickelle · ckp@imagingbiz.com EDitor Cheryl Proval · cproval@imagingbiz.com

Departments

8

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Art Director Patrick R. Walling · pwalling@imagingbiz.com Technical Editor Kris Kyes Associate Editor Cat Vasko · cvasko@imagingbiz.com

Those Pesky Patients

Online Editor Lena Kauffman · lkauffman@imagingbiz.com

By Cheryl Proval

10

Online News Editor Julie Ritzer Ross · jritzerross@imagingbiz.com

The Bottom Line White Coat and a Pinstripe Suit

Contributing Writers RIchard E. Heller III, MD; James A. Kieffer, MBA; Julie RItzer Ross; Greg Thompson; George Wiley

By Richard E. Heller III, MD

12

Priors 12 Strategic Planning | It’s a Darwinian New World 14 Finance | Getting a Grip on Collections 16 Leadership | Leadership Training for All Radiologists

60

Advertiser Index

62

Final Read

Sales & Marketing Director Sharon Fitzgerald · sfitzgerald@imagingbiz.com Production Coordinator Jean Lavich · jlavich@imagingbiz.com Special Projects Coordinator Emily Kawka · ekawka@imagingbiz.com Webmaster Robert Elmquist · relmquist@imagingbiz.com

Next-generation Radiology Leadership

By Curtis Kauffman-Pickelle

49

54

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Radiology Business Journal is published bimonthly by imagingBiz, 17291 Irvine Blvd., Suite 105, Tustin, CA 92780. US Postage Paid at Lebanon Junction, KY 40150. August/September 2011, Vol 4, No 4 © 2011 imagingBiz. All rights reserved. No part of this publication may be reproduced in any form without written permission from the publisher. POSTMASTER: Send address changes to imagingBiz, 17291 Irvine Blvd., Suite 105, 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.

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Those Pesky Patients Patients who dodge the bill at the front desk are having an effect

T

o the Standard & Poor’s downgrade of US sovereign debt, the CMS proposal to slash the radiology professional component, and the stalemate in Washington, add yet another threat to solvency that has slipped nearly undetected onto the horizon—your patients.

In flush times, hospitals and physicians were not aggressive about trying to collect copayments from insured patients. The uninsured patient was frequently treated as a write-off, especially if the encounter took place in an emergency department.

As our mystery feature on page 54 by James Kieffer, MBA, reveals (spoiler alert), the unwillingness of providers to make a concerted effort to capture copayments from patients is having a very noticeable effect on receipts. If radiology reimbursement had not been cut so relentlessly over the past five years, maybe no one would have noticed. In the case of this practice and its imaging center, though, accounts receivable sprang a leak, and no one knew where it was coming from—until it was traced to patient copayments.

Why, you may ask, must one engage an MBA to come in and analyze accounts receivable, in agonizing detail, to uncover the source of the missing revenue? The answer, of course, is that it is not easy to measure an unknown.

Problem 1: Neither the practice nor the patient knows the amount of the copayment. Let’s face it: Insurance plans are so complicated, and health care is so fragmented, that only the insurer knows for certain whether the patient has met the deductible, what the amount of the copayment is, and whether the service is covered.

Let’s imagine that insurers are required to make this information available in real time, at the point of service (in the parlance of the retail trade), to providers—a sidecar requirement to the federal meaningful-use initiative. This brings us to the next problem.

Problem 2: The provider culture is wimpy about taking money from patients. Call it mission or something else, but many providers don’t make a point of trying to get their copayments up front, trusting that the patient will put a check in the mail. This is a mistake, according to Jerry Peer, a presenter at the RBMA’s Spring Summit. He cited research (see page 14) indicating that if you do not collect at the time of service—before the patient leaves the premises—you can expect a return of less than 40%.

Growing copayments and high-deductible plans, however, have changed the game for the patient as well. The $10 copayment is nearly obsolete, and deductibles are on the rise, which brings us to yet another problem.

Problem 3: The patient is shouldering an increasing share of the bill at an inopportune time. People are broke, basically, and if they aren’t, they are worried that they will be soon. In reporting 2010 census data, the Wall Street Journal referred to the first decade of the century as the “Lost Decade for Family Income,”1 a decade in which median household income dropped 4.8% over the decade and the number of people living in poverty increased more than 1%.

The number of people 25 to 34 years old who were living with their parents rose 8.4%. This, as we all know, was followed by a recession from which we continue to suffer. If your patients have the money, they are reluctant to let it leave their hands.

Some of this reluctance is fear, and some of it is due to something else.

Problem 4: There is a culture of healthcare entitlement. At a talk given by healthcare futurist Jeff Goldsmith, PhD, three years ago, I was struck by a number he shared: US residents were spending less on health care than they were on Christmas presents. While that might have changed in the intervening years, the culture of entitlement remains.

As a patient, I am somewhat conflicted about sharing this inside intelligence with you, but as the editor of Radiology Business Journal, it is my duty. This is how a patient thinks: mortgage/rent, utilities, and credit-

8 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

card debt are at the top of the pile, and medical bills, for a number of reasons, are at the bottom. The thinking goes something like this: They already got a boatload of money from the insurance company, so they can wait while I eke out payments, at $10 a month, for the next 40 years. Besides, I need it more than they do.

If you don’t like—or know—the physician, then that makes payment optional. This brings us to a persistent problem in radiology.

Problem 5: I never even saw you. Why should I pay you? Radiology has a special challenge in collecting. More august minds than mine have been urging radiologists to leave the reading room and get out and meet the occasional patient—the so-called one-a-day solution. As practice patterns change, that might not be feasible for every radiologist, and anyway, it is not working.

What is the answer? Practices might want to consider empowering one of their senior members to become a patient ambassador for part of the day, dropping into exam rooms to deliver good or bad news. They also need to leverage their IT expertise to make use of websites and social media to connect with patients and communities.

Have a clear-cut policy for charity-discount determinations so that patients who need help receive consideration.

On the subject of capturing copayments, comb the pages of this issue, which has a finance theme and features interviews with many practice leaders who are grappling with this, and other problems. You can’t say this because it is politically incorrect, but I can: Patients are not giving health-care providers their due.

Cheryl Proval cproval@imagingbiz.com Reference 1. Dougherty C, Murray S. Lost decade for family income. Wall St J. http://online.wsj.com/ article/SB1000142405274870344060457549 5670714069694.html. Published September 17, 2010. Accessed August 23, 2011.

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The Bottom Line

White Coat and a Pinstripe Suit In one radiologist’s view, many parallels exist between medical school and business school by richard E. heller iii, md

P

hysicians, let’s face it: Conventional wisdom has it that we make lousy businesspeople.

We’re great when it comes to the nuts and bolts of the body, but when it comes to the mechanics of finance, we’re said to be naive. Frankly, there may be some truth to this. The majority of us spent the bulk of our 20s and 30s in medical school, residency, and fellowship, focusing on learning the foundations of medicine and the practice of radiology.

We didn’t have time to study the differences between stocks and bonds, how options work, or when debt is better than equity. Not only did we lack the time, but many of us didn’t have the extra money to invest or the motivation to learn. Money was something that we knew would come later, when we had our real jobs. We didn’t enter medicine to get rich, but we could be reasonably sure that we wouldn’t be destitute, either.

I’m six years past a pediatricradiology fellowship, and I’m a partner in a successful private-practice radiology group. This is what I worked so hard for, all those years—so why am I now halfway through an MBA program, spending every other weekend, for two years, in all-day classes on things like managerial finance, accounting, and corporate strategy?

As I looked around at the financial and political landscape, it was clear that significant changes were coming. Federal and state governments are facing critical budget deficits. Their expenses will have to be slashed, and this will certainly have an impact on the finances of health care.

At the same time, radiology itself has become even more competitive. It was against this backdrop that I decided to embark on a business education.

As it turns out, those things that I was too busy to learn about earlier really are important to how we practice. The differences between a thriving practice or department and a failing one probably have a lot more to do with the things I’m studying now than with what they taught me in residency.

Now that I’m here, what do I think of physicians in business school? Out of a class of about 65 people, there are four physicians (I’m the only radiologist).

We physicians are more than holding our own against our more traditional business classmates. What I have learned is that the skills that we developed over years of training and practice translate very well to a business setting; you just need to understand how.

Business has a language, just as all specialties in medicine have. If you want to communicate effectively in business, you need to know this language. Once you understand this language, it is much easier to translate the concepts that we use in everyday radiology practice to a business setting. Business school teaches this language and the mechanics of business practice. It doesn’t provide a defined pathway to success or riches (though we wish it did); rather, it provides the tools necessary for you to make your own pathway.

Imagine you are running a business, you are trying to increase brand awareness, and you are offered the chance to sponsor hat day at the local baseball park. For $20,000, your company logo would appear on the backs of all the hats given out to fans.

Should you do it? This seems fully alien to radiology, doesn’t it? Not at all: Just reword the question in terms to which we can more easily relate.

For example, a clinician believes that the patient has a tumor and wants to know whether to order an MRI exam. We ask, ”Where do you suspect the tumor is?” In business terms, we would ask who should be the target of this advertising campaign.

Another basic radiology question is, “Given where you think the tumor is, are there better ways to image the patient?” The business version of this question could be, “Are there more effective and/or cheaper ways to reach your target market?”

If the clinician thinks that the patient has lung cancer, we would say, “Skip the MRI exam, and get a CT exam.” If the businessperson’s target market consists of purchasers of industrial mining equipment, we would say, “Skip the baseball promotion, and maybe focus more on trade shows.” In radiology, we’ve learned that to get the right answer, you need to make sure you are asking the right question. This couldn’t be any more true in business.

A critique that I hear about physicians in business is that we are inflexible,

10 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

but succeeding in business requires an appreciation that the world is constantly changing and shifting. I couldn’t disagree more with the notion that we are inflexible.

When my father, also a pediatric radiologist, trained in the 1960s, there was no CT, MRI, or ultrasound yet. As each of these modalities emerged, however, he adapted and learned.

All segments of medicine are constantly evolving based on new research and information, and radiology is no different.

In fact, in addition to those other constant changes, our world of radiology is also highly dependent on technology, which is continuously progressing. We are forced to keep up or to risk being out of date and left behind. I would even say that few aspects of business practice have changed as fundamentally, over the past 30 years, as radiology has.

As physicians, we are professional students. We know how to learn. When most of our college classmates graduated, they entered the workforce. While these friends were developing their careers in the workplace, our job was to be students, and we became quite good at it. Years of studying for our rotations, for licensing exams, and for board certification have paid off: We are experts in the art and science of learning.

Whether it’s the latest consensus statement on pulmonary nodules or how to develop a marketing plan, we know how to learn.

The conventional wisdom that physicians make bad businesspeople might include some truth, but only with the caveat that physicians who are willing to invest the time to learn the language and mechanics of business have the potential to make great business leaders. Business school just helps translate concepts that we already understand. In reflection, the time that I spent studying in my 20s and early 30s was a great business education. I just didn’t know it.

Richard E. Heller III, MD, is chief of pediatric radiology, Department of Diagnostic Imaging, at Advocate Hope Children’s Hospital and at Advocate Christ Medical Center, Oak Lawn, Illinois, and is a partner with Radiology Imaging Consultants, Harvey, Illinois. He is in the MBA program at the Kellogg School of Management, Northwestern University.

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It’s a Darwinian New World

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eeves and Deimler1 portray an unvarnished picture of the business operating environment in their article, “Adaptability: The New Competitive Advantage,” in a recent issue of the Harvard Business Review. Market dominance is increasingly ephemeral, with the percentage of companies falling out of the top three from year to year increasing from 2% in 1960 to 14% in 2008. Market leadership, today, is not often correlated with profitability: The likelihood that market dominance translates into profitability decreased from 37% in 1950 to 7% in 2007. These two new business truths pose great challenges for those who must set the strategic course for the organization.

Traditional strategic thinking involves building an enduring, or static, competitive advantage by establishing an effective market position. Increasingly, leaders are beginning to question the logic of leading based on something as fleeting as market position, particularly at a time when it is so difficult to determine where one industry ends and another begins.

A growing number of companies are coming to the same conclusion: Success is no longer measured by market position, scale, or the organization’s ability to produce a product (or, in the case of health

care, procedures). The greatest measure of success is its ability to adapt—that is, to learn new things. The authors contend that those companies with the ability to thrive in this environment can do four things very well.

First, they are quick to pick up and recognize market signals. Operating in such a fast-changing environment requires an organization to be attuned exquisitely to the external environment and to possess the ability to decode the incoming signals. The authors use Formula One racing as a metaphor, explaining that the era when car and driver determined who won has been supplanted by an era in which information from multiple sensors produces data on thousands of variables processed by race teams, whose input is an important factor in a win.

Adaptive companies use sophisticated data-mining capabilities in order to recognize these patterns in their markets.

When considering the new mandate to improve outcomes in health care and the likelihood that providers will assume some level of risk, the ability to collect, process and analyze a multitude of data on a patient population will be fundamental to those endeavors.

The authors cite the example of a leading media company that added neural-network technologies to its analytics to understand customer churn better. The company was able to uncover patterns that enabled it to predict with great accuracy which customers were about to leave and target them with retention programs. Radiology practices could benefit from the ability to recognize and address customer dissatisfaction quickly. Another example cited was Google’s use of analytics to identify the interests of its users so that ads could be better targeted—a strategy that drove revenue, since the company is paid on a per-click basis.

12 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

Second, adaptive companies know how to experiment quickly, often, and inexpensively—an excellent alternative to forecasting in market uncertainty.

Asking customers for their perceptions is known as a poor predictor of success, the authors write, but experimenting in the real world can be dangerous. Therefore, adaptive companies are finding new ways to experiment, such as in virtual environments. Procter & Gamble, for instance, is creating virtual stores in which to test products. Medical schools have begun hiring actors to stand in for patients, to teach some skills better.

Companies must broaden the scope of their experiments, the authors contend, going beyond their traditional products and services. A case in point is IKEA, which recognized that whenever it opened a store in Russia, property values increased in the area around the store. It began investing in malls and now makes more money in real estate in Russia than with its traditional offerings in furniture.

The authors advise that embracing failure for what can be learned is part of the process.

Third, adaptive companies have developed the skills necessary to manage complex systems with multiple stakeholders that are increasingly interconnected. As companies engage in a growing amount of economic activity beyond corporate boundaries, strategy must embrace dynamic business systems.

“Increasingly industry structure is better characterized as competing webs or ecosystems than as a handful of competitors producing similar goods and services working on a stable, distant, and transactional basis with their suppliers and customers,” the authors write.

Therefore, companies that can create benefit at the system or network level (without benefiting competitors) have

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the advantage, and adaptive companies manage this by using common standards that encourage interaction without throwing up barriers. eBay, with its buyers, sellers, and rating system, is an example of this.

Nokia had the benefit of being first to market in the mobile-phone arena, but Apple (with its network of suppliers) and Google’s Android (with its network of hardware suppliers and application developers) both eclipsed the market leader. In the radiology environment, a radiology practice, imaging center, or department would seek to benefit a broader ecosystem of providers, hospitals, payors, patients, or accountable-care organizations.

Fourth, adaptive companies have learned how to unlock a key resource: the people who work for them. While adaptation is local by nature—someone,

somewhere decides to experiment—its implications are global for the organization.

Companies, therefore, must create fluid environments in which information and knowledge flow freely and autonomy and risk taking are encouraged.

Adaptive companies have replaced permanent silos with modular business units that change based on need and have driven decision making down to the frontlines. Recognizing the difficulty of making the transition to an adaptive company, the authors offer several suggestions.

Rather than focusing on your traditional competitors, look at the mavericks. Also keep an eye on disruptions in adjacent industries, and ask if they could happen in yours. Set aside traditional forecasts and focus on risks and uncertainties instead. An adaptive organization needs to distinguish false

knowns from underexploited unknowns (and unknown unknowns).

Strategic initiatives should be the engine that drives adaptability by tying an initiative to each significant source of risk. Require that every change proposal be accompanied by multiple alternatives to encourage organizational diversity.

If your industry is stable and predictable, you might want to stick with traditional forms of strategic planning, the authors concede, but if, like many (health care included), it is uncertain and changing rapidly, then you need a dynamic and sustainable way to operate that supports adaptive change.

—Cheryl Proval Reference 1. Reeves M, Deimler M. Adaptability: the new competitive advantage. Harv Bus Rev. 2011;89(7/8):134–141.

finance

A Bird in the Hand: Getting a Grip on Collections

B

ad debt in health care resulted in $65 billion in uncollected revenue last year1—a big share of the $141 billion that all US businesses failed to collect in 2010.

Although a percentage of that can be attributed to the 46 million uninsured, this might come as a surprise: At one multihospital health-care facility, balances unpaid after insurance reimbursement, as a segment of bad debt, are growing at a faster rate than the uninsured segment is growing: 30%, compared with 19%.1 Jerry Peer, vice president of collections for Professional Finance Co (PFC), Greely, Colorado, presented “Point of Service Collections” on June 6, 2011, at the RBMA’s Spring Summit in New Orleans, Louisiana. He takes the position that collections is a critical part of customer service. Not only do patients cite the inability to figure out their portion of the bill as a key reason for not paying bills, but PFC survey data show payment as a percentage of the total amount owed sliding precipitously (to less than 40%) if copayments are not collected before patients leave the premises.

As the voice and face of the radiologist,

front- and back-office personnel hold an increasing amount of responsibility for the hospital/practice’s revenue stream.

This new reality will have an impact on everything from the type of person healthcare leaders hire to how that person is trained.

Changing the Culture US health-care providers are having a difficult time collecting debt, partially because it is a different type of debt, Peer says. “Patients don’t plan to get sick, so the end result is that payment typically comes out of their discretionary income,” he says.

Another major factor is that patients are operating under old assumptions.

Until fairly recently, if patients failed to pay the deductible, the unpaid balance represented a very small portion of the

14 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

total bill, and providers were unlikely to pursue that revenue. Today, the average deductible for an outpatient visit is $30 to $45, compared with the $10 copayments of years past. Hospital copayments that were formerly $100 have morphed into a typical copayment of $500.

Yet another factor is the entitlement belief: Some patients believe that they are entitled to health care. “We have perpetuated some of this mindset in our own patients, and now we have to guide our patients into this cultural change,” Peer says.

Bringing about a cultural change that will result in stronger point-of-service collections means overcoming concerns about public relations and patient satisfaction—and the feeling that getting paid conflicts with the organization’s mission. The difficulty of estimating a patient’s copayment in advance is no reason to neglect getting a deposit, up front, against what will ultimately be owed. Peer asks, “Apathy sets in after the service is provided, so why not ask for it before the service is provided?”

It’s not all about policies and procedures, Peer advises. A strong point-

of-service collections initiative requires tools to facilitate the process and calls for the training of employees in the soft skills of successful collections, and if you do not invest the time in training, Peer predicts, your initiative will fail. “That collections culture has to permeate the organization,” he says, and that includes physicians.

Technical Solutions and Soft Skills To begin with, health-care providers should offer every payment option in order to satisfy the patient’s preference.

These options include debit and credit cards, cards for health savings accounts and health reimbursement accounts, electronic remittances through a kiosk or website, and electronic checks.

This might sound obvious, but providers must make it very clear that they expect to be paid for their services.

Communicate payment expectations in every patient interaction (including verbally, at the point of service, by trained personnel), as well as in all written communications and bills. Include information about the patient’s next responsibility, terms, and timing.

Before building a program and training employees, leaders need to establish collection goals and key performance measures. For instance, a goal could be a dollar amount, and employees’ performance could be measured as the percentage of dollars collected, against what is owed.

Many tools exist that support an organization’s point-of-service collections—which is as much about collecting information and increasing the integrity of your data as it is about collecting cash, Peer says. If you do not collect this information, someone else will have to: addresses, phone numbers, occupations, and employers. Best practices in the industry currently call for updating this information quarterly.

There are vendors available to help by doing online medical scoring, automated charity-discount determinations, and address verification.

Medical reimbursement is a challenge for providers to understand, so imagine what it must look like to patients.

Employees will need a command of all aspects of insurance reimbursement and the ability to explain reimbursement to patients in terms that they will understand (in addition to having the necessary tools and services at their disposal).

The soft skills necessary for medical collections include engaging the patient through smiling, maintaining eye contact, and using the patient’s name; speaking with confidence using positive terms; being empathetic, but objective; and never, ever arguing with a patient. “You may win the argument, but you will most assuredly lose a patient in the process,” Peer advises.

The Eight-Step Method Peer recommends taking eight steps designed to heighten the patient’s awareness of a delinquent bill. The method is not a script, but a process, and Peer always begins with this when he trains employees in point-of-service collections. He recommends a callpreparation step in which the employee reviews past call records and payment history, and prepares questions.

First, identify the customer to make sure that you are speaking to the responsible person (usually the patient, but sometimes a relative). A key step in identifying the customer is asking for phone-number and address verification.

Second, identify yourself and your employer, once you are confident that you are speaking to the right person.

Third, in preparation for requesting the outstanding balance, let the customer know that you are calling to discuss the statement recently mailed to him or her.

Ask the customer if he or she has any questions about the statement and what it was for, listen, and respond to those questions. Then, state the outstanding balance and ask the customer how he or she would like to pay.

Fourth, pause: This pause will influence the customer to take a turn in the conversation and respond. Resist the temptation to fill the silence that is likely to follow as the customer considers a response.

Fifth, determine the reason for the delinquency. The caller knows that the account is delinquent, so the objective is

to collaborate with the patient in getting to a zero balance. If the patient has no money, offer to take a credit-card number.

If there is no credit card, explain your payment policies, including deposits, monthly payments, and interest terms.

It is very important for the caller to be attentive and to be prepared to respond to questions about third-party payments and other issues raised in conjunction with nonpayment, as this step precedes negotiation for payment. “If you are collaborating, you will get to the desired outcome,” Peer says.

Sixth, negotiate: The most important thing to know is that negotiations need not be confrontational, and that the employee’s attitude will set the tone for the negotiation. Barriers to a successful negotiation include trying to win at all costs, becoming emotional, not trying to understand, and inveighing blame in any way.

Seventh, close: The primary goals of this phase are to conclude with a clear understanding of the next step; to present options for payment or agree on a date by which the customer will get back to you with specified information; and to thank the customer.

Eighth, update the file. Any individual who picks up that file needs to know what is going on when the patient shows up for service—perhaps as soon as the next day. All payment agreements must be documented and entered into your system.

It is important to have a one-page printed document for the patient that explains payment options and policies, to be distributed at the point of service.

Patients can easily be distracted at the time of a procedure, so burying your policy in a longer document practically ensures that the patient will not understand the policy before he or she receives the service.

—Cheryl Proval Reference 1. Pellathy T, Singhal S. The next wave of change for US health care payments.

McKinsey Quarterly. http://www. mckinseyquarterly.com/The_next_ wave_of_change_for_US_health_care_ payments_2585. Published May 2010.

Accessed August 16, 2011.

www.imagingbiz.com | August/September 2011 | Radiology Business Journal 15

priors

leadership

Leadership Training for All Radiologists

A

natomy, physics, and pathology are all hallmarks of the radiology education. Now, the ACR® intends to add another element: leadership training. The college announced in mid-August 2011 that it will launch the Radiology Leadership Institute (RLI) in 2012 with an inaugural invitation-only meeting, to be held July 12–14 at Northwestern University’s Evanston, Illinois, campus.

The institute is intended to educate all radiologists and will feature management training for residents, fellows, and practicing physicians. A full curriculum is being developed that will include face-toface learning (in a variety of geographic locations), team projects, case analysis, and Web-based distance learning. To learn more about the institute, Radiology Business Journal interviewed Cynthia S. Sherry, MD, FACR, chair of the ACR Commission on Leadership and Practice Development and medical director of the recently announced RLI. RBJ: Why has the ACR elected to invest in leadership skills for the profession now?

Sherry: In recent years, the ACR leadership has recognized that the business of running a successful medical practice or medical department is challenging for all physicians, not just radiologists. There are a number of reasons for this, including economical, political, and competitive factors that are driving the present need for more sophisticated business acumen among radiologists, in both academic and private-practice settings.

Hospitals are under similar pressures.

Together, these two parties are finding that they have different expectations of each other. As a symptom of this, we saw longstanding relationships between radiology groups and hospitals becoming strained and breaking down; because these relationships are the bedrock of radiology and the majority of radiologists practice in hospital-based settings, these breakdowns were the first indication that we had to do something about honing our leadership and management skills.

RBJ: Are there any specific market conditions or government actions that prompted the founding of the institute?

Cynthia S. Sherry, MD

Sherry: The health-care landscape in general is chaotic and uncertain right now, and there are a number of governmental actions and market conditions that are playing a role. There are a few assumptions all of us are likely to be making. Whether or not the Patient Protection and Affordable Care Act is implemented, the amount of governmental intrusion into health care is likely to increase. We all agree that the current rate of growth of healthcare costs cannot be sustained, and we all agree that the current fee-for-service model is likely to be overhauled in the next few years.

With all of this going on, it is crucial for radiologists, as individuals and in groups, to become more knowledgeable and adaptable, and to gain more effective skills in management and business.

Clearly, reimbursement cuts have overly targeted medical imaging in recent years; if unchecked, these continuing cuts will have the consequence of limiting patients’ access to life-saving medical-imaging tests. It is of paramount importance for radiologists to become more actively engaged and influential in the political process.

RBJ: Is there a perceived or real shortage of leaders willing to assume leadership positions in the practice or the hospital settings?

Sherry: Taking the 30,000-foot view, in all medical specialties, radiology included, leaders have traditionally been selected based upon their clinical acumen, so that the best clinicians inevitably rose into the leadership positions without bona fide management or business training. Most of their knowledge in these nonclinical areas came from on-the-job experience.

This probably didn’t work very well in the past, but circumstances were different, and the system was a little more

16 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

accommodating. Nowadays, the system is less accommodating, the business of medicine has become much more complex and demanding, and the system has higher expectations of physician leaders in general, radiologists included.

If physicians—if radiologists—are to play a meaningful part in the rollout of health-care reform, it is critical for them to obtain these leadership skills.

RBJ: What type of faculty do you hope to attract? Will academia, medicine, and business all be represented?

Sherry: We are setting our sights on attracting a combination of faculty from a variety of business and academic backgrounds, and in addition to that, plan to engage the services of the numerous radiologist faculty who already have demonstrated expertise in these realms.

We also think of ourselves as an academy that will draw upon the resources of many other radiology societies.

We think that in the early stages of leadership/management education, it is important to tie the business fundamentals back to the relevant issues of radiology because, first and foremost, we have to keep our own house in order before we assert our influence beyond it.

RBJ: Will there be a diploma program, or is this strictly designed for CME? Sherry: The institute is designed to award certificates of proficiency in leadership as the candidate advances through the institute. We have divided the institute into different levels, and each level is marked by an award of a certificate.

As the RLI unfolds, we are working to provide the participants a number of pathways that can lead to an advanced business degree, and we are in the process of working out details with these graduate business school affiliates. The RLI will differ from traditional business schools and executive programs because of the inherent focus on radiology, especially in the early stages.

As a radiologist advances in the institute, his or her interest will naturally broaden beyond radiology and will naturally evolve into a broader interest in general business and health-care issues.

The RLI plans to anticipate these needs

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Imaging Market File

Radiology-group Financial Performance

R

eimbursement pressure, the rising cost of infrastructure, and trends in payor mix are putting continued downward pressure on radiologist compensation.

Introduction: This third installment of the Imaging Market File tracks four key financial-performance measures over time: payor mix, receipts per unit of service, administrativeinfrastructure expense, and total physician compensation (Figures 1â&#x20AC;&#x201C; 4). The dataset includes professionalcomponent services only, billed by 112 hospital-based radiology groups ranging in size from eight members to 94 members; the groups are located in the Northeast, Mid-Atlantic, Midwest, Southwest, and Northwest regions.

70%

The 2008, 2009, and 2010 datasets are actual performance numbers; the 2011 numbers represent actual data through June 2011. Multiple sources contributed to the dataset: Integrated Medical Partners, Dominion Medical Management, and Barrington Lakes Group (all of Milwaukee, Wisconsin) and Regents Health Resources and National Imaging Network (both of Brentwood, Tennessee).

In the table at right, which illustrates the varying levels of CMS reimbursement seen throughout the United States, Puerto Rico serves as the baseline. For every $100 collected in Puerto Rico, this table indicates the amounts that would be collected in other locations (source: Integrated Medical Partners).

Medicare/Medicaid/self-pay

All other

Linear

Locality

$103.03............... AR.......................................All $103.06............... NE........................................All $103.31............... AL........................................All $103.36............... IA.........................................All $103.95............... OK.......................................All $104.05............... SC.......................................All $104.07............... ID.........................................All $104.13............... TN........................................All $104.20............... KY........................................All $104.25............... ME......................Rest of state $104.38............... MS.......................................All $104.43............... NY......................Rest of state $104.43............... WI........................................All $104.56............... MN......................................All $104.56............... KS........................................All $104.61............... IN.........................................All $104.66............... MO.....................Rest of state $104.71............... LA.......................Rest of state $104.74............... OR......................Rest of state $104.91............... NC.......................................All $105.12............... GA.....................Rest of state

$105.40............... ND.......................................All $105.55............... VA.......................................All

40%

$105.58............... WV......................................All

30%

$105.70............... VT........................................All $105.83............... TX..........................Beaumont

20%

$105.86............... NM......................................All

10%

$106.06............... UT........................................All

2008

2009

2010

$106.21............... WA.....................Rest of state

2011

$106.34............... MI.......................Rest of state

Figure 1. Medicare/Medicaid/self-pay trends, tracked over time, show that government and patients are responsible for an increasing percentage of healthcare costs, while the share borne by all other payors (including private payors and business) is on the decline. Factors fueling the increase in total share are the aging of the population, higher deductibles, and high unemployment.

$106.34............... CO......................................All $106.37............... PA.......................Rest of state $106.42............... OR............................ Portland $106.44............... IL.........................Rest of state $106.47............... AZ........................................All $106.54............... MO.................. Metro St Louis

$60

High

Midrange

Low

Linear

$106.62............... TX.......................... Fort Worth $106.65............... TX................................. Austin

$50

$106.72............... ME................... Southern part $106.90............... OH.......................................All

$40

$106.90............... MT.......................................All $107.13............... VI.........................................All

$30

$107.18............... TX.......................... Galveston $107.18............... MO............ Metro Kansas City

$20 Sponsored Supplement

State

$100.................... PR........................................All

$105.35............... TX.......................Rest of state

50%

$107.46............... WY.......................................All $107.49............... NH.......................................All

$10 $0

Reimbursement

$105.30............... SD........................................All

60%

0%

Table. CMS Reimbursement Variation

by Locality

$107.54............... GA............................. Atlanta $107.56............... TX.............................. Brazoria

2008

2009

2010

2011

Figure 2. Payment per unit of service has decreased due to a number of factors (including regulatory changes and shifts in modality mix and payor mix), forming a trend that is likely to continue. Direct hits to the professional component have been proposed through the Medicare Physician Fee Schedule for 2012.

$107.59............... LA......................New Orleans $107.59............... MA.....................Rest of state $107.87............... TX................................. Dallas $108.30............... DE.......................................All Continued on back

August/September 2011

Imaging Market File 15%

Table. CMS Reimbursement Variation

by Locality (continued) Reimbursement

10%

State

Locality

$108.38............... TX..............................Houston $108.76............... FL........................Rest of state $109.07............... NV.......................................All

5%

$109.09............... IL..........................East St Louis $109.24............... CA......................Rest of state $110.26............... MA.....................Rest of state $110.29............... NY....Poughkeepsie/Northern

0%

2008

2009

2010

2011

High

11.3%

12.2%

14.3%

15.4%

Midrange

10.2%

10.7%

11.2%

12.3%

Low

9.8%

8%

8.2%

8.6%

Figure 3. Administrative-infrastructure costs, as a percentage of net revenue, have increased steadily, over the past four years, as net receipts have declined. Personnel salaries, benefits, and technology are among the factors driving up administrative expenses, which also include postage and supplies.

New York City suburbs

$110.85............... RI.........................................All $110.98............... WA.......Seattle/King County $111.74............... MD........................ Baltimore/

surrounding counties

$112.20............... HI............................ All/Guam $112.38............... FL................. Fort Lauderdale $112.83............... IL................ Chicago suburbs $113.06............... PA........... Metro Philadelphia $113.17............... MI................................ Detroit $113.62............... NJ.......................Rest of state

80%

$114.69............... IL.............................. Chicago $115.................... CT........................................All $115.25............... MA................... Metro Boston

60%

$115.86............... CA...................... Los Angeles $115.99............... CA............................. Ventura $116.32............... FL.................................. Miami

40%

$116.68............... CA........Marin/Napa/Solana $117.47............... CA.......Anaheim/Santa Ana $117.55............... NJ.................... Northern part $117.70............... DC...... District of Columbia/

20%

suburbs

$118.16............... CA........... Oakland/Berkeley

0%

$119.02............... NY............................. Queens

2008

2009

2010 High

Midrange

2011 Low

Linear

Figure 4. Total physician compensation, as a percentage of receipts, has eroded in direct proportion to decreases in reimbursement and increases in administrativesupport infrastructure; these converge to create their impact on available revenue and distributions to partners.

$120.35............... NY....................... Manhattan $120.55............... NY................... New York City

suburbs/Long Island

$120.63............... CA...................... Santa Clara $122.99............... CA...................San Francisco $123.35............... CA........................San Mateo $145.63............... AK.......................................All

About the Sponsors

EGENTS Health Resources

The Standard in Medical Imaging Intelligence

Regents Health Resources was formed in 1996 to assist hospitals and physicians in the development and management of their medical-imaging and oncology services. The consultancy has served more than 500 clients nationwide with a diverse range of services, from strategic planning and operational assessments to joint-venture planning, valuations, and imaging-center sales and acquisitions. www.RegentsHealth.com

Integrated Medical Partners (IMP) manages a portfolio of synergistic health-care IT service businesses, which partner with physicians and hospitals to promote better delivery of patient care, enhanced compliance, improved operational efficiency, and increased profitability. The portfolio includes Dominion Medical Management, ProSperus RCM, Plexus Teleradiology, Medic Analytics, and Barrington Lakes Group. IMP is member of the National Imaging Network. www.IntegratedMP.com www.NationalImagingNetwork.com

priors

and keep pace with these advancing interests.

RBJ: Whom do you intend to educate, rank-and-file radiologists or practice and department leaders? Will there be something of interest for all members?

Sherry: Our philosophy is that there are so many diverse opportunities for radiologists to participate in management and leadership roles that we think it is crucial for all radiologists to acquire at least some modicum of leadership/ management training.

We don’t think these skills should be limited just to the chosen few who become practice leaders or department chairs. The opportunities out there are just so numerous and varied that every radiologist would benefit by participating in some way.

In essence, we need to create a cultural transformation that values, expects, and demands leadership activity, in some form, from every radiologist in our practice. Leadership training will also produce better followers; it is equally

important for radiology-group members all to pull in the same direction as their leaders and not to work against them.

Leadership training would enlighten all of us and set the stage for a more effective specialty-wide transformation.

RBJ: Will there be distance learning, or will it all be classroom based?

Sherry: Basically, what we are thinking about that is that there would be a combination. There’s a certain amount of book learning that will take you a certain distance, but many of the leadership skills are behavioral competencies that can be best learned in face-to-face situations, working in teams, working on projects, and demonstrating that radiologists have achieved these competencies.

RBJ: Will the institute help radiologists achieve their maintenance of certification?

Sherry: The RLI will offer CME credits wherever possible, including some ethics credits, and will work toward providing the self-assessment modules. We are trying to arrange for the RLI credits to count toward

the criteria to achieve ACR fellowship.

RBJ: What does the college hope to achieve at the inaugural meeting next July?

Sherry: We just want to jump-start a collaborative program that will engage ongoing interest from many individual radiologists at various levels of career maturity across the country. We also hope to engage the commitment of practices and practice leaders that they will support their members’ pursuit of leadership education.

RBJ: The first meeting is by invitation only.

How do radiologists signal their interest in receiving an invitation?

Sherry: We will have a limited number of slots available: The size of the class will have to be limited. If radiologists sign up for this launch event, they will become ambassadors for the program and will be given special privileges. If they are interested, they should just go to the website (www.acr.org/RLI). There is a questionnaire, and they just need to sign up for the class.

—Cheryl Proval

7 + ( ) 2 8 5 7 + $ 1 1 8 $ / 5 $ 1 . , 1 * ( ; 3 $ 1 ' 6

Bigger, Better, More Inclusive In an effort to provide a more definitive portrait of the radiology private practice landscape, we are expanding our annual ranking to include the largest 75 practices.

The larger list will enable Radiology Business Journal and LarsonAllen to recognize and track more U.S. radiology practices as they grow to meet the needs of health care in America.

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RBJ

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COVER | Radiology Under Fire

Fight or Flight:

Radiology Faces the Firing Squad

The CMS proposal for a blanket professional-component reduction for multiple procedures performed on the same day has put medicine on edge

By George Wiley

R

adiology might become the first medical specialty to face Medicare’s mythical death panel.

If the specialty keeps taking hits, it might die, critics of proposed Medicare reimbursement cuts warn. The deathpanel idea began as a political slur, meant to tar advocates of expense reduction for end-of-life care. As it turns out, in the current budget-cutting environment, radiology practices—not the elderly— might be the ones getting killed.

becoming radiologists. Just as bad, they will push aside the development of newer technologies (such as molecular imaging) that hold great promise for clinical care.

Goldsmith isn’t the only one who is concerned about proposed cuts in professional fees paid by CMS. The whole radiology profession appears to be worried. Ezequiel (Zeke) Silva III, MD, RCC, FACR, is treasurer and director of interventional radiology with South Texas Radiology Group in San Antonio; he has

Cut the prices enough, and the field is not going to renew itself. Attacking the professional fees is the wrong message.

That’s not where the waste is.

—Jeff Goldsmith, PhD University of Virginia

Jeff Goldsmith, PhD, a health-care consultant and professor of public health sciences at the University of Virginia, says, “Cut the prices enough, and the field is not going to renew itself. Attacking the professional fees is the wrong message.

That’s not where the waste is.”

Goldsmith notes that radiology has already seen its income cut, through the DRA and again under the Patient Protection and Affordable Care Act (PPACA). He reports that imaging volumes, which rose rapidly in the middle of the last decade, have since tailed off, going from double-digit acceleration to no growth. Nonetheless, radiology is still a constant target for cost cutting, he says. More cuts, Goldsmith adds, will discourage medical students from

tracked reimbursement reductions. He is also chair of the ACR® practice-expense subcommittee. In a recent analysis1 in the Journal of the American College of Radiology: JACR, he writes that reimbursement cuts to radiology from 2006 to 2009 sliced more than $1.3 billion from the CMS imaging pie. Proposed reductions, if adopted, will nearly double that hit by 2013, he adds.

Silva says that it’s past time for CMS, Congress, and other government planners to take the target off radiology’s back.

His voice (and the voices of thousands of radiologists like him) appears to be falling on deaf ears, however. CMS is proposing cuts now where it hasn’t made them before. Largely for the first time, the agency is targeting radiologists’

22 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

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COVER | Radiology Under Fire

How CMS came up with 50% is a real conundrum to me. CMS took the lead from MedPAC, which took the lead from the GAO, which did its study in 2009— and the GAO, in its study, said the efficiencies were only as high as 25%.

—Bibb Allen Jr, MD, FACR Birmingham Radiological Group

professional fees. It’s this step into new territory that has so many physicians up in arms.

A 50% Solution On August 30, 2011, CMS closed its comment period on the proposed 2012 Medicare Physician Fee Schedule (MPFS),2 which includes a plan to chop 50% off the professional fees for any second and subsequent CT, MRI, or ultrasound exam performed on the same day for one patient and interpreted by the same radiologist who interpreted the patient’s first exam of the day. The fee reductions would begin in 2012. CMS estimates that this would save about $200 million per year.

A patient could, for example, undergo CT and ultrasound exams on the same day. The interpretation fee for the higherpaying exam would be paid in full; the interpretation for the second exam would be paid at half of the established rate. The cuts would apply to both professional fees and technical fees (where CMS previously applied the discount).

CMS classifies the cuts in both technical and professional fees as being part of its multiple-procedure payment-reduction policy, but the multiple-procedure reduction has never been applied in a blanket fashion to professional fees, as CMS is now proposing.

One mystery is how CMS arrived at the proposed 50% figure for reducing professional fees. The 50% size of the payment reduction, not yet explained

by CMS, is a huge bone of contention between CMS and radiologists (and the ACR).

In its history of recommendations leading to the cuts under the proposed rule, CMS cites a July 2009 study3 done by the Government Accountability Office

(GAO) on multiple-procedure discounts.

That study found that a multipleprocedure payment reduction of 25% in the professional component would be justified, due to efficiencies gained when multiple tests are performed. As Silva and others affiliated with the ACR contend, however, that GAO study was flawed to begin with—and even if it had not been flawed, its recommendation of a 25% reduction in professional fees due to efficiency gains is only half of the cut that CMS is proposing this time.

The proposed rule also refers to a 2010 recommendation made by the Medicare Payment Advisory Commission (MedPAC) that calls for reducing professional fees for multiple procedures, but as Silva points out, that MedPAC recommendation did not include a percentage by which the professional component should be reduced.

Bibb Allen Jr, MD, FACR, is a diagnostic radiologist at Birmingham Radiological Group in Alabama. He is also chair of the ACR’s Commission on Economics, and he is the ACR’s representative on the AMA/ Specialty Society RVS Update Committee (RUC). The RUC meets periodically to review and update the RVUs assigned to designated specialty physician services, including those of radiologists. CMS and private insurers use the RUC data in setting reimbursement levels for physicians’ services.

Allen says that the proposed 50% figure chosen by CMS for discounting professional fees in imaging under multiple-procedure payment reduction is certainly arbitrary. It is not, he adds, based on any firm precedent. For instance, the comparisons made with discounts for surgical services don’t hold, Allen says, because surgeons’ fees include

24 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

follow-up care, hospital visits, and other activities that aren’t comparable to what radiologists do.

“How CMS came up with 50% is a real conundrum to me,” Allen says. “CMS took the lead from MedPAC, which took the lead from the GAO, which did its study in 2009—and the GAO, in its study, said the efficiencies were only as high as 25%.”

Nothing is simple when it comes to attempting to create a level playing field for various physicians’ contributions to care (through comparable RVUs). In its analysis of proposed cuts in imaging professional fees, CMS argues, based on the 2009 GAO study, that efficiencies are achieved for second and subsequent imaging exams because radiologists don’t have to repeat

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COVER | Radiology Under Fire

Medicare has not released any data analysis to show why that 50% number is substantiated.

—Pamela Kassing, MPA, RCC ACR

the preinterpretation work of studying the patient’s personal data or medical history or the postinterpretation work of discussing findings with referring physicians more than once. CMS implies that the preinterpretation and postinterpretation efficiencies justify the 50% reduction in the professional component.

Allen says that this is nonsense, adding that the amounts of work done before and after interpretation are minor, compared with the work of interpretation and report preparation. He says, “To think that they constitute 50% is truly arbitrary on the part of CMS. It’s based on what CMS wants to do.” Allen contends that the intensity of work is also far higher for interpretation and reporting than it is for preinterpretation and postinterpretation activities.

The ACR’s Counterstudy To dispute the CMS contention that preinterpretation and postinterpretation services account for a 50% efficiency on second exams, Allen and a group of colleagues conducted a study.4 The investigators included Silva and Pamela Kassing, MPA, RCC, the ACR’s senior director for economics and health policy.

To conduct the study, Allen’s group repeated an analytical procedure that the GAO had used in 2009. The group consulted the MPFS results contained in the AMA RBRVS Data Manager for 2011, an updated edition of the same data bank that the GAO had analyzed in 2009.

The RBRVS data were analyzed statistically to quantify values for preservice, intraservice (interpretation and reporting), and postservice work.

The investigators found the preservice and postservice work, combined, took nowhere near the time expended for interpretation and reporting of samesession exams: The maximum efficiencies obtained in preserve and postservice

activity varied by modality, but were in the range of 4.32% for CT exams to 8.15% for ultrasound tests. The study found that maximum multiple-procedure professional-fee reductions due to preservice and postservice duplication could be assessed for CT at a 2.96% rate and for ultrasound at a 5.45% rate.

As Allen points out, these efficiency rates, all below 10%, do not approach the 50% level that CMS is proposing. Silva says that if the GAO had conducted its analysis of the RBRVS Data Manager material down to a level of granularity comparable to that of the ACR’s study, the GAO would have seen that the efficiency was, at most, 13%. “We reached the conclusion it was less than 13%,” he says.

Kassing says that for her, the bottom line is about 5%. That’s what she contends can be saved, on average and across modalities, through efficiencies in preservice and postservice work during multiple same-session imaging exams.

Like Allen and Silva, Kassing emphasizes that this is far less than the 50% efficiencybased payment reduction that CMS is proposing. “Medicare has not released any data analysis to show why that 50% number is substantiated,” she says.

If all this weren’t enough, the ACR study also looked at preservice and postservice work for certain patient classifications; it determined that for cancer patients, chronically ill patients, and trauma patients, the preservice and postservice work could actually mean increased effort for multiple exams, especially when referrers were ordering different tests under stressful conditions.

The intraservice work for these critical multiple procedures also took more time than usual, the ACR report says.

Isolated and Ill If the multiple-procedure payment reduction is adopted, it will be the

26 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

chronically ill patients who will be inconvenienced in care, Allen says. “I try to look at how many cases we do where there are multiple exams,” he says. “It’s always the hardest cases and the sickest patients—the trauma patients who may need a neck, abdomen, and chest CT, or the cancer patients with metastatic disease who need multiple different types of exams. To me, it is inappropriate to target the hardest hit. CMS thinks this is simple and easy to cut, yet it is whacking the hardest to treat.”

Rural radiology practices and their patients will also be hard hit, Allen says, because trips to the distant hospital or imaging center are long and costly for rural patients. For that reason, multiple exams tend to be scheduled to avoid extra trips. Rural radiologists will be hit hard

RIS/PACS

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COVER | Radiology Under Fire

too, Allen says, because they typically read all imaging in the practice, whereas at academic sites or those with specialists on board, multiple exams are usually interpreted by more than one radiologist.

Allen says that, according to his understanding, the proposed 50% cut in professional fees won’t apply if the different exams are interpreted by different physicians. “From the ACR perspective, and in my own practice, I want to put the patient first,” Allen says. “We’re not going to make people come back for a different exam on a different day, but people who are less scrupulous might do that.”

While he depicts himself as an industry outsider, Goldsmith has done his homework in radiology. Along with Bruce Hillman, MD, a radiologist and prominent ACR member, Goldsmith wrote a popular book on imaging called The Sorcerer’s Apprentice: How Medical Imaging Is Reshaping Health Care.5 Goldsmith says that one reason that radiology keeps taking reimbursement hits is that it’s not fighting back hard enough. “I would argue the field is not doing a very good job of making its case,” Goldsmith says. “When you just trample over a professional group without them defending themselves, there is the motive to go on doing that—and do more.”

Goldsmith says that oncologists have fought harder than radiologists against reimbursement cuts, for instance, by protecting huge fees for chemotherapy.

Hospitals have fought harder, too, he says. Radiology hasn’t fought hard enough; therefore, Goldsmith adds, it remains a more tempting target. He says that the political action committee run on behalf of radiologists through the ACR (RADPAC) only has a relatively small lobbying budget. “It’s not enough,” he states.

Radiologists need to press harder on the conflict-of-interest button, he notes. Conflicts of interest that allow self-referring nonradiologists to collect imaging fees for patients that they send to their own imaging equipment represent the real excess in imaging fees, Goldsmith says. He adds that radiologists also need to stand up and make clear to policymakers that they’ve taken more than their share of reimbursement cuts. “The imaging

boom is over,” he says. “Growth is down to the low single digits—or it’s negative growth—on almost every modality.”

Goldsmith says that a lot is at stake if CMS makes cuts in professional fees that are then adopted by private insurers. The withering of the radiology profession is only one negative. More reimbursement cuts will also retard investment in technology—especially molecular imaging, where molecular probes are the next big thing, Goldsmith says. Molecular imaging offers the chance to image, diagnose, and initiate treatment all in one session for the patient, Goldman says— exactly the scenario that CMS is talking about penalizing as multiprocedural.

Radiology, Goldsmith says, needs to fight harder against taking more hits.

Public officials need to be reminded that radiology has already been hammered with cuts. “There’s no cognizance of the effects of earlier reductions on the cost trends,” Goldsmith says. “Radiology has done an ineffective job of making its case.”

Entering Battle At the ACR, though, the perception is different. There is the sense of having fought the good fight, all along. The introduction of the proposed 50% cut has upped the ante, however, and the ACR is enlisting allies and marshalling resources to convince bureaucrats and legislators that the proposed cuts to professional fees are unwarranted and unfair.

Allen says that no dollar figure has yet been attached to the projected professional-fee cuts, other than the CMS estimate of $200 million in annual savings for itself. The ACR will conduct its own volumetric analysis, Allen says, to determine the number of multipleprocedure exam series that might be hit, under the proposed rule.

A grassroots effort is also going forward, with ACR members and radiology practices urged to lobby their legislators.

The ACR has attorneys and consultants looking at the CMS proposal, but there might not be much to challenge on legal grounds. Kassing says that the PPACA specifically gives CMS the authority to look for misvalued codes, and the DHHS secretary also has discretionary powers to

28 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

seek out misvaluations.

Maurine Spillman-Dennis is a senior director of economics and health policy for the ACR. Like Allen and Kassing, she has been deeply involved in developing the strategy to oppose the proposed rule.

Allen says that the ACR will send CMS officials and Congress enough copies of the ACR’s counterstudy on preservice and postservice efficiencies to paper the walls of their offices. Spillman-Dennis adds that the ACR’s study will be central to seeking what she calls “at least a stay of execution” in the implementation of the proposed rule.

“Five years ago, the regulatory climate was different,” Spillman-Dennis says. “I don’t think, now, decisions are being driven by career officials. It’s the policymakers outside CMS who are putting the pressure on CMS to make these changes. They want this money, and they want it now.” Spillman-Dennis says that other specialty societies are also watching what happens in response to the proposed attack on professional fees for radiologists. “Many people are hiding and praying CMS doesn’t come after them next,” she says.

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COVER | Radiology Under Fire

Every single time the federal government wants to save money, radiology has been an easy place to find that. In the PPACA, the only specialty specifically targeted for reduction was radiology. I think we can demonstrate that we have absorbed our fair share of the pay reductions in the fee schedule.

—Ezequiel (Zeke) Silva III, MD, RCC, FACR South Texas Radiology Group

Kassing agrees that if radiologists lose professional fees, it will open the door for other physicians to lose fees. Moreover, professional fees for radiologists in categories other than multiple-procedure payment could come under threat, she adds. Opposing the proposed rule is an important fight.

Kassing calls herself an optimist, nonetheless. “Our membership is going to respond heavily to this rule,” she says.

She expects other specialty societies to join the fight. The AMA has already written a letter to Congress opposing MedPAC’s recommendation of blanket cutting of professional fees, she says.

Spillman-Dennis says that the RBMA prepared a template for its members to use in adding their voices in opposition to the proposed multiple-procedure payment reduction. “We put the bullet points in,” she says. “We made the letter so it can stand on its own, with instructions on how to send it to CMS—or senders could use the letter and embellish it from their own practices.”

Enough Is Enough For Silva, the bottom line is that radiology has already been battered by more than its share of reimbursement cuts. He says that the RUC has already stated that fee cutting should not be done across the board in any category, but should be done only on a code-by-code basis for each specific procedure.

“No one wants to raise taxes, so there is tremendous pressure to reduce expenses and payments to Medicare,” Silva says.

“Every single time the federal government wants to save money, radiology has been

an easy place to find that. In the PPACA, the only specialty specifically targeted for reduction was radiology. I think we can demonstrate that we have absorbed our fair share of the pay reductions in the fee schedule.”

George Wiley is a contributing writer for Radiology Business Journal.

References 1. Silva E. I can’t absorb anymore. J Am Coll Radiol. 2011;8(7):458-459.

2. US DHHS. Medicare program; payment policies under the Physician Fee Schedule and other revisions to Part B for CY 2012; proposed rule. Fed Regist. http://www. gpo.gov/fdsys/pkg/FR-2011-07-19/ html/2011-16972.htm. Published July 19, 2011. Accessed August 14, 2011.

3. US GAO. Medicare physician payments: fees could better reflect efficiencies achieved when services are provided together. http://www.gao.gov/ htext/d09647.html. Published August 31, 2009. Accessed August 15, 2011.

4. Allen B, Donovan WD, McGinty G, et al. Professional component payment reductions for diagnostic imaging examinations when more than one service is rendered by the same provider in the same session: an analysis of relevant payment policy. J Am Coll Radiol. http://www.jacr.org/article/S15461440(11)00331-0/fulltext.

Published June 28, 2011. Accessed August 15, 2011.

5. Hillman BJ, Goldsmith JC. The Sorcerer’s Apprentice: How Medical Imaging Is Reshaping Health Care. New York, NY: Oxford University Press; 2010.

30 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

Cloud-based Email Archiving:

Improved Compliance, Security, and Bottom Line Like other enterprises, imaging centers, hospitals, and radiology practices depend on information and, therefore, information technology (IT). With this reliance on IT, organizations must understand and adapt to constant and rapid changes in the technology—and in their own needs and obligations.

Data backups and built-in archiving don’t substitute for end-toend archiving solutions. Most email systems today have records-

capability and efficiency, yet they also require upgraded infrastructure: hardware, software, storage space, square footage, power, cooling, and more. There also is the need for strong data security and integration with mobile devices. These, along with regulatory and other obligations, add up to increases and unpredictability in costs and management burden. What may be surprising, however, is that email figures prominently into this equation.

management capabilities, including archiving, but these have limited, noncustomized functionality. Some organizations archive their emails using basic backup methods, such as data tapes. Both of these methods permit long-term retention, and they can help optimize servers and storage—but they are utterly unhelpful with regard to e-discovery and email retrieval.

One reason for maintaining an archive is to be able to respond to legal inquires, which means producing the needed files. Without refined search capabilities and compliance-minded functionality, data backups and generic tools in email applications dramatically complicate the task of finding and retrieving emails. The risks are not just expensive fines, but also unpredictable and potentially high costs associated with e-discovery.

Email and email archiving contribute to organizations’ IT and business challenges. According to market-research and analysis

On-site, purpose-built archives offer better security, ease, and compliance. More and more organizations are using purpose-

company Enterprise Strategy Group (ESG), 40% of organizations are experiencing an annual growth in email traffic of at least 20%. ESG’s research also suggests that the average organization’s email archive grew in size by 200% to 300% from 2007 to 2009.

While email and email archiving may not appear to top the list of IT priorities, they are a significant IT—and business—concern. Emails are covered by stringent regulatory/legal requirements and internal policies for retention, electronic discovery (e-discovery), and disaster recovery. Like other types of data, archived emails also require storage space, maintenance, and other IT infrastructure and resources.

built archiving solutions, which capture emails directly from the email application and manage them intelligently in dedicated on-site archives. Automatic capture means minimal IT labor and risk of deletion. Purpose-built systems also are customizable and make possible numerous retention policies, automatic expiration/ deletion, greater security, easy e-discovery/retrieval, and a seamless user experience. While very effective, on-site archives require significant in-house compliance and IT expertise, thus posing a challenge for organizations that lack such resources.

IT-related changes create advantages—and increased obligations and unknowns. IT advances provide new functionality and greater

Compliance, legal exposure, and retention are primary issues.

Physician practices, hospitals, and imaging centers must keep their emails safe and secure—and keep them for specified amounts of time. While HIPAA doesn’t mandate durations for retaining emails, it is generally interpreted that emails fall under HIPAA’s six-year– retention rule for privacy and security policies. Organizations also implement their own email-retention policies and need to retain emails to protect the organization in the event of complaint, litigation, and investigation—all common in healthcare. An email archive can therefore have several different retention policies in effect.

E-discovery, storage-space restriction, and the challenges of archiving emails. Important parts of healthcare organizations’ obligation to retain and archive email are e-discovery and email retrieval.

Practices/providers do not merely have to retain emails; they must be prepared and able to find, retrieve, and produce them as needed or required. This is where email archiving becomes particularly important—and becomes a problem.

As email volumes consume ever more storage space, IT departments must either deploy additional infrastructure (at considerable, and often unpredictable, expense) or enforce email-volume limitations (quotas).

The first response, of course, is to implement quotas on users, who respond by creating personal archives on their local machines. This creates a significant e-discovery and email-retrieval problem, requiring substantial labor to find and retrieve emails stored on users’ machines.

How many copies? Where are they? How much labor? Is compliance achievable?

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With Symantec’s Enterprise Vault.cloud software as a service, emails are captured from the primary email system as they arrive and are archived in redundant, highly secure data centers. Instead of a large up-front investment in infrastructure and unpredictable ongoing costs, providers pay a low initial fee and a fixed amount for each user.

Email archiving with Enterprise Vault.cloud means that your organization achieves retention and regulatory compliance, reducing not just the risk of noncompliance, but also the unpredictable and potentially high costs of trying to comply. At the same time, Symantec’s hosted archiving solution resolves a variety of end-user and administrative challenges by offering unlimited mailboxes, easy 24/7 Web-browser access, granular retention policies, instant scalability, rapid deployment, and expert management and support.

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PACS | Distributed Reading

Leveraging PACS for Growth PACS technology continues to fuel the distributed-reading movement, but an old-school devotion to boots-on-the-ground radiology remains strong

By Greg Thompson

W

hen Rob Smith walked into a rural Kentucky emergency department on a Saturday afternoon in the summer of 2011, he knew nothing of the distributedreading contract put in place just a week before. This fortuitous timing led to prompt care for his aching wrist—a direct result of services from Radiology Imaging Consultants, Harvey, Illinois.

Without Radiology Imaging Consultants’ help, Smith’s plain-film wrist radiograph would have languished on the PACS virtual shelf until Monday morning.

As part of the hospital’s new workflow, Jay A. Bronner, MD, MBA, saw the image on his monitor in Chicago while the patient was in the emergency department, and he recognized a dislocation of the carpal bones.

Bronner, a 26-year veteran radiologist and CEO of Radiology Imaging Consultants for the past decade, heads Radiology Imaging Consultants’ group practice of 75 associates and partners.

He called the emergency-department physician to discuss the case just 10 minutes after receiving the image. The emergency-department physician was extremely skilled, but the patient’s injury was not an easy one to catch.

“I told the emergency-department attending physician that I thought it was a perilunate dislocation—a type of injury that required immediate care,” Bronner says. “It’s much better if this type of injury is reduced in short order, as opposed to waiting days to fix it. The physician and patient were pleased, and the patient was sent, that afternoon, to a university facility, where he saw an orthopedist.”

At first glance, the emergencydepartment wrist radiograph contained little drama, but another pair of eyes uncovered another layer of the mystery.

“Nothing about that emergency physician was deficient in any way, but perilunate dislocation is not something you see very often,” Bronner says. “I had not seen it in five years.”

Bronner’s analysis from afar is one benefit of distributed reading, particularly

instead to plant its flag at host facilities— an arrangement that pleases all parties.

Steven Waslawski, MD, president of the group’s Grand Rapids division (one of four divisions), relies on a solid PACS, but is keen never to lose sight of the personal touch. “We are not a virtual service where there is a lack of physical presence and boots on the ground,” Waslawski, a 21year radiology practitioner, explains. “We forge partnerships, and we don’t want

I told the emergency-department attending physician that I thought it was a perilunate dislocation—a type of injury that required immediate care.

—Jay A. Bronner, MD, MBA Radiology Imaging Consultants

when it comes to faster turnaround times and better access to care in rural areas.

Spreading its reach from the southern suburbs of Chicago, Radiology Imaging Consultants now serves 16 hospitals in a region that includes Illinois, Kentucky, and Indiana.

Radiology Imaging Consultants is part of a growing cadre of group practices that are able to distribute in-person talent from headquarters to various points.

Advanced Radiology Services, Grand Rapids, Michigan, boasts what might be the largest physician-owned distributedreading group practice in the country, with 120 radiologists fanning out to many hospitals.

Advanced Radiology Services does not own competing imaging centers, choosing

32 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

to compete on a virtual playing field.

We feel we can deliver greater value by maintaining and strengthening our onsite presence.”

Effective engagement with medical leaders, as well as the performance of common interventional procedures, requires on-site radiologists. Despite all manner of technology, many hospitals are loath to give up that vital communication and expertise.

If referring physicians doing business with Medford Radiological Group in Oregon have any trouble maintaining that personal connection with radiologists, a call center fosters crucial communication.

Roseanne McLaren, CEO of Medford Radiological Group, says, “Physicians are put through to wherever the radiologist

is working, and it’s a convenient way to access our physicians. This is a way to connect referring providers to radiologists, if the radiologists are not available in the hospital to speak in person. The central call center is open from 8 am to midnight, Monday through Friday, and physicians can call directly to get a radiologist. We extended the hours because providers liked the service.”

Justifying a PACS There will always be small facilities where critical volume makes it difficult to justify a 24/7 on-site presence. In these cases, coverage five days a week—or even one day a week, for small facilities—might be appropriate.

Physicians are put through to wherever the radiologist is working, and it’s a convenient way to access our physicians. We extended the hours because providers like the service.

—Roseanne McLaren Medford Radiological Group

When radiologists can’t be on-site, an excellent Web-based PACS that works seamlessly with a RIS can avoid a lot of headaches. Given the choice, many radiology groups would prefer one effective PACS, from a single vendor, that stretches across all hospital partners.

Michael Troychak, MD, says, “That would

be an understatement; however, we have two different major PACS in our practice.

One of them is from an important customer/client that is part of a large hospital system, and we are obligated to use its PACS.” As president of Medford Radiological Group, Troychak regularly confronts

www.imagingbiz.com | August/September 2011 | Radiology Business Journal 33

PACS | Distributed Reading

incompatible PACS, which is a familiar situation for much of the industry. Despite challenges stemming from differing viewing platforms, both Web-based systems at Medford Radiological Group ultimately work well together, offering patients and clinicians outstanding turnaround times.

Despite covering a service area that is 200 miles in diameter and that has 23 facilities, Medford Radiological Group’s PACS is able to compare multiple prior studies, which are automatically integrated from different databases.

“We currently have discrepant dictation systems, but we are midway through the process of transitioning to a single voice-recognition solution, one site at a time,” Troychak says. “We are aiming for a single-workstation solution. One PACS and one RIS is the goal, with one voicerecognition system. As we implement that, it gives us the capability of moving away from a site-specific setup to a transparent system, where radiologists

Medford Radiological Group’s distributed-reading model will increasingly rely on voice recognition to foster prompt final reports, which are fast replacing the old practice of preliminary interpretations.

“Historically, with transcription, you put out a preliminary report,” Troychak says.

Distributed reading is moving more toward subspecialization and is not site dependent. The RIS we have chosen as the interface for our voice-recognition system is from the same vendor as our PACS. It allows us to organize studies by organ system and urgency, not just chronologically or by site.

—Michael Troychak, MD Medford Radiological Group

can be anywhere in our practice.”

Medford Radiological Group radiologists will ultimately be able to view a master worklist that can be accessed according to the preference of the referring physician. “Distributed reading is moving more toward subspecialization and is not site dependent,” Troychak says.

“The RIS we have chosen as the interface for our voice-recognition system is from the same vendor as the PACS. It allows us to organize studies by organ system and urgency, not just chronologically or by site. The RIS launches voice recognition and the PACS, based on the needs of the practice.”

“Now, we are making the preliminary report unnecessary because instead of sending to transcription, we self-edit our dictation with voice recognition. That final report is coming up to us in real time on a monitor, as we dictate. We send out that final report immediately.”

Bronner adds, “Our model is that we read in real time while patients are still in the emergency department. This allows the emergency-department physician to make confident, timely decisions that improve the quality of care for the patients. Our turnaround times, for our facilities, are 20 minutes for emergency cases and 40 to 60 minutes for all the

34 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

other cases, including outpatient exams.”

When Radiology Imaging Consultants initially decided to go to in-house final interpretations, it did not even have a PACS. “We did not need it because we always had somebody in-house at our client facilities,” Bronner says. “We continued in that mode until about two years ago, when we started to consider facilities that could not justify an overnight in-house radiologist, due to geography or case volume. It was then that we decided to invest in a PACS.” Of the 16 facilities served by Radiology Imaging Consultants, 12 do not have a radiologist on-site 24 hours a day.

Radiology Imaging Consultants plans to add client facilities, but only some of them will have radiologists on-site around the clock. The distributed-reading model ensures that final interpretations will continue without skipping a beat. “We will use our PACS in some facilities and not in others,” Bronner says. “We will use our distributed PACS in situations where we do not have someone on-site 24 hours a day. Clients are individual in their willingness to build the interface with our system. If they are reluctant to interface with us, we will try to work around that.”

Those who wish to interface are likely to do so, in the future, based on the dictates of electronic medical records (EMRs). Government enticements— and penalties—will probably motivate facilities to act, whether they are ready or not.

PACS | Distributed Reading

“There is an ongoing evolution of information systems within the hospital as many hospitals migrate to EMRs,” Bronner says. “Many of our clients and potential clients have big, coordinated projects on the table right now and are open to that, but it requires prioritization of their precious IT resources. We have many clients that we believe genuinely recognize some of the added value that our workflow and systems provide because they can get enhanced access to subspecialty interpretation while clinical decisions are being made for their patients—day or night.”

Purchases and Politics As practices get larger and cover ever more territory—and reimbursement continues to drop—the need to invest in IT (including PACS) continues to grow. It comes down to efficiency, and it comes at a price. When Gary H. Dent, MD, president of South Georgia Radiology Associates in Baxley, went shopping for

going to bring in a little computer smaller than a laptop, just in a corner in the server room with Internet access, you are good to go, and it is no problem.”

Dent’s server actually sits in Tennessee, away from his Georgia base, and he pays a company to handle networking issues

You never know how long it is going to take until you start. There are always interfaces that must be written, and there is tremendous variability.

We take that variability and get it to conform to a model of real-time, 24-hour interpretation.

—Gary H. Dent, MD South Georgia Radiology Associates

a new PACS to bolster his distributedreading capability, he encountered many promises—and even more options. At the top of his list were easy image transfers and seamless interfacing with disparate PACS in client hospitals.

As he sought to expand a client base that already included nine different Georgia locations and 140,000 exams per year, Dent wanted to avoid a large on-site hardware footprint, if at all possible. “If you must have a designated server, it can cause technical issues that can slow you down and lead to increased overhead, from an IT standpoint,” Dent says. “If it is a hospital, you must also ask them for server space. If you can tell them you are

(in addition to paying a per-study fee).

“Our night interpretations are handled by one radiologist, every single night,” Dent says. “We are literally scattered across the state, and we do as much boots-on-theground radiology as we can. We do not congregate in one bunker.”

Another expensive challenge for Dent and his colleagues is interoperability with hospital PACS because many institutions have different systems.

Customization is necessary for virtually every implementation, and successful integration is never a cookie-cutter process. “You never know how long it is going to take until you start,” Dent says. “There are always interfaces that

36 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

must be written, and there is tremendous variability. We take that variability and get it to conform to a model of real-time, 24-hour interpretation.”

It’s a huge challenge, but Dent’s IT team of four has never been stymied.

Two of the four take care of all implementations, and outsourcing is also done, when necessary. “Even with all the resources, PACS integration has allowed us to bring distributed-reading services to new facilities, and it’s been a valuable tool,” Dent says. “The PACS is worth the investment, if you have the support and knowledge to implement it.”

Actually making the investment is a large (and usually expensive) decision.

When Waslawski began the vendorselection process, he was not surprised to find that everyone had an opinion.

“It is not a simple matter to convince a group of physicians to invest in something that has historically been provided for by our facility partners,” Waslawski says. “It is a significant political effort to deliver added value, both to our facility partners and to our practice, that groups should not underestimate. In the end, we needed to embrace these technologies, rather than fight them. We were not going to continue to be the preferred provider if we were not going to adopt distributed reading.”

During an exhaustive vendor-selection process, Waslawski marveled that features and functions changed from week to week, and even day to day, as software designers came up with new efficiencies.

“Technology is changing even during the selection process,” he says. “Some vendors did not have products that were ready, and some had products that were more mature. They all had different attributes, in terms of size, stability, and likelihood that they would still be there tomorrow. There is no perfect vendor or platform. We selected one with a proven platform that could grow into a long-term partnership and continue to develop the technology and applications.”

A multivendor approach might have brought features that no single vendor could provide, but Waslawski and his associates at Advanced Radiology Services believed that the solid relationship was most important. In essence, manufacturer and radiology group worked together to smooth over any bumps.

The Advanced Radiology Services IT department eventually doubled in size to accommodate the 24/7 model. At this point, about 10% of client facilities use the new system, but 25% will probably be on board in the next six months. From there, the percentage will only grow, as features continue to be perfected.

“Worklists are filtered by subspecialty,” Waslawski says. “Our goal is not to remove our on-site presence, but actually to enhance our on-site presence. For us, distributed reading is not a virtual service line. We are able to supplement our onsite radiologists to maintain and improve service that we could not achieve before.

Most of our work is (and will still be) done on the premises, even though we can fill in from any site.”

Filling in during busy times is an important feature that Dent’s clients also appreciate. Stat designations on the worklist foster turnaround times of less than 15 minutes, day or night. “The stat case comes up as a priority, and we immediately see it on the list,” Dent says.

“We immediately go to that page, and then we go back to our location-based workload.”

For any new contract, Dent’s group downloads two years of prior exams, all while retaining the ability to query and retrieve from disparate PACS. “If there is something over two years old, we ask the technologist to inform us about that,” he says. “If we must retrieve it, we have

an assistant who does that. If there is a pulmonary nodule, and we know there is a chest radiograph from 2002, we get that. Anything less than two years old we automatically have available to us. That’s a minimum. Sometimes, we have three to four years of exams available.”

The Wish List With the old lightbox all but a relic in radiology departments, physicians have grown used to the fruits of new technology.

With each advance, refinements and new ideas quickly follow. In some cases, the technology is available, but just out of reach. Dent admits that efficiency will go up another notch when he is able to read PET/CT scans conveniently.

“If I get called about a PET/CT right now, and I am not at the workstation where I can read it, I have to tell my client that I will call back,” he says. “If the radiation oncologist is trying to plan treatment, that is not good. It delays workflow, and I

www.imagingbiz.com | August/September 2011 | Radiology Business Journal 37

PACS | Distributed Reading

It is a significant political effort to deliver added value, both to our facility partners and to our practice, that groups should not underestimate.

In the end, we needed to embrace these technologies, rather than fight them. We are not going to continue to be the preferred provider if we are not going to adopt distributed reading.

—Steven Waslawski, MD Advanced Radiology Services

don’t like that. Fortunately, the advent of PET/CT fusion sent directly into the user interface will soon improve our ability to serve the customer. We are doing a lot more PET studies—ten to 15 a week, which is pretty substantial for a rural area.”

With so many sites and interfaces involved, many radiologists—in the age of distributed reading—must deal with

several passwords, user names, and database addresses. Troychak, for one, is not alone in his wish for a system that takes out another pesky step in the signin process.

“What we really could use is roaming profiles, and I’m sure the technology will get there with our current PACS and RIS providers,” he says. “You log on once and you are in; from there, you don’t

want to do more that triggers passwords.

Any computer you go to would operate in exactly the same manner as any other workstation. That would eliminate some frustration. That is something we are really looking forward to conquering with the cloud-computing model.”

Greg Thompson is a contributing writer for Radiology Business Journal.

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Top 20 Imaging-center Chains | Second Annual Report

2011’s Top 20 Imaging-center Chains: Second Annual Report

Growth among the top imaging-center chains stalled in 2011, but the overall market saw a slight increase, and procedural volumes per center hit a decade’s high By Cheryl Proval

T

he growth of imaging-center chains was flat last year as owners absorbed a new round of reimbursement cuts in the form of higher equipment-usage rates and multiple-procedure payment discounts.

Independent-chain owners primarily held their own or shed centers—and despite reports of hospital buying sprees, the chill extended to the country’s largest hospital-affiliated chains as well (though hospitals overall continued to bulk up through relationships with outpatient imaging centers). The good news is that procedural volumes and patient visits continued the upward trend that began last year as owners absorbed clientele and sought efficiency gains to offset reimbursement cuts.

Radiology Business Journal and SDI (formerly Verispan), Plymouth Meeting, Pennsylvania, are cosponsors of this second annual report on the imaging-center– chain market. SDI provided the data on which this article (and last year’s report1) are based, as well as the comparison information2 that the company collected and analyzed in earlier years.

The top 20 imaging-center chains (Table 1) added just 10 centers in 2011, for a total of 934 (compared with 924 in 2010)—a mere 1% growth rate. By comparison, the top 20 imaging-center chains grew 7.5% between 2008 and 2010. More chains contracted than grew in 2011, with 10 chains shedding centers, three (and possibly five) chains adding them, and three remaining the same. Two new chains appeared on the list this year, and one was displaced.

The remaining two chains, Novant Health (Winston–Salem, North Carolina) and MedQuest Associates (Alpharetta, Georgia), were counted as separate chains this year because MedQuest is a wholly owned subsidiary of Novant Health. After Novant Health purchased the outpatient imaging-center chain in 2007, however, SDI counted the combined imagingcenter holdings of both companies as one. Last year, the combined company had 87 centers; this year, it has 81 (for

Novant Health) and 65 (for MedQuest), indicating that one or both of these chains went on a buying spree.

With 188 centers, RadNet (Los Angeles, California) once again was the largest imaging-center chain by far.

Following several years of torrid growth, however, the company shed 10 centers in 2011. It made up for its inactivity in the imaging-center market with the acquisition of a PACS company and a teleradiology company in 2010.

Table 1. Top 20 Chains Chain Headquarters Centers, Centers, Centers, Change

2008 2010 2011 2010–2011 RadNet Los Angeles, CA 174 198 188 –10 HCA Nashville, TN 95 89 85 –4 Novant Health Winston–Salem, NC 81 See article MedQuest Associates Alpharetta, GA 65 See article Center for Diagnostic Imaging Minneapolis, MN 39 55 52 –3 Insight Imaging Lake Forest, CA 67 54 50 –4 Tenet Healthcare Corp Dallas, TX 31 35 49 +14 SimonMed Imaging Phoenix, AZ 8 23 35 +12 Doshii Diagnostic Hicksville, NY 44 38 35 –3 Imaging Services Ascension Health St Louis, MO 51 45 34 –11 Community Health Systems Franklin, TN 22 34 32 –2 Cleveland Clinic Health System Independence, OH 28 31 30 –1 Catholic Health Initiatives Englewood, CO 33 30 –3 TriState Imaging Group Rockledge, PA 16 34 29 –5 A1 Medical Imaging Sarasota, FL 24 24 0 Diagnostic Centers South Texas Radiology Group/ San Antonio, TX 17 24 +7 Imaging Centers Solis Women’s Health Addison, TX 24 ProScan Imaging Cincinnati, OH 23 23 0 Health Diagnostics Melville, NY 23 Trinity Health Novi, MI 18 21 21 0 TOTAL 859 924 934 +10

40 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

Rocky Mountain 414 127 61

14

8

27

Pacific 839

84

619 182

13

22

31 288

72

360

126 310

9

121

75

111

22 108

510 187

49

2

MidAtlantic 1,150 52

47 117 280 53 10 164

160

107

86

43 39

526

21

11

79

31 22

Great Lakes 903

12

10 53

New England 307

North Central 316

Southeast 1,398

173

95

83 622

19

Southwest Central 724

South Central 321 Puerto Rico 11

Total 6,383

Figure 1. US imaging centers (by state and region), 2011.

Two of the three chains that added centers grew significantly, adding enough to offset the losses of the majority. One was the independent SimonMed Imaging (Phoenix, Arizona), which gained 12 centers in 2011 (for a total of 35), leapfrogging up to eighth position. The other was Tenet Healthcare Corp, Dallas, Texas, which added 14 centers, for a total of 49.

In spite of the difficult operating environment, the total number of imaging centers in the United States—including single-site operations—reversed its downward trend and logged a modest increase in 2011, adding an additional 72 centers, for a total of 6,383 (Figure 1).

California and Florida continue to swap positions as the states with the most imaging centers. In 2011, Florida took back the number-one position, with 622 centers. That state added 10 imaging centers in 2011, compared with the three added by California (total: 619), mired in state budget problems. New York (510), Pennsylvania (360), and New Jersey (280) rounded out the five states with the most imaging centers.

Ohio added the most capacity in 2011, with 16 new centers, followed by

Michigan (13), Arizona (12), and Indiana and Florida, each of which added 10 new centers.

The number of imaging-center chains—defined as companies that own two or more centers—in the United States continued its slide, from a peak of 1,066 in 2008 to 902 in 2011 (Figure 2). At the same time, the number of centers owned by chains increased from 4,383 in 2009 to 4,533 in 2011, suggesting that existing chains are availing themselves of buying opportunities.

With the exception of MedQuest, however, the top five imaging-center chains pared their totals rather than adding centers, indicating that cash flow at the top of the chart might have ebbed due to reimbursement cuts—and that efficiencies were not easy to find (Figure 3).

The declines, however, are in line with a recently established pattern of alternating years of growth and contraction among the top five chains. For most of the largest chains, a decline in the number of centers was preceded by a year of growth, so the decreases could be part of the natural attrition following acquisition, in which nonperforming centers and those with overlapping markets are shuttered.

Modest gains in the overall number of US imaging centers were, for the most part, spread across regions. Just two regions (Table 2) lost access in 2011, compared with five regions in 2011. The Mid-Atlantic states lost eight centers, and the New England region was down three.

The remaining regions added centers, with the greatest growth in capacity seen in the Great Lakes region (4.63%), the Rocky Mountain region (4.02%), and the South Central region (3.55%).

In the regions that lost centers, the totals declined just slightly: the MidAtlantic region declined a scant 0.69%, and the New England region was down 0.97%. In the Southeast, which lost 56 centers between 2008 and 2010, the decline in the number of centers has finally been reversed. The region added one center this year, for a total of 1,398.

The percentage of imaging centers affiliated with a chain increased steadily from 2003 (48%) to a peak of 75% in 2006, but then gradually declined to 70% in 2010. In 2011, the imaging-center chains gained one percentage point in market share (Figure 4). It will be interesting to see whether that trend continues as health care in general undergoes consolidation.

www.imagingbiz.com | August/September 2011 | Radiology Business Journal 41

Top 20 Imaging-center Chains | Second Annual Report 8,000

1,200

1,066

1,024

995

953

1,000

945

7,000

902

6,000

800

687 5,000

600

506 351

400

4,703

4,689

4,478

4,533

4,433

4,383

4,000

3,818

3,000

3,281 200

2,499

0

2,000

2003 Chains

2004

2005

2006

2007

2008

2009

2010

1,000

2011

Centers owned, managed, or leased

Figure 2. Growth/decline of US chains, 2003–2011.

198 188 174 166 146 136

90

95 84

89 89

89

93

90 87

Integrated health networks (IHNs) have definitely expanded their footprints in the outpatient imaging space since last year’s report. As defined by SDI, an IHN aligns health-care facilities in order to deliver integrated health-care services to payors (by improving quality and reducing costs in a defined geographical area).

The total network of imaging centers associated with IHNs increased significantly, from 1,519 imaging centers in 2010 to 1,620 in 2011—an increase of 101 imaging centers (Figure 5). This trend has been picking up steam since 2005, when IHNs reported relationships with 842 outpatient imaging centers. The number has nearly doubled since then.

Considering the fact that the total number of imaging centers increased 73 55

52

67

61

54

50

37 39 38

RadNet Inc 2007

2008

HCA 2009

2010

2011

Novant Health/ MedQuest Associates Inc

Figure 3. Growth/decline of the top five chains, 2007–2011.

42 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

Center for Diagnostic Imaging

InSight Imaging

by just 10 in 2011, quite a few imaging centers must have changed hands last year. This is consistent with reports of radiology practices and entrepreneurs either selling out to or partnering with hospitals, which can command significant reimbursement premiums beyond what nonhospital owners are able to negotiate.

As health care moves toward greater accountability for patient populations, health systems have stepped up efforts to build a broader presence in their communities, and outpatient imaging fits into those plans. Hospitals also are addressing the cost of care delivery as they prepare for 30 million new patients to enter the health-care system; delivering imaging in an outpatient setting is less costly than it is in the hospital.

Nonetheless, the IHNs with the greatest number of imaging-center relationships did not grab a greater share of the total IHN-affiliated pie. In fact,

Table 2. Growth/Decline of Imaging Centers (by Region), 2010â&#x20AC;&#x201C;2011

Region Centers, 2010 Centers, 2011 Change Great Lakes

863

903

+40 (+5%)

Rocky Mountain

398

414

+16 (+4%)

South Central

310

321

+11 (+4%)

North Central

310

316

+6 (+2%)

Pacific

833

839

+6 (+<1%)

Southwest Central

721

724

+3 (+<1%)

1,397

1,398

+1 (+<1%)

New England

310

307

â&#x20AC;&#x201C;3 (â&#x20AC;&#x201C;1%)

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1,158

1,150

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Top 20 Imaging-center Chains | Second Annual Report

they (Table 3) claimed a lesser share of the total network: 25.8%, compared with the 27.5% share enjoyed by the top 10 imaging-center–affiliated IHNs in 2010.

There was, however, some swapping of positions among the top 10: HCA (Nashville, Tennessee) now holds the greatest share of network relationships, at 5.3%, followed by 2010’s leader, Novant Health, at a 5.2% share of the network.

A newcomer to the list of the 10 IHNs with the most imaging-center relationships, Memorial Hermann Healthcare System (Houston, Texas), showed up with 21 imaging centers and a 1.3% share of the network.

The lack of activity at the top of the IHN list, however, belies IHN imagingcenter–acquisition activity in the middle and at the lower end of the IHN scale.

For instance, a major, $100 million joint venture involving eight locations was recently reported by Saint Thomas Health (a five-hospital system based in Nashville, Tennessee).

Another indicator of hospital interest in the outpatient imaging-center space is the continued growth of the Alliance Imaging division of Alliance HealthCare Services (Newport Beach, California), which operated 136 fixed-site imaging centers at the close of the first quarter of 2011. Because the vast majority of imaging centers operated by Alliance Imaging are joint ventures with hospitals and hospital systems, Alliance Imaging does not show up on the list of the 20 largest imaging-center chains; most of its centers are counted under the banners of the company’s hospital partners. Alliance Imaging would rank as the second-largest chain if its centers were not already counted elsewhere.

Unlike the largest chains on the top 20 list, which have undergone alternating periods of growth and contraction in recent years, Alliance Imaging has grown steadily, from 106 sites in 2009 to 119 in 2010 and 136 in 2011—suggesting that its strategy of partnering with hospitals, rather than focusing on wholly owned centers, has worked well for the company.

While growth was flat in the overall imaging-center market, patient visits were up in nearly every region (Table 4).

100% 80% 60% 47% 40%

26%

27%

27%

74%

73%

73%

2007

2008

34%

53%

41% 66%

29%

30%

29%

71%

70%

71%

2009

2010

59%

20% 0% 2003

2004

Not affiliated

2005

2006

2011

Affiliated

Figure 4. Affiliation of imaging centers with chains, 2003–2011.

Table 3. Integrated Health Networks With the Most Imaging-center Relationships Network Centers Relationship Share (of 1,620) Novant Health/MedQuest Associates

84

5.2%

HCA

86

5.3%

Ascension Health

49

3%

Cleveland Clinic Health System

41

2.5%

Catholic Health Initiatives

38

2.3%

Community Health Systems

37

2.3%

Trinity Health

24

1.5%

Memorial Hermann Healthcare System

21

1.3%

ProMedica Health System

19

1.2%

Catholic Healthcare Partners

19

1.2%

418

25.8%

TOTAL

2002 2003

516 554

2004 2005 2006 2007 2008 2009 2010

813 842 981 1,142 1,269 1,418 1,519

2011 Figure 5. Number of imaging centers affiliated with integrated health networks, 2002–2011.

44 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

1,620

Clinical Imaging Information Management System Pivotal to Comprehensive EHR

By Charles Morris, Sr. Marketing Manager, IMPAX Data Center, Agfa HealthCare, United States To provide a comprehensive view of a patient’s medical history and current condition, a hospital electronic health record (EHR) construct must aggregate information from several enterprise-wide systems, including a clinical information system (CIS), a document-management system (DMS), and a new class of image-management solution: the clinical imaging information management system (CIIMS). For the patient’s longitudinal imaging record to be complete, this new CIIMS must go beyond a conventional PACS, and beyond radiology and cardiology, to incorporate medical images and data from the wide array of other hospital departments involved in medical imaging.

In addition to improving the process of clinical decision making by giving clinicians easy, anytime, anywhere access to a patient’s complete record, this centralization of imaging data also provides business and technical benefits.

Foremost among these are managed security and business-continuity protection for patient data—an important consideration for any hospital wishing to establish a medical-imaging repository of record.

A

first major step toward what would ultimately become known as a comprehensive EHR was marked by the advent of the hospital-wide CIS (also known as the hospital information system).

These systems, which addressed connectivity and dataintegration problems associated with a legacy environment dominated by disparate departmental systems, gave clinicians a single view of a patient’s condition in the context of the clinical workflow, including orders and results. No longer was it necessary for the clinician to log into multiple systems to collect patient information upon which to base an informed diagnosis or treatment decision.

Over the ensuing years, the CIS has evolved to the point where it now touches virtually every department in the hospital and is every bit as robust and functional as the current best-of-breed departmental systems, while still solving the original integration problem by eliminating the need for (and complexity of) having to integrate all those individual systems.

CIS Does Not Equal EHR Although a CIS—and more specifically, the clinical data repository that it hosts—is a key component of an EHR, it does not house all the data required for a complete longitudinal medical record. Recognizing that the CIS, therefore, does not fully constitute an EHR, many organizations have also invested in some form of document-management system (DMS).

A DMS is fundamentally different from a CIS in that its primary function is document control, rather than departmental workflow. It is designed to create and manage data that are typically paper based and subject to periodic change—consent forms, questionnaires, registration data, orders, insurance information, claims history, general patient communications,

etc.—and therefore, it includes capabilities such as access and revision controls, check-in/check-out permissions, document templating, optical character recognition, and more.

While patient-related information stored in a DMS represents an important additional dimension to the types of patient data stored in a CIS, both, taken together, still do not constitute a comprehensive record of a patient’s medical history and current condition. Today’s health-care organizations exist in a world of high expectations with respect to patient care and the need to leverage technology to support that care. Digital imaging is pervasive and a critical enabler for achieving that goal, and it provides many direct benefits to care delivery, but only when images/data are easily accessible to the clinicians making diagnosis and treatment decisions.

There’s More to Imaging Than Just Radiology When it comes to digital imaging in health care, people immediately think of chest radiographs, CT scans, and MRI exams—studies that are classified as diagnostic imaging.

Radiology data account for the lion’s share (reportedly 45% to 75%) of all diagnostic-imaging data within a hospital, with cardiac-imaging data running second.

In keeping with the importance of diagnostic imaging as part of a patient’s medical record and as part of a clinician’s frontline decision-support tools, numerous diagnostic-imaging repositories have been implemented over the past few years to store diagnostic-imaging data at both hospital and regional levels and to make data readily available to authorized care providers.

In Canada, for example, the Canada Health Infoway blueprint for a national, interoperable electronic health record specifies diagnostic imaging as a critical component, along with drug information and laboratory results.

There are more types of imaging in health care than just diagnostic imaging, however, and there are a lot more departments involved in imaging than just radiology and cardiology, including surgery, mammography, ophthalmology, pediatrics, pathology, dermatology, and others. For some of these departments, imaging involves a standards-based modality, such as ultrasound or endoscopic devices. Others use modalities not based on medical standards, such as digital cameras and scopes used in dermatology, plastic surgery, pathology, and forensics (for example), or nonimaging modalities, such as ECG and EEG, that can yield nonstandard data types that also need to be stored and managed.

These other departments have recently been increasing their use of imaging technologies in order to improve the speed and quality of their specialty and subspecialty services, so it is here that imaging data are growing in leaps and bounds—not in radiology, which has been doing imaging for many years and is thus growing at a slower rate.

CIIMS Rounds Out the EHR When hospitals combine radiology and cardiology PACS data with CIS and DMS data to create EHRs, the other types of imaging data generated by other departments often get left out; perhaps this is because of challenges associated with storing the data in centralized repositories—challenges stemming from the fact that departmental image data generally aren’t handled by some form of imagemanagement system and may not follow the same DICOM industry standards as PACS-based radiology and cardiology data. It may also be because the data are owned by individual departments, where staff have little or no experience with image management or standards, rather than managed centrally by an IT team that has many years of experience with standards and moving radiology data, for example, between departmental systems and central repositories.

One observation made in talking to the CIOs, CTOs, and CMIOs who are the EHR visionaries within their organizations is that they typically don’t have much interaction with imaging activities taking place within individual departments of their hospitals. This signifies a gap: They are all trying to improve their EHRs, but the imaging data from these other departments are absent from the conventional diagnostic-imaging repository, the contents of which are being aggregated with CIS and DMS data to create those EHRs. To make a hospital EHR truly comprehensive (the so-called modern EHR), thereby arming clinicians with the most complete set of patient information possible, the scope of the imaging repository needs to be expanded—beyond diagnostic imaging, beyond PACS, and beyond radiology and cardiology—to incorporate the full range of hospital imaging data into what is more aptly called a clinical imaging information management system, or CIIMS. Having a CIIMS as part of a hospital EHR strategy greatly simplifies a physician’s interaction with the hospital’s systems in the quest for complete patient records—the EHR, with CIIMS,

becomes the one-stop repository for data. This reduces the number of systems the physician must access as part of the care process, which, in turn, allows the physician to get more done in less time and increases satisfaction.

Apart from the all-important clinical value of having a complete EHR, the adoption of a CIIMS and the incorporation of all imaging data types also provide important technical/business benefits for the hospital.

For example, by centralizing the storage and management of medical-imaging data, responsibility for the data moves from individual clinical departments to the IT shop. The IT team is much better able to ensure that all the right backup, business-continuity, and disaster recovery measures have been taken to protect the data.

The IT department is also better able to ensure the integrity and quality of the data—probably through compliance with standards regarding how those data are formatted and stored—so that when they are subsequently retrieved from the repository, they are clearly identified and associated with the right patient.

Adoption of a CIIMS and consolidating imaging data centrally also mean that individual clinical departments no longer have to worry about those data or their distribution, but, rather, can focus on making their own operations more efficient, confident that IT is handling the bigger EHR challenge and managing the infrastructure supporting it—the integrated, enterprise-wide CIS, DMS, and new class of CIIMS. Departments also benefit by having their information easily visible and accessible to others through a persistent connection to the patient record, thus enabling them to operate as an integral part of the collective care process, rather than as disconnected islands of information.

CIIMS Is Much More Than Just Storage An enterprise medical-imaging repository is essential for hospitals, multifacility health-care campuses, or multilocation health-care networks that want to improve patient care by providing clinicians with a comprehensive, longitudinal view of the patient imaging record. To address this need, a number of commercial enterprise image archive and management solutions are available on the market today, including one class of what are commonly referred to as vendor-neutral archives. This class of system, however, is little more than an intelligent storage device, unlike the CIIMS, which has internal services to provide the patient and study identification required in the capture of medical-imaging information, the ability to integrate with the EHR, and the ability to provide visual access to its contents directly to the physician.

To fulfill its role in the modern imaging-enabled EHR, to be clinically effective, and to be robust enough to serve as an enterprisewide medical-imaging repository of record, a CIIMS needs to go far beyond just storing an image and provide four classes of enterprise imaging services—the ability to capture, store, exchange, and provide universal access to imaging information. Only then will the CIIMS be able to support an end-to-end click-to-capture, click-toaccess EHR workflow that makes comprehensive patient imaging records readily available to clinicians whenever and wherever they are needed.

Charles can be reached at charles.morris@agfa.com

Only the North Central and Southwest Central regions reported a decline in the number of patient visits. The biggest gains were logged in the Pacific region, which reported 15,573 visits, compared with 13,300 in 2009; in the New England region (13,727 visits, compared with 11,755); and in the Rocky Mountain region (16,522 visits, compared with 14,595).

Despite the fact that the Rocky Mountain region added the greatest number of centers last year, the centers there logged the highest visits per center for the second year in a row: 16,522. New England lost three centers last year, which might have helped to boost its figures for per-center visits.

Imaging centers hit a milestone in 2010, with an average of 298 visits per week (Figure 6), exceeding a decadeâ&#x20AC;&#x2122;s high of 291 visits per week, seen in 2002.

Volumes increased dramatically between 2000 (at 216 visits per week) and 2002, but slid precipitously to 267 in 2003,

a year in which more than 1,000 new centers were added to the total inventory.

2002â&#x20AC;&#x2122;s visits-per-week number was not exceeded until this year.

Clearly, operators of imaging-center chains had a strong motivation to tighten operations and increase throughput, which was likely to have been a response

to the latest round of reimbursement reductions. Demographic trends suggest that volumes will continue to increase as the baby boomers move into their peak years of health-care use.

Nonetheless, the continuing targeting of outpatient imaging for reimbursement cuts by CMS and lawmakers casts a

Table 4. Average Patient Visits per Imaging Center (by Region) Region Centers

(2011) Rocky Mountain

Visits per Center (2009 average)

414

16,522

1,398

16,420

Pacific

839

15,573

Mid-Atlantic

1,150

15,193

South Central

321

14,930

New England

307

13,727

North Central

316

12,617

Great Lakes

903

11,794

Southeast

Southwest Central TOTAL

724

11,388

6,372

14,240

Top 20 Imaging-center Chains | Second Annual Report

7,000

400 350 300 250

271 216

291

267

5,450 259

5,753 243

5,969 259

6,455

6,241 245

258

6,150

6,033 298

266

6,000 5,000 4,000

4,159

200 150

5,163

3,000

3,366 3,068

2,000

100

1,000

50 2000

2001

Procedures

2002

2003

2004

2005

2006

2007

2008

2009

2010

Centers

Figure 6. Average number of procedures per week performed at imaging centers, 2000â&#x20AC;&#x201C;2010, based on data from 6,033 of 6,321 US imaging centers.

shadow over the immediate future of the sector. Thus far, those cuts appear to have inspired greater operational efficiencies.

Independent and entrepreneur-owned chains are clearly shedding centers, however, because the increase in hospitalaffiliated centers (100) exceeds the increase in the total number of outpatient imaging centers (72).

Cheryl Proval is the editor of Radiology Business Journal and vice president, publishing, for imagingBiz, Tustin, California.

References 1. Kyes K. The top 20 imaging-center chains. Radiology Business Journal.

2010;3(4):30-35.

2. SDI. 2008 Diagnostic Imaging Center Market Report. Yardley, PA: SDI; 2008.

About Our Partner SDI, Plymouth Meeting, Pennsylvania, is a health-careâ&#x20AC;&#x201C;analytics organization that was founded in 1982; its clients include pharmaceutical/biopharmaceutical manufacturers, medical- and surgicaldevice manufacturers, financial institutions, and the federal government, among other health-care organizations; www.sdihealth.com.

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Revenue-Cycle Management | Billing and Coding

Managing the Revenue Cycle: Optimized Coding and Billing

Lean manufacturing processes, automated coding, and the right human resources are all part of the solution in three practices’ efforts By Julie Ritzer Ross

P

roper coding and billing have long been priorities of private and hospital-based radiology practices alike.

Healthcare reform and its accompanying reimbursement cuts, however, have created a need to optimize both functions.

Efforts underway at practices across the country indicate that attention to detail in coding and billing can result in stepwise improvement in receipts.

Bill Ziemke, JD, LLM, MBA, CPA, believes that coding and billing cannot be optimized without the implementation of new strategic processes and the adjustment of existing ones. Ziemke serves as CEO of Strategic Administrative and Reimbursement Services (STARS), LLC, the billing and management company for Advanced Radiology Services, Grand Rapids, Michigan, which represents more than 100 radiologists and is one of the largest radiology practices in the United States.

The outgrowth of several radiology practice mergers, Advanced Radiology Services comprises four divisions— Grand Rapids, Kalamazoo, Grand Valley, and Lansing—that provide radiology services to six major health-care systems, including the various satellite health centers owned and operated by these health-care systems. STARS handles billing for approximately 20 hospitals and well over 100 smaller sites.

Not long ago, STARS completed a coding/billing-optimization initiative that spanned more than three years and yielded, among other enhancements, a 57% improvement in procedures billed per FTE. Ziemke says that changing the organizational behavior of the company was crucial. Implementing manufacturing processes and procedures, developed to exceed industry benchmarks, played a

key role in sparking the changes. These benchmarks initially came from the RBMA and later were supplied by the Strategic Radiology practice consortium (St Paul, Minnesota) and others.

Ziemke cites the automation of multiple operating procedures and the subsequent elimination of unnecessary steps as prime examples. STARS now employs a straightto-bill strategy wherein automatic coding replaces manual coding in 70% of cases (compared with 0%, in the past). “Because 70% of our procedures need no manual intervention, we need 70% fewer coders,” Ziemke explains. “One could argue that we probably have one of the higher auditing-of-coding costs in the country because we devote a lot of time to this area, but the additional auditing creates

opportunities to save on back-end work.

The more work you do on the front end, getting a clean code into the system, the less follow-up work needs to be done.”

Other new methods have also contributed heavily to heightened efficiencies and productivity, faster collections, and (in turn) a decrease in overall billing costs. For instance, based on an analysis of customer-service calls and their content, patient statements were refined to render them easier for patients to understand, reducing the volume of calls while bolstering the rate of private payments. A solution that enables patients to pay their bills online, coupled with the automatic deposit of more than two-thirds of remittances, among other changes, has helped to reduce days elapsed in accounts

www.imagingbiz.com | August/September 2011 | Radiology Business Journal 49

Revenue-Cycle Management | Billing and Coding

If a certain payor mix is returning subpar reimbursements at one location, the data are analyzed and opportunities are identified to maximize reimbursement, which includes ensuring that what is due from the patient at the time of service is collected. As a result, fewer accounts are turned over to bad debt.

—William Moore II, MBA Desert Radiologists

We track and report back, making it a friendly competition between different centers and offering rewards, such as lunches, for hitting the targets.

These small incentives do work.

—Pat Harms, MBA, CPA, FACMPE Desert Radiologists

receivable by 40%, from a high of 55 days to 32 days (as of June 30, 2011).

Ziemke notes, “We could probably go on and on with the list, but it would be too long. Needless to say, constant efficiency improvement is now part of our daily expectation. We have created worklists.

We are not yet where we need to be, but we have the ship out of the harbor, sailing toward its proper destination.”

Real-time Data For Desert Radiologists (Las Vegas, Nevada), a 46-physician practice that offers diagnostic-imaging and interventional radiology services, that has five outpatient locations in Las Vegas and nearby Henderson, nine Southern Nevada hospitals, one Northern Nevada hospital, and one hospital in Arizona, outsourcing and the use of third-party technology have lined the path to billing/coding optimization. The practice performs more than 1.2 million exams annually.

William Moore II, is Desert Radiologists’ CEO. He says that the decision to outsource billing and coding was made in 2008, with the objective of improving collections and accountsreceivable management while reducing costs. Prior to this time, the practice

depended on a local billing company, but its services, Moore explains, were not sufficiently comprehensive to handle a practice of Desert Radiologists’ size and scope. Management subsequently opted to bring billing operations inhouse, but this, too, proved troublesome; adequately posting payments to patients’ accounts was an unwieldy process, and remaining on top of accounts receivable was extremely challenging.

Desert Radiologists contracted with a national organization with a system that enables the practice to track every exam electronically, from order entry to collection, via decision-support system. A custom software interface permits billing information from the hospitals served by the practice to be incorporated into the system, and the automated billing process begins immediately when individual procedures and services occur, with all reports electronically transmitted to the third-party billing company.

Billing volumes are accessed daily, weekly, monthly, and annually—by location, modality, carrier, and referring provider. Leveraged together, the process and the technology yield consistent billing, payment, and reporting of all charges, Moore says.

50 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

“With the system and its decisionsupport component, we see near–realtime billing information, which is the only effective way to track every aspect of the billing cycle,” Moore explains. He adds that business and contract decisions are now made based on actual reimbursement data. For example, staff can drill down and compare reimbursement for breast biopsies, by carrier, to determine whether all payors are issuing adequate reimbursements for the procedure. Should reimbursement for certain procedures be inadequate, communication can be initiated with a payor to renegotiate rates.

With the system in place, future revenue can be predicted as well. The data provide accurate gross percentages, while the decision-support component forecasts future numbers and indicates whether adjustments in charges need to be made. Consequently, Moore states, “If a certain payor mix is returning subpar reimbursements at one location, the data are analyzed and opportunities are identified to maximize reimbursement, which includes ensuring that what is due from the patient at the time of service is collected. As a result, fewer accounts are turned over to bad debt.”

Best practices implemented in-house complement procedures followed in line with the outsourcing agreement. Both the office manager and office staff have been schooled in the importance of obtaining all necessary insurance information and collecting patient copayments and deductibles at the time of service.

“We previously were much less aggressive in this regard, but in today’s world, with the high degree of patient responsibility for charges, it is incumbent on us to be certain that we collect what is due to us,” Moore says. “If needed, we will set up payment arrangements for patients rather than turn them away, but we are being more proactive about collections.”

Recently, Desert Radiologists initiated a policy under which staff and facility managers receive feedback from the executive team on the success of collections endeavors in their particular offices. Pat Harms, MBA, CPA, FACMPE, practice CFO, says, “We track and report back, making it a friendly competition between different centers and offering

If they do not do a great job on the reporting end, it will affect coding and billing, and we will not optimize the revenue cycle.

owed; he consistently remains on top of tracking and trending collections per RVU and overall net-collections rates. As Vermont’s primary hospital and medical center, Fletcher Allen Health Care provides care at more than 30 sites and 100 outreach clinics and programs— including an inpatient facility with more than 500 beds—in Vermont and upstate New York.

UVM Medical Group’s employed radiologists know that clarity and accuracy in radiology coding depend on

the clarity of their reporting, and they are 100% responsible for that, LaDue explains. “If they do not do a great job on the reporting end, it will affect coding and billing, and we will not optimize the revenue cycle,” He says. “This, in turn, will affect their incentive compensation.”

To support proper reporting, he says, UVM Medical Group provides practitioners with voice-recognition software that creates written reports.

Physicians are charged with reviewing the reports for accuracy and editing them, where necessary, before releasing them as final reports.

While procedural and operational refinements clearly have had—and continue to have—a positive impact on coding and billing, so, too, do human resources and the manner in which they are harnessed. This encompasses everything from investments in additional personnel

codes, and it must be in place before the changeover to ICD-10. The version 5010 change occurs well before the ICD-10 implementation date to allow adequate version 5010 testing and implementation time. CMS has publicly noted that if providers do not conduct electronic health transactions using version 5010 as of the January date, they will almost certainly encounter delays in claim reimbursement long before the fall of 2013.

With this in mind, private practices and hospitals alike have begun their preparations for ICD-10 and version 5010. For its part, Advanced Radiology Services, Grand Rapids, Michigan, plans to upgrade its billing system to handle the new codes. Specifics have not yet been ironed out; vendors advocate such upgrades as integrated electronic health record components. These could assist physicians with the extra documentation required by ICD10 (as well as with selecting the correct codes), while simultaneously affording billers instant access to the patient records they need to check before submitting claims.

Training will constitute an equally significant step on the preparation front: Team members will be educated to grapple with the new codes, in part, by asking patients more specific questions about specific conditions, while physicians will (for

example) be made more aware of the subtle differences between multiple diagnostic codes for seemingly identical conditions.

Bill Ziemke, JD, LLM, CPA, MBA, who serves as CEO of Strategic Administrative and Reimbursement Services (STARS), LLC, the billing and management company for Advanced Radiology Services, concedes that paving the way for ICD-10 will cause some temporary inefficiencies. “Obviously, in the short run, our costs will increase,” he says, “and the organizational improvement process will continue.”

Similarly, Desert Radiologists (Las Vegas, Nevada) has held ICD-10 training sessions for on-site billing personnel. It has also initiated discussions with physicians about how the codes are evolving and what they personally will need to do in order to help the practice weather the change, according to Pat Harms, MBA, CPA, FACMPE, CFO. For example, they will have to understand which of several similar diagnostic codes should be assigned to any given condition.

“We are also communicating with outside resources, such as referrers and hospitals, regarding the information they gather and how it fits into coding, so that there can be a seamless transition,” Harms concludes.

“Without cooperation, it won’t work.”

—J Ritzer Ross

—Bill LaDue UVM Medical Group/Fletcher Allen Health Care

rewards, such as lunches, for hitting the targets. These small incentives do work.”

The Human Factor Bill LaDue, director of radiology and pathology at the UVM Medical Group component of Fletcher Allen Health Care in Burlington, Vermont, agrees that incentives contribute to optimized coding and, by extension, billing. LaDue holds ultimate responsibility for keeping coding/billing functions working as they should and for collecting every dollar

Preparing for ICD-10

O

ctober 1, 2013, ushers in a new era in coding. That is when health-care providers in all categories will be required to submit claims to CMS using the new ICD-10 codes. These codes must be used for all HIPAA transactions, including outpatient claims with dates of service—as well as on inpatient claims with dates of discharge—on and after October 1, 2013. Claims on which the codes do not appear may be rejected; providers will then be required to add the codes and execute a resubmission of the documents, resulting in delays and other possible negative effects on reimbursements.

Moreover, providers will be forced to grapple with a far larger number of codes than in the past. The diagnostic-code count will increase from 16,000 to 69,000; the procedure-code count, from 3,800 to 72,000.

The changes wrought by the advent of ICD10 get underway even earlier than two years from now. On January 1, 2012, standards for electronic health-care transactions transition from version 4010/4010A1 to version 5010.

These electronic health-care transactions include such functions as claims, eligibility inquiries, and remittance advice.

Unlike the current version 4010/4010A1, version 5010 accommodates the ICD-10

www.imagingbiz.com | August/September 2011 | Radiology Business Journal 51

Revenue-Cycle Management | Billing and Coding

In order to improve billing effectively, we need the most up-to-date insurance information. It’s critical to know.

—Bill Ziemke, JD, LLM, MBA, CPA Advanced Radiology Services

to the delegation of staff responsibilities to communication with payors and other third-party entities.

For STARS, changes to the organizational chart, including the creation of new positions and the addition of new skill sets via hiring, were as important as other steps taken in its quest to improve the overall billing picture. “We moved people out of positions into new positions, initially increasing our costs to get the proper mindset of reduction in place and focus these team members on the end game,” Ziemke says. “For us, this wasn’t just staff members in the billing department; it was everyone from finance, IT, human resources, project management, and so forth.”

A cost accountant was engaged to analyze and measure all billing data so that realistic future expectations could be set. A position for a business analyst who could bring to the table both IT and billing knowledge was created.

Weekly communication meetings across all functional areas were instituted to keep all departments in the loop as new processes were instituted in line with the initiative.

Each day, the analyst conducts a comparison of all reporting information against average volume to identify any anomalies. Periodic communication between STARS team members and facilities ensures that facilities are receiving the most accurate files.

“In order to improve billing effectively, we need the most up-to-date insurance information,” Ziemke states. “For instance, say a patient shows up in the emergency department, and the hospital has old insurance and address data on file. The hospital changes the data in its system after the patient supplies the new information, but did we get the first file, with the bad information, or did we get the updated information? It’s critical to know.”

Moreover, to optimize communication between Advanced Radiology Services and the hospitals it serves, a single STARS team member was assigned to review billing reports daily for accuracy. This individual investigates the origin of billing issues, ascertaining that their roots lie in the hospital in question (rather than with the practice itself). Taking such a step, instead of contacting the hospital first, not only reduces unnecessary expense from the billing process, but also bolsters Advanced Radiology Services’ credibility among hospitals, Ziemke says.

STARS has also brought on board several relationship managers who meet regularly with hospitals to iron out billing and other issues; their responsibilities include serving as liaisons with senior hospital executives, should there be a need, as Ziemke puts it, to go to a higher authority for assistance.

Out of Sight, not Mind Contrary to what one might assume, Desert Radiologists’ philosophy holds that outsourcing billing functions does not exempt partners and employees from the responsibilities inherent in optimizing billing and coding. At the highest level, Harms holds ultimate responsibility for the financial side; Moore, for the operational side. Members of the billing department report up through Harms, who monitors the practice’s financial performance and communicates with the client services director assigned to Desert Radiologists by the billing company.

States Harms, “My role here involves constant communication, not sporadic communication. We’re looking at various aspects of revenue-cycle management daily, weekly, and monthly. Otherwise, it wouldn’t work.”

Reinforcing this communication, the billing company’s client services director works closely with Desert Radiologists’

52 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

administrative group and physician board of directors. The agenda includes monthly face-to-face meetings with the practice’s finance committee, supplemented by conference calls—and always focused on detailed data analysis.

Individuals from the billing company partner with the staff to ensure that effective charge capture and billing are occurring regularly and that all necessary steps required for collecting charges promptly, reprocessing denied claims, and ascertaining that bills do not (as Harms put it) fall back into a black hole are executed. A Desert Radiologists billing manager also acts as a liaison with the third-party company, keeping schedulers, front-desk personnel, and physicians abreast of any changes that pertain to charge capture or coding.

UVM Medical Group has designated three specialty coders—3.5 FTEs—to handle only the coding of radiology procedures. Its rationale for this setup— and for handling coding and billing in-house, according to LaDue—is that radiology, more than other medical disciplines, not only is highly specialized, but involves an unusual volume of minutiae. Assigning radiology coding to general hospital coding staff would widen the margin for error.

“These coders are highly trained and experienced; one has 35 years of experience; another, 30 years; and the third, 20 years,” LaDue observes.

Consequently, they can identify subtle discrepancies between procedures that were scheduled and those that were actually performed—differences that their generalist counterparts might overlook.

As an example, LaDue cites an MRI exam with contrast that is being billed as an MRI exam without contrast.

“Last fiscal year, we had 188,000 work RVUs, and we perform about 280,000 imaging procedures per year,” LaDue concludes. “Our coding error rate is very, very low, in large part because of this human-resource structure.” Keeping those errors to a minimum is at least half the billing/coding-optimization battle, LaDue says.

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

i believe

“It is time to give something back.

Call it karmic obligation.

Call it tikkun olam.

It really doesn’t matter

what you call it—

Allen Rothpearl, MD Founder, Complete Radiology Reading Services Organized the digital transmission of images from a pediatric hospital in Haiti to CRRS after the devastating earthquake in 2010.

Dr. Rothpearl and his associates read the examinations and donate their interpretations to the hospital to this day.

Allen Rothpearl uses eRAD PACS.

www.erad.com

it is simply the right thing to do.”

Billing | Accounts-receivable Analysis

The Mystery of the Missing Collections In this inquiry into an imaging centerâ&#x20AC;&#x2122;s accounts receivable, the suspected culprits were exonerated and a surprising perpetrator emerged By James A. Kieffer, MBA

H

ow well do you really know your payors? A recent analysis for one practice turned up some very interesting revelations with operational ramifications for the provider, but this was possible only because the provider had access to the entire fee schedule of the insurance company.

The larger insurance companies use variations of the RBRVS, applying their own conversion factors. For this reason, radiology providers would be wise to secure a complete schedule of their contracted fees. Only then can providers manage the complex relationships between their imaging-center costs and the revenues that they must receive to cover them.

Prudent owners should know their fixed and variable costs by modalityâ&#x20AC;&#x201D;

information useful in determining whether the fees proposed by an insurance company adequately compensate them.

They also have to consider the evolving dynamics of the current marketplace, in which insurance companies promise a certain fee level and then shift increasing amounts of the obligation to the patient, in the form of copayments and deductibles.

Reason for Evaluation A radiology practice, owner of an imaging center, did not find the payment trends for a major payor to be acceptable. It had performed some testing (on a limited sample of exams) that had provided few answers, and it was unwilling to spend a large amount on a detailed audit. The use of database-extraction techniques gave the practice the answers that it sought.

54 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

The project involved the extraction of billing-system files accounting for 2,466 exams and containing 28 fields of data.

This was performed in mid-February 2011. Two additional fields were added to facilitate the evaluation. The first was the negotiated fee schedule of the primary payor being evaluated, provided in an electronic spreadsheet, in order by CPTÂŽ code.

The second added field contained one of 11 numeric flags assigned to exam families for which technical-component payment is discounted if two or more exams in the same family are performed during the same patient visit. This discounting policy was based on a CMS regulation, but other major payors also instituted it. The discounting did not apply when the multiple exams performed during a single visit were in

different families. This regulation was changed (effective January 1, 2011) to merge the 11 families into one, making providers unable to avoid discounting for multiple exams, even when the exams are from different families.

Account Resolution In Table 1, six hypothetical patients underwent the same exam; all were apparently covered by the same insurer, with different benefit programs. The radiology charge was $100; the agreedupon fee was $49.50. Therefore, the radiologist was obligated to write off $50.50 as a contract adjustment.

Patient A had a high-end plan (slowly disappearing), in which the insurer paid the entire amount due. Patient B had a 20% copayment, but also had a secondary insurance plan that covered this. Patient C was obligated to pay the 20% and called the billing office to pay the amount by credit card; the practice paid the credit-card fee.

Patient D, who had an annual deductible that had not been met, owed the entire bill. Only part of the fee was received, and the balance was eventually sent to a collection agency. Patient E was referred to the office by a physician who did not comply with the insurerâ&#x20AC;&#x2122;s rule for preauthorization. The patient was not asked to return at a later date (the front office knew that it needed an authorization number). The amount due was lost as a compliance credit.

Patient F formerly had insurance coverage, but was uninsured at the time of service. He had been to the office before, and the front desk did not verify coverage. The claim was rejected; the patient made a partial payment, and the rest was written off as a courtesy.

Four Universe Subsets A perfect universe is one containing only two credits: cash and contract adjustment. The marketplace is moving in a different direction, however, where other types of noncash credits apply: courtesy, credit-card fees, and adjustments for bad debt and compliance failures.

This unweighted sample implies perfect resolution at 49.5% (which is not that far from reality, in this case), but other market factors drag down the final number.

A review of the imaging centerâ&#x20AC;&#x2122;s accounts receivable revealed that the 2,466 exams could be organized into 22 different payment scenarios (Table 2). These universes were organized into four groups.

The first group contained single exams and multiple exams, performed on the same day, that were not in the 11 families where discounting might have applied in 2010.

The second group consisted of alphanumeric supply codes (such as those for contrast and disposables). No payor fee existed for these codes because they were variably priced. A fee schedule was reverse engineered by organizing the records by CPT code and looking for consistent payment patterns.

The third group included single exams, by date of service, in one of the 11 discounting families, and the fourth group was composed of multiple exams in one of those 11 families that had been performed on the same day. The four universe subsets contained 22 universes.

Universe 1: This was the perfect universe; resolved at the payor-fee amount, it accounted for 50.36% of the total volume as of mid-February 2011.

Universes 2 through 7: These include zero-balance records where cash (plus the credit-card fee, bad debt, courtesy, or balance) equals the payor fee. The only other noncash credit is the contract adjustment. Universes 2 through 5 would have resolved at the fee-schedule amount, if not for the practiceâ&#x20AC;&#x2122;s failure to collect on self-pay balances. Universe 6 was made up only of records with cash and contractadjustment credits where balances were due from patients. If these had been fully collected, they would have been in universe 1. Universe 7 was unique to the supply codes in that the payor fee exactly matched the practice charge.

Universes 8 through 10: Universes 8 and 9 held exams where the patient was responsible for the entire payor fee because of an annual deductible. In spite of numerous statements being sent to the patients, no cash was collected, and these amounts were written off as either bad debt or courtesy. Universe 10 was similar to universe 6, except that no cash had been collected as of mid-February 2011.

Table 1. Mathematics of Account Resolution

Patient A

Patient B

Patient C

Patient D

Patient E

Patient F

Totals

$100

$100

$100

$100

$100

$100

$600

Insurer fee

$49.50

$49.50

$49.50

$49.50

$49.50

$100

$347.50

Contract adjustment

$50.50

$50.50

$50.50

$50.50

$50.50

0

$252.50

Insurer payment

Practice charge

$49.50

$39.60

$39.60

0

0

0

$128.70

Secondary-insurer payment

0

$9.90

0

0

0

0

$9.90

Patient payment

0

0

$9.60

$15

0

$25

$49.60

Compliance adustment

0

0

0

0

$49.50

0

$49.50

Credit-card fee

0

0

$0.30

0

0

0

$0.30

Bad debt

0

0

0

$34.50

0

0

$34.50

Courtesy

0

0

0

0

0

$75

$75

Balance

0

0

0

0

0

0

0

Cash

$49.50

$49.50

$49.20

$15

0

$25

$188.50

Noncash

$50.50

$50.50

$50.80

$85

$100

$75

$411.80

Collection

49.5%

49.5%

49.2%

15%

0%

25%

31.37%

www.imagingbiz.com | August/September 2011 | Radiology Business Journal 55

Billing | Accounts-receivable Analysis

These records would have been shifted into any of the prior 9 universes once their balances reached zero.

Universes 11 through 16: Universe 11 was a useful byproduct of acquiring the payorâ&#x20AC;&#x2122;s fee schedule. It only contained records where the payor fee was higher than the practice charge. Naturally, the payor reimbursement was at the practicecharge level; there was no contract adjustment, and the balances were zero.

Universe 12 held all zero balances, resulting only from cash and contractadjustment credits. None of the receipts matched the payor fee schedule; they were either higher or lower. These could have been exams for patients who had different coverage than that provided by the payor for which records were evaluated, but information on that other coverage was not acquired at the time of the visit. Universe 13 contained records where the cash was less than the payor fee, the balance was zero, and there were multiple noncash credits, including contract adjustments.

Universe 14 consisted of exams performed for patients who were classified

as covered by the payor of interest; nonetheless, the charge was written off as bad debt. Universe 15 held exams with no cash and zero balances resulting from combinations of compliance credits, bad debt, and courtesy. Universe 16 consisted of 13 records that met the criteria for potential discounting because of the 11family rule.

Universes 17 through 22: Universe 17 represented the only records where no response had been received on the original claims at the time of evaluation.

Universe 18 held records where cash had been credited and noncash credits had not been posted. Universe 19 differed from universe 11 because there were balances.

Universes 20 and 21 showed cash and contract adjustments inconsistent with the payor fee and either debit or credit balances. The last two records (universe 22) pertained to supply codes where a payor fee could not be determined.

Accounts-receivable Results Table 2 shows exam volume for all modalities combined, but without including dollars, it is only half the

picture. Table 3 illustrates the financial implications of Table 2. It is organized as a conventional reconciliation, except for the inclusion of the payor-fee information.

This is the amount that the practice would have received if: no copayment or deductible requirements had existed, no discounting rules on multiple exams had been applied, and no compliance with precertification and other rules had been required.

Net cash consists of the actual receipts posted to these accounts by mid-February, 2011â&#x20AC;&#x201D;about $90,000 less than the total payor fees. The remaining balances on all nonzero records were $44,819.

With nearly $45,000 in receivables unaccounted for, it was necessary to make a speculative attempt at bringing the balance to zero using the statistical techniques illustrated in Table 4.

The balance-resolution row shows hypothetical amounts of cash and credits with a total equal to the remaining balance. The residual cash estimate is based on a belief that residual balances mostly end up as charity or bad-debt write-offs, accounting for approximately

Table 2. Summary of Four Universe Subsets

Single and Supply Universe Description nonfamily codes codes 1 2 3 4 5 6 7

8 9 10

11 12 13 14 15 16

17 18 19 20 21 22

Payor fee = cash Payor fee = cash + credit card Payor fee = cash + bad debt Payor fee = cash + courtesy Payor fee = cash + credit card + bad debt Payor fee = cash + balance Payor fee = charge = cash Payor fee = cash + self-pay credits Payor fee = bad debt Payor fee = courtesy Payor fee = balance Payor fee = self-pay credits Payor fee > charge Payor fee < or > cash Cash > 0 Charge = bad debt Cash = 0 Payor fee > cash All other zero balances Cash = 0, balance = fee Cash + balance = charge Payor fee > charge Cash > 0, balance > 0 Cash > 0, balance < 0 No payor fee Nonzero balances Total

823 38 151 10 4 106 0 309 34 10 20 64 127 52 50 27 18 0 274 5 13 11 4 4 0 37 1,507

Single-date- of-service family codes

164 3 42 1 0 65 107 218 0 0 6 6 0 58 0 0 33 0 91 0 0 0 1 4 2 7 486

56 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

62 2 16 1 1 11 0 31 1 2 0 3 0 4 0 0 2 0 6 0 0 0 1 0 0 1 103

Multiple-dateof-service family codes Totals 193 9 62 2 2 55 0 130 5 3 8 16 0 5 0 2 11 13 31 0 0 0 0 0 0 0 370

1,242 52 271 14 7 237 107 688 40 15 34 89 127 119 50 29 64 13 402 5 13 5 6 8 2 45 2,466

Percent of population 50.36%

27.9%

3.61%

16.3%

1.82%

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Billing | Accounts Receivable Analysis

25% of the average resolution rate.

The assumption has also been made that the contract adjustments had already been applied to the remaining procedures, meaning that the balance would be attributed to the other credits (using the proportions achieved through midFebruary). A lower resolution rate was assumed for the unaccounted shortfall, based on the knowledge that this was the hard-to-collect balance.

The bottom three rows illustrate the dollar impact of the hypothetical resolution of all records to a zero balance, measured against the perfect universe (the payor-fee level). The perfect universe would only have two credits: cash and contract adjustment. The combined cash and contract-adjustment shortfall was shifted to the other four credit categories in the form of losses attributed to the current reimbursement environment.

The whole purpose of the hypothetical universe was to examine how much the practice lost because of the introduction of multiple-procedure discounting and compliance rules, in addition to the shifting of responsibility for promised fee-schedule payments to patients (in the form of higher deductibles). At this point in the investigation, it became clear that the practice’s suspicion that a payor was responsible for the missing accounts

Table 3. Accounts-receivable Results for Four Universes

Groupings Count Charge Payor fee Net cash

Contract adjustment Compliance

Credit-card adjustment

Single

759

$670,139

$305,637

$276,534

$335,436

$912

Multiple nonfamily

748

$230,697

$104,026

$95,460

$117,641

$1,262

$46

Totals

1,507

$900,836

$409,663

$371,994

$453,077

$2,174

$189

Supply codes

486

$68,209

$33,883

$33,487

$31,674

$401

$12

Single-date-of-service family code

103

$161,013

$77,892

$67,485

$83,044

$1,993

$21

Multiple-date-of-service family code

370

$601,398

$275,332

$233,097

$318,698

$15,389

$88

2,466

$1,731,456

$796,770

$706,063

$886,493

$19,957

$309

0.2121

0.0033

Aggregate total

Noncash credits (other than contract adjustment)

$142

Table 4. Hypothetical Final Resolution Versus Perfect Universe

Groupings Count Charge Payor fee Net cash Table 3: aggregate total

Contract adjustment Compliance

Credit-card adjustment

2,466

$1,731,456

$796,770

$706,063

$886,493

$19,957

Balance resolution

$5,000

0

$8,446

$309 $131

Probable result at zero balance

$1,731,456

$711,063

$886,493

$28,403

$440

Perfect universe

$1,731,456

$796,770

$934,686

0

0

Variance

–$85,707

–$48,193

$28,403

$440

Table 5. Receivables Reconciliation (by Month of Service)

Month of service Accounts Count Charge Payor fee Net cash

Contract adjustment Compliance

January

80

161

$125,480

$55,680

$43,851

$61,290

February

82

160

$124,335

$57,470

$52,715

March

82

158

$133,612

$61,896

$50,211

April

102

228

$181,614

$86,800

May

99

204

$161,659

June

101

217

July

96

205

August

113

September

116

October November December

Credit-card adjustment

$7,986

$15

$62,562

$3

$40

$66,656

$5,492

$22

$77,477

$92,783

$122

$30

$76,280

$69,340

$78,074

$5,250

$31

$129,484

$58,542

$52,336

$70,618

$937

$7

$118,568

$50,315

$49,362

$63,537

$46

$52

227

$148,285

$67,942

$59,244

$76,306

$25

$9

269

$197,615

$89,803

$80,004

$99,404

$25

$28

103

219

$133,186

$61,320

$51,743

$69,992

$46

$14

104

210

$138,731

$65,896

$59,560

$73,084

$1

$35

101

208

$138,887

$64,826

$60,219

$72,187

$23

$26

Total universe

1,179

2,466

$1,731,456

$796,770

$706,063

$886,493

$19,957

$309

Single

658

759

$670,139

$330,917

$276,534

$335,436

$912

$142

Multiple

444

1,707

$1,061,317

$465,853

$429,529

$551,058

$19,045

$167

Totals

1,102

2,466

$1,731,456

$796,770

$706,063

$886,493

$19,957

$309

58 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

receivable was unfoundedâ&#x20AC;&#x201D;and that patients were the probable culprits.

credits pertain to the charges generated in that month of service.

The accounts column lists the patient accounts that were either created or updated in each month of service. The billing system maintains a permanent account number for each patient; this is why the number of accounts in the monthly history changes according to whether the data cover patients who had only a single exam or those who had

Reconciliation by Month of Service To illustrate the implications of needing to collect increasingly large deductibles from patients, the database extraction for Table 5 was organized by month of service to show how the 2010 population was managed. The information on each row is interrelated; the cash and noncash

Bad debt

either multiple exams during one visit or single exams during more than one visit in 2010. The lower of the two numbers is the more accurate.

Modeling the database in this fashion helps to explain payor dynamics that affect collections. the last three columns are resolution ratios that illustrate this.

Since the imaging center maintained a constant payor relationship for all of 2010, the degree of variation in the resolution

Courtesy

Balance

Cash/count

Payor fee/count

Resolution (%)

Payor fee/charge (%)

Success rate

$36,341

$2,457

$18,317

$364.34

$402.68

$7,881

$2,599

$5,808

$127.62

$139.07

0.4242

0.4561

0.9301

0.4245

0.4509

$44,222

$5,056

$24,125

$246.84

$271.84

0.9415

0.4243

0.4548

0.9329

$1,487

$235

$914

$68.90

$69.72

0.4976

0.4968

1.0016

$3,569

$528

$4,372

$655.20

$756.23

0.4308

0.4838

0.8905

$16,307

$2,411

$15,408

$629.99

$744.14

0.3978

0.4578

0.8689

$65,585

$8,230

$44,819

$286.32

$323.10

0.4186

0.4602

0.9096

0.6971

0.0875

Bad debt

Courtesy

Balance

Cash/count

Payor fee/count

Resolution (%)

Payor fee/charge (%)

Success rate

$65,585

$8,230

$44,819

$286.32

$323.10

0.4186

0.4602

0.9096

$27,758

$3,484

â&#x20AC;&#x201C;$44,819

$93,343

$11,714

0

$288.35

0.4107

$323.10

0.4602

0

0

0

$93,343

$11,714

0

Bad debt Courtesy Balance $10,471

0

$1,866

Codes/ account

Cash/ account

Cash/ count

$2.01

$548.14

$272.71

Payor fee/ count Resolution (%) $345.84

0.3547

Payor fee/ charge (%)

Success rate

0.4437

0.7994 0.9273

$7,670

0

$1,344

$1.95

$642.87

$329.68

$359.19

0.4286

0.4622

$11,102

0

$129

$1.93

$612.32

$317.26

$391.75

0.3762

0.4633

0.8120

$9,174

0

$2,028

$2.24

$759.58

$339.10

$380.70

0.4314

0.4779

0.9027

$4,195

$137

$4,631

$2.06

$700.41

$340

$373.92

0.4416

0.4719

0.9358

$4,212

$350

$1,024

$2.15

$518.18

$241.01

$269.78

0.4074

0.4521

0.9011

$4,295

$385

$891

$2.14

$514.19

$240.28

$245.44

0.4195

0.4244

0.9885

$6,127

$2,383

$4,190

$2.01

$524.29

$260.84

$299.30

0.4111

0.4582

0.8972

$8,293

$2,334

$7,527

$2.32

$689.69

$297.28

$333.84

0.4209

0.4544

0.9263

$41

$2,297

$9,053

$2.13

$502.36

$235.85

$280

0.4168

0.4604

0.9053

$1

$345

$5,705

$2.02

$572.69

$283.51

$313.79

0.4477

0.4750

0.9425

$2

0

$6,430

$2.06

$596.23

$289.43

$311.66

0.4546

0.4668

0.9739

$65,585

$8,230

$44,819

$2.09

$598.87

$286.54

$323.10

0.4186

0.4602

0.9096

$36,341

$2,457

$18,317

$1.15

$420.26

$364.34

$435.99

0.4242

0.4938

0.8591

$29,244

$5,773

$26,502

$3.84

$967.41

$251.93

$272.91

0.4151

0.4389

0.9458

$65,585

$8,230

$44,819

$2.09

$598.87

$286.54

$323.10

0.4186

0.4602

0.9096

www.imagingbiz.com | August/September 2011 | Radiology Business Journal 59

Billing | Accounts Receivable Analysis

rates seems puzzling. The resolution percentage was based only on cash and noncash credits; charges were not considered. Payor fee divided by charge is a more relevant measurement; it assumes perfect resolution at the negotiated-fee level. Note how uniform its ratios are for all months except July.

January and March have low resolution rates. The reasons are easily understood because of the extent of compliance and bad-debt losses attributed to cases in those month of service. Compliance write-offs are random, but the large baddebt credits in the early months of the year are triggered because patients must meet annual deductibles, making them responsible for the entire payor fee.

The bad-debt and courtesy trends could reflect both timing issues and policy decisions. The absence of bad debt in the last three months was probably due to the timing of the data extraction, since fewer patients will have deductibles to meet that late in the year. The courtesy adjustments seemed to increase to a new level suddenly in August. The receivables balances for the last four months of the year dropped more from bad debt and courtesy credits than from cash.

The success rate of the practice’s collection effort was expressed in the success-rate column, which was the achieved resolution percentage rate divided by the payor-fee resolution percentage rate. The most noteworthy month was July, measuring 98.85% of the maximum attainable amount. There was an insignificant balance remaining.

The main reason for this is case mix; note the maximum achievable level (42.44%). In other words, the mix of exams in July was so favorable that actual collections almost matched the perfect universe. Perhaps there was a low incidence of multiple-procedure discounts or a higher rate of better-paying procedures.

Analysis Findings Slightly more than 50% of the exams were resolved exactly at the payor-fee level, at rates approximately twice those of the Medicare schedule for this region.

Exactly 31% of the exams could have been resolved at the payor-fee level, but

revenue was lost—either from failure to collect self-pay balances or due to amounts that remained to be collected at the time of data extraction. This percentage could have declined to 20% thereafter, as more outstanding balances were paid.

The bad-debt and courtesy losses attributed to just this one payor are significant enough to warrant exploration, by the imaging center, of making copayments mandatory at the time of service. Any subsequent need to refund overpayments would still be a better alternative than the loss of copayments that are never collected.

The remaining 19% of accounts failed to resolve at the payor-fee level and will not do so without corrective action (assuming that some action is appropriate). Within this number is a population of exams that might not belong in this payor universe, suggesting that the imaging center’s staff either did not acquire information about changes to an existing patient’s account or that a new patient provided incorrect information. The billing system purposely keeps the original payor as the primary one, even if it subsequently acquires different information.

The value per exam at the payor-fee level is $323; this amount, however, is only relevant to this provider and this payor, and is not applicable elsewhere. Actual cash per exam has reached $286. The cash value of the remaining receivables ($45,000) contains a large proportion of bad debt and courtesy, and it might only increase the final number to $288. This implies a shortfall of $86,000. The average number of procedure codes per account (considering only those with multiple transactions) was 3.84.

Supply (disposables) codes are included in this average.

While this inquiry was triggered by the practice’s belief that one payor was delinquent, it turned out that many payors were in default—a considerable number of patients. As insurance companies and employers shift a greater share of healthcare costs to the patient, self-pay balances are a growing problem for radiology groups.

James A. Kieffer, MBA, is president of Proforma Financial Group, Inc, Nashua, New Hampshire; James.Kieffer@comcast.net.

60 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

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FinalREAD

Next-generation Radiology Leadership Leaders in radiology have access to expanded educational options in the nuanced art form of leadership By Curtis Kauffman-Pickelle

I

t is always encouraging to see the profession’s toptier institutions embrace the notion of helping to develop tomorrow’s radiology leaders. It not only is the right thing to do for a profession in transition, but it validates and underscores what has become, for me, a vocational mandate. I have been dedicated to the idea of supporting imaging executives as they achieve success through innovative and proven leadership strategies; a recent experience and a new development prove that others whom I respect are equally dedicated to this mission.

Cheryl Proval and I recently participated in the annual RBMA Executive Education Program in Scottsdale, Arizona, at which a faculty of leaders in health care and radiology specifically addressed some of the most pressing issues facing the industry today. The idea that the RBMA is dedicated to educating tomorrow’s leaders is encouraging and worthy of support. The nonphysician leader in today’s radiology practice is faced with a deluge of data, information, uncertainties, and difficult decisions. It is good to know that they can find tactics and strategies to help

them navigate these with current techniques and solutions, all of which were on display at the meeting.

Equally encouraging and inspirational is the fact that the ACR® has recently announced the formation of the Radiology Leadership Institute (RLI), launching in 2012 at its first invitation-only event at Northwestern University’s Evanston Campus

Process geeks are not really inspirational leaders. Sure, the trains will run on time, but where will they be headed, and what will happen when they arrive? in Illinois. Elsewhere in this issue you will find an interview with Cynthia Sherry, MD, FACR, chair of the ACR Commission on Leadership and Practice Development and medical director of the RLI. The entire premise of Radiology Business Journal was—and is—the idea that leadership is the key to success in an increasingly complex health-care arena.

Likewise, it is clear that current trends in leadership, when applied to the practice or hospital setting, can make the difference between success or failure in a less forgiving marketplace, such as the one that we are faced with today. It is only going to get more competitive, less forgiving, and less predictable in the future. When I launched this publication, the value proposition was very clearly stated in our tag line: For leaders in medical imaging services. It is with this

62 Radiology Business Journal | August/September 2011 | www.imagingbiz.com

position within the business of radiology in mind that I offer my applause and support to both the RBMA and the ACR for these programs.

Leadership today is a nuanced art form. To be successful, leaders need to be superb communicators, intellectually curious learners, innovators, analyzers, thoughtful and pragmatic strategists, and passionate about the profession that they have chosen. Nothing less will get the job done. Nothing less will result in the ideal result of leadership: followership. People will follow those they admire, respect, and feel confident about; it is the ability to instill confidence in and among the constituents that is the hallmark of true leaders. The best way to nurture such confidence is through demonstrating enthusiasm and passion for your chosen profession.

Leadership is also not for everyone. It is certainly not for those who are not fully committed to reinvention and innovation.

It is, likewise, not for those who just wish that everything would stay smooth and uneventful—those who thrive on routine and predictability. Process geeks are not really inspirational leaders. Sure, the trains will run on time, but where will they be headed, and what will happen when they arrive?

We wish the RBMA and the ACR the best of luck in the continued development of their leadership courses, and we encourage you to take full advantage of the resources available to help you achieve new levels of leadership within your organization. RBJ is dedicated to making that happen, and we are pleased to share this vision with such prestigious institutions.

Curtis Kauffman-Pickelle is publisher of ImagingBiz.com and Radiology Business Journal, and is a 25-year veteran of the medical-imaging industry.

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