The 50 Largest Radiology Practices

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Introduction by Joseph P. White, CPA, MBA The second annual survey’s results are in, and I think you will find that they are representative of the larger groups in the country. We, of course, recognize that there are many large groups that chose not to participate in the survey, and consequently, the survey is not 100% accurate. I think we would still agree it is interesting and fun to read. You will see that some of the larger groups declined in size. This is probably directly related, first, to the ability to increase the productivity of radiologists due to RIS/PACS and specialization and, second, to reimbursement cuts, self-referral, and radiology benefit management, resulting in decreased revenue and the groups’ adjusting of radiology staffing accordingly. It appears that there is a fair amount of merger activity going on, so it will be interesting to see what next year’s results look like. Thank you for participating! Joseph P. White, CPA, MBA, is principal, LarsonAllen, Minneapolis, Minnesota.
The 50 Largest Radiology Practices for 2009 Click here for [Table] or [PDF] For the second year, LarsonAllen (Minneapolis, Minnesota) and Radiology Business Journal have cosponsored a survey to determine the ranking and characteristics of the largest radiology practices in the United States. Because the financial information submitted by the survey respondents is confidential, largest is defined as meaning that these practices have the most radiologists, counted in FTEs. Of course, many of the groups having the most FTE radiologists will naturally have the highest revenues as a result. Unlike last year, the sponsors have elected to rank academic practices using a different survey methodology because of the shared research mission. The survey was conducted from July 15 through September 15, 2009, using a Web-based questionnaire that was made available to RBJ readers and the readers of ImagingBiz.com. There were 67 responding practices, and the survey cosponsors are grateful not only to the 50 practices represented here (see table), but to the 17 responding groups that had fewer FTE radiologists. The details provided by all 67 respondents helped to clarify the trends affecting the practice of radiology in 2009. Because the responding practices were self-selected in that they were willing to provide their information, it is not possible to claim that every large radiology practice in the United States is represented here. For the same reason, the median values for selected practice variables (Figures 1–4) can only be considered to apply to the survey respondents themselves. Nevertheless, the survey is certainly likely to represent the majority of large radiology practices, and changes in the median values based on the information submitted by those practices probably indicate trends that deserve consideration in planning for 2010 and beyond. As the survey is repeated annually, those trends will become clearer and more useful over time. The Largest This year, the largest radiology practice, with 106.2 FTE radiologists, was Advanced Radiology Services PC of Grand Rapids, Michigan. The practice grew substantially this year, adding 17 FTE radiologists. It has 20 FTE employees and has 105 teleradiology clients in one state. It has 15 hospital contracts and has no imaging centers. The second-largest practice was St Paul Radiology in Minnesota, which has 85 FTE radiologists (up from 83 last year) and 116 FTE employees. The group has an unspecified number of teleradiology clients in nine states, has seven imaging centers, and has 13 hospital contracts. The third-largest practice reduced its staffing slightly this year. Austin Radiological Associates in Texas now has 78 FTE radiologists, down from 84 last year, and it has 644 FTE employees; in 2008, it had 700. It has 14 imaging centers and 15 hospital contracts, and it performs all of its interpretations via teleradiology, primarily from central reading centers. Five other groups also had more than 65 FTE radiologists, 16 groups had 50 to 65 FTE radiologists, 12 groups had 35 to 49 FTE radiologists, and the remaining 14 groups had 25 to 35 FTE radiologists. Changes for 2009 A look at the data indicates that many of the large became larger in 2009; the average group size for the 50 largest practices is now 48 FTE radiologists and 154 FTE employees, and the smallest of the 50 groups has four more FTE radiologists than 2008’s smallest group had. In part, this growth could indicate that the benefits of being part of a large practice (including access to superior imaging equipment, IT, and support staff) make it easier for large groups to attract and retain radiologists. It might also reflect the ongoing merger/acquisition activity being seen in radiology, since some small practices have found it more difficult to survive in recent years without affiliation with larger organizations.
imageFigure 1. Median number of imaging centers, 2009.
In all four practice-size categories, the median number of imaging centers (Figure 1) has decreased since 2008. For the largest practices, the median number of imaging centers was reduced less than it was for centers in the other three size categories. The most dramatic reduction was among centers having fewer than 35 FTE radiologists, which saw a reduction from a median of about five centers in 2008 to two centers for this year. The average number of imaging centers for the 50 largest practices combined has also decreased, from seven in 2008 to five in 2009. Procedural volumes fluctuated slightly in both directions (Figure 2), but no clear trend has emerged. The significant fact here may be that overall volumes have changed so little when staffing reductions have been so common, indicating that radiologists and practice employees are more productive (and/or overworked) than they were in 2008. It is also possible that large practices have taken advantage of advances in information systems and imaging equipment that make it possible to perform more procedures with fewer people.
imageFigure 2. Median number of procedures performed, 2009.
Lower staffing levels were seen at practices in all four size categories (Figure 3), with an average of 3.2 FTE employees per FTE radiologist. Clarification through more detailed questions in future surveys will be helpful, since the staffing range for this year’s survey is extraordinarily broad (from 13 to 827 FTE employees). This huge difference might indicate that practices define FTE employees in different ways; it could also show that some practices rely on (uncounted) hospital staff to perform many tasks. In addition, it could be a reflection of the varying degree to which practices use outsourced versus in-house staff for their billing, repair/maintenance, IT, marketing, and other services. This interpretation of the numbers might be supported by the variation in median FTE employees by group size. Perhaps the smaller groups are more likely to outsource some tasks than to employ staff for those functions—especially if the group is not large enough to keep an employee busy all the time with a highly specialized task in the biomedical-services or IT area, for example. The average number of hospital contracts for all 50 practices increased from around eight for 2008 to 11 for 2009. This increase is also seen for three of the four practice-size categories (Figure 4); the largest practices added one contract to their median number of hospital contracts, raising it from 13 to 14, but the practices having 25 to 35 FTE radiologists doubled their median number of contracts (from three to six). Hospital work might be keeping procedural volumes roughly stable, even as the number of imaging centers decreases. Upside-down Productivity Although the revenue information submitted by survey respondents will not be released, gathering it is an important reason for performing the survey because of the larger patterns that it illustrates. For example, one surprising finding for 2009 is that larger groups do not exhibit higher revenues per FTE radiologist, even though this pattern seemed obvious last year. In fact, the revenues per FTE radiologist have flipped this year, with the highest median revenue figures seen among the practices having fewer than 35 FTE radiologists; medians then decline steadily as practice sizes increase, with the lowest median revenue per FTE radiologist being shown by the eight practices with more than 65 FTE radiologists.
imageFigure 3. Median number of employees, 2009.
Since revenue per FTE radiologist is one measure of productivity, it is possible that some characteristic of the largest practices impedes the productivity of radiologists. Productivity is not the only factor that affects revenue per FTE radiologist, however. Location, payor mix, and the effectiveness of billing/collections all change revenues, no matter how hard the radiologists are working. Perhaps, too, the largest practices have been successful in competing for the largest contracts—and, as a result, have been expected to accept the lowest payments per exam. In any case, the two groups of practices having fewer than 50 FTE radiologists performed more procedures per FTE radiologist than the two larger groups, and groups having more than 65 FTE radiologists had the lowest average number of procedures (14,662) per FTE radiologist.
imageFigure 4. Median number of hospital contracts, 2009.
The practices with the second- and third-highest per-radiologist revenues were both in the group having fewer than 35 FTE radiologists. The practice with the highest revenue per FTE radiologist, however, was among the largest, so there may be high levels of productivity at both ends of the size range. For that practice, more is clearly better; in addition to the highest per-radiologist and overall revenues, it had more FTE employees, contracts, and imaging centers than the average figures for the 50 largest practices. Determining which factors actually boost productivity most, in both larger and smaller groups, will require more detailed questioning in future surveys. New Data There are three areas where no trends can be spotted because the corresponding questions were new for the 2009 survey. The snapshot provided for today will be fleshed out when the 2010 survey repeats these questions, which concerned teleradiology, coverage strategies, and subspecialty expertise. As the table shows, all but two of the 50 largest practices provide at least some teleradiology services. Perhaps because multistate licensure can be tedious and costly, 30 of the 50 practices provide teleradiology within only one state, which can be safely assumed (for the same reasons) to be the practice’s home state. Of the remaining 18 teleradiology practices, all but three limit their services to five or fewer states. One practice serves all 50 states, one serves 10, and the third serves nine. Some practices have only one teleradiology client, and most have fewer than 50 clients. The practice serving all 50 states, it should be noted, is a hybrid practice that does not fit squarely within any of the three practice descriptions (private practice, imaging center company, or teleradiology organization) offered to survey respondents. It seems safe to predict that these figures will increase for next year’s survey, since more health care facilities appear to be seeking teleradiology coverage; once a practice has invested in the technology needed to provide teleradiology services, there is little reason for it not to pursue more teleradiology business. In fact, teleradiology could be among the reasons that volumes have remained fairly steady while staffing has dropped. Because teleradiology exams awaiting interpretation can be directed to radiologists who are experiencing lighter workloads, time that might otherwise be spent waiting (or driving from one facility to another) can instead be used for interpretation. For their own needs, only four of the 50 practices use teleradiology services for night coverage. These four are not among the smaller surveyed practices, however, as they have from 41 to 58 FTE radiologists. Seven practices use a combination of in-house and outsourced night coverage, and 12 use only in-house night coverage. Two practices cover their subspecialty reading needs using a combination of in-house and outsourced interpretation. In-house subspecialty coverage is available 24/7 at 21 practices, including all but one of the practices having more than 65 FTE radiologists; it seems reasonable to assume that the larger a practice becomes, the less it needs to outsource coverage (although radiologists’ lifestyle preferences might still motivate it to do so). The survey respondents were asked to indicate whether they provided services in eight subspecialty categories: cardiac, musculoskeletal, neuroradiology, mammography, breast MRI, chest, pediatric, and emergency. The majority (28 practices) said that they provided services in all eight categories. All of the respondents provided mammography, and only one practice lacked breast MRI services. Another did not provide musculoskeletal imaging; two did not offer neuroradiology services. Chest and cardiac imaging were not provided by six practices each, and eight practices did not make pediatric services available. The least commonly represented subspecialty was emergency radiology, which was offered by only 37 of the 50 practices. A survey such as this is meant to raise questions as well as answer them, for practices of all sizes, as they compare themselves with the 50 largest practices, review the past year’s changes, and consider how trends should affect their long-term strategies. The survey’s cosponsors are grateful to the 67 participants for making this possible. They also hope that next year’s survey participants will be just as generous with their time and insight—and that any large practices that were not represented this year will choose to be part of this project for 2010. Editor’s note: We gratefully acknowledge the contributions of Laura Tierney, LarsonAllen, who provided the computations for this survey. Kris Kyes is technical editor of Radiology Business Journal.