CEO Roundtable: Practice–Hospital Relations

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Leading an independent radiology practice has never been more challenging. Congress has escalated the timetable for reductions to the outpatient-imaging technical component to help pay for health-care reform. Health systems have embarked on a medical-practice–buying spree across specialties and primary care, leading to some very well publicized meltdowns for radiology practices, and teleradiology providers are competing on a national level for hospital contracts. The CEOs of three leading radiology practices agreed to participate in an electronic roundtable discussion about the challenges of hospital–practice relations.

Wayne K. Baldwin is CEO of Pueblo Radiology Medical Group, a 23-radiologist group based in Santa Barbara, California. The group provides professional services for five hospitals and operates two wholly owned imaging centers, and employs a staff of more than 100. Prior to assuming this position, Baldwin served as president of MD Services, and as general counsel and chief development officer of Comprehensive Medical Imaging. Dennis Carter is CEO of TRA Medical Imaging, a 52-radiologist group based in Tacoma, Washington. The group provides professional services for six hospitals, and it operates five wholly owned OICs and three OIC joint ventures with a combined clinical, office, and support staff of 307 employees. Prior to holding his current position, Carter served as the executive director of Gainesville Radiology Group in Georgia and as CFO of X-Ray Associates of New Mexico in Albuquerque.Keith Radecic has been CEO of Radiology Alliance, PC, a 45-radiologist group based in Nashville, Tennessee, for seven years. The group provides services for seven hospitals and operates one wholly owned imaging center. Prior to serving in his current position, Radecic was national director of billing services for a national medical billing company, where he was responsible for six management services organization locations across the United States.RBJ: Leading an independent radiology practice has never been more challenging. What are the key external threats to the viability of the practice?

Radecic: Many external forces can become perceived threats to an organization, including both local and national competition with other radiology groups. For example, how do you balance the use of a night-coverage service while ensuring no impedance of competition from that group on your practice, since the service’s physicians are already credentialed at your hospitals? PACS has been a great asset to a radiology group, but it also enables other competitive groups to supply the service remotely and quickly. In a phrase: Commoditization of services is a threat.

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

—Keith Radecic, CEO,
Radiology Alliance, Nashville, TN

Other threats we see are payors’ impact on lowering professional reimbursements to the radiologists, governmental intervention through increased regulations, and general health-care reform and its impact on the industry. Another concern is other subspecialty physicians who generate potential service creep for almost all imaging modalities.

Carter: For TRA Medical Imaging, hospital acquisition of the referring-physician community, declining government and commercial reimbursements, a growing disproportionate percentage of after-hours work, and erosion of interpretations (turf battles) are a few of the bigger challenges.

Baldwin: An ongoing threat is the continued targeting of radiology reimbursement by government, with an ever-increasing burden of compliance with new regulations. Government has told us, in effect, “Radiology will get paid less, but we expect you to adopt and adapt to new technology, provide better service, and see more patients.”

Another issue is that of taking action to demonstrate (and provide) value and service to our customers in a way that overcomes the trend toward the commoditization of radiology. A manifestation of commoditization is the greater role of radiology benefit management companies. Managed-care entities will only deal with you if they need you. If not, their primary focus is on sending patients to the lowest-cost provider. There are numerous recent examples of unilateral fee-schedule reductions by Anthem Blue Cross, CIGNA, Aetna, and