Prepare for sharp increases in diagnostic imaging costs if CMS prices practices and entrepreneurs out of the imaging center business The setting was luxurious, but the mood decidedly frugal at the recent Imaging 100 meeting in Carlsbad, Calif. Not that executives from the nation’s leading outpatient imaging companies were stuffing shrimps into their jacket pockets, but everyone was bracing for a new round of cuts to the technical component, beginning with the recommendation of the Medicare Payment Advisory Commission (MedPAC) for a 90% equipment-use factor. Session after session highlighted the difficulties of accessing capital, the shortening of renewal fees on lines of credit, and the impact of high deductibles on the seasonality of imaging. Even an upbeat wrap-up session on the final day, moderated by the publisher of this magazine, highlighted the successes of several operators in diversifying their businesses—primarily, beyond the borders of diagnostic imaging. A final session featured a roundtable of health care venture capital representatives who confirmed that the money has moved on—as the audience members already knew. I left the meeting with one persistent question: What would happen to the total cost of health care if radiology practices and entrepreneurs closed the imaging center doors? Price disparities among sites for the same study are notoriously broad in some markets, where some payors reportedly reimburse an outpatient imaging center as little as $300 for an MRI study, but pay closer to $1,000 for the same study in a hospital-based outpatient setting. Price, though, isn’t the only reason to keep outpatient imaging centers open. Many patients prefer them. In 2007, 33.3% of outpatient CT, 57.8% of outpatient MRI, 42.2% of mammography, and 56.6% of PET exams took place in the freestanding imaging center environment, according to data from Thompson Reuters. Freestanding outpatient imaging centers are successful for reasons that have been enumerated many times: Patients like the convenience, the ambience, and the service that outpatient imaging centers offer. They don’t like the crowded parking lots, concrete floors, and institutional green walls traditionally found in the basements of most hospitals. Safety is not an issue, as IDTFs surely operate in one of the most heavily regulated environments in all of health care. A recent study1 by Shah-Patel et al looked at four years of adverse-event records in an outpatient imaging office setting and concluded that it is a safe environment in which to be imaged and to undergo selected interventional procedures. My intention is not to pit freestanding against hospital-based outpatient imaging providers, but to state some facts, and to train a flashlight on one of the fiscal realities of the diagnostic imaging market place, although this reality is well known to anyone operating as an IDTF. Reportedly, some radiology benefit management companies are beginning to recognize this and to steer studies to selected outpatient centers to help insurers control imaging costs. Expressing concern that the technical component of medical imaging is too generous, MedPAC has urged CMS to adopt an equipment-utilization rate of 45 hours per week, or 90%, for all equipment that costs more than $1 million, and to consider doing the same for equipment that costs less.2 MedPAC based its recommendation on a study that it conducted in six markets that showed comparable equipment-use rates. This could result in a 44% cut to the technical component of MRI, CT, and PET studies. Are most imaging centers operating their technology 45 hours a week? Since the DRA, the busy, well-run centers certainly try, but not all centers are this busy, and many are certainly not busy enough to keep all modalities humming 45 hours a week. A 90% equipment-usage requirement would put many PET operators out of business. Be certain that if diagnostic imaging is no longer a viable business, the health care entrepreneurs will move on; the money already has. It will not be long before radiology practice shareholders discover that their professional fees are subsidizing the technical component, and more doors will close. CMS is best advised to proceed judiciously and with caution. Before she passed away at 93, and whenever I seemed ready to do something stupidly impulsive, my mother-in-law advised me, “Don’t throw the baby out with the bath water.” That would be costly indeed.