Hospital–Radiologist Alignment: Together, but Separate

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Alignment increasingly occupies the thoughts of health-care stakeholders—insurers, legislators, and regulators, but especially hospitals and physician groups. Because alignment sets the stage for service and quality improvements, as well as for the implementation of cost-control mechanisms, the interest is warranted. Hospitals have sought to employ both primary-care and specialty physician practices for the ability to impose quality and cost uniformity through top-down policies, procedures, and cultural mandates. Although hospitals have yet to make radiology practices a focus of their alignment designs, that has not stopped some imaging providers—especially those who savor their independence—from striving to achieve alignment of their own design with the hospitals they serve. Many radiology groups, in fact, recognize alignment as both a noble and a desirable aim. For this reason, Radiology Associates of Canton (RAC) in Ohio recently entered into a contractual arrangement that delegates to the group certain roles and responsibilities that were formerly the exclusive domain of the hospital. Specifically, RAC is now comanaging the radiology department at Canton’s Aultman Hospital, with responsibility for strategic planning and radiology-related capital investments, as Syed Zaidi, MD, president and CEO of RAC, explains. RAC and Aultman Hospital formed this comanagement agreement at the beginning of 2013, after two years of discussion. The idea was initially sparked when the parties realized that such an arrangement represented the most flexible (and potentially powerful) means of helping each other satisfy their business needs. Zaidi says, “Each side basically wanted more responsiveness. The hospital wanted faster turnaround time on imaging studies and reports, while my group wanted to eliminate certain inefficiencies built into he radiology department. Both of us were stuck in a status quo of mutual dissatisfaction. Despite that, there was a sense that things could be better, if only we each would give the other a chance to improve, and that’s what our comanagement agreement seeks to do: give each side the ability to improve.” The Essential Difference Comanagement/shared-management agreements are different from exclusive-provider contracts, according to attorney Thomas W. Greeson, JD, of Reed Smith LLP. “Comanagement entails managing the radiology department with the hospital, not for the hospital,” he explains. “Comanagement agreements allow radiology groups to have a positive impact on care—and give them an additional source of compensation. These agreements can also be a valuable tool to help radiology groups achieve longer-term security in their contractual arrangements with their hospitals.” Greeson continues, “For example, a hospital that issues tax-exempt bonds to finance on-campus capital projects involving radiology is likely to have, with the radiology group, an exclusive provider contract lasting just two years (or possibly three). That is done to satisfy IRS requirements surrounding the issuance of those bonds. Now (although hospitals typically don’t use tax-exempt bonds to finance outpatient imaging centers), if the radiology group has both a two-year exclusive provider contract and a separate 10-year contract for shared management of the outpatient imaging center, the hope would be that the hospital will naturally be inclined to keep renewing its two-year on-campus contract with the radiology group because of that off-site companion 10-year contract.” The comanagement agreement between RAC and Aultman Hospital took effect relatively recently, but Zaidi says that the benefits already are accruing. “It’s giving us more control, more participation, and more cohesiveness with the hospital,” he says. “We turned our relationship toward the positive.” Greeson notes that in almost all instances, the radiology group acts as the suitor, when it comes to initiating these arrangements. “It is incumbent upon the radiology group to make the first move,” he says. Indeed, that is precisely how the RAC–Aultman Hospital deal came to be. In late 2011, Zaidi says, “I decided to reach out to the leaders of Aultman Hospital. At the same time, the CEO of Aultman Hospital had temporarily taken charge of radiology after the vice president of radiology was moved to cardiology, and a leadership vacuum in radiology was temporarily created. It was by chance, then, that our interests coincided. It helped that the hospital’s CEO and