How Hospitals Are Rethinking Imaging

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Diagnostic imaging remains critically important to the bottom lines of individual hospitals and health systems alike, continuing to subsidize many less-profitable and unprofitable service lines while providing predictable growth. A rapidly changing imaging landscape, however, is spurring institutions to alter models for, and methods of, managing their imaging businesses on the inpatient and outpatient fronts alike. The languishing economy and the capital-intensive nature of this particular service line have placed a tighter-than-ever lid on access to capital. At the same time, reimbursement cuts are putting the squeeze on (as well as creating new opportunities for) hospital-affiliated freestanding outpatient imaging sites.

Gary A. Fammartino, MBA, serves as system executive for ambulatory and outpatient services at St Vincent Health in Indianapolis, Indiana. “In light of these elements,” he affirms, “the way we manage imaging now cannot be entirely the same as the way we may have done it even a short time ago.”

St Vincent Health is a member of Ascension Health, St Louis, Missouri, the nation’s largest nonprofit Catholic health care system. With 19 facilities serving 45 counties in central Indiana, St Vincent Health is also the state’s largest health-care employer. St Vincent Health provides imaging services at 13 hospitals and six freestanding OICs. Eleven hospitals perform imaging services on an inpatient and outpatient basis, while two hospitals have only inpatient imaging services.

Fammartino’s department is charged with expanding the outpatient services offered by the provider throughout the state of Indiana. He characterizes St Vincent Health’s model for imaging management as blended, noting that the provider does not look at “inpatient versus outpatient, but rather, at hospital-based inpatient and outpatient together, versus outpatient alone in the freestanding centers.”

Bottom-line responsibility for imaging services at each hospital rests on the shoulders of that institution’s own president, with Fammartino and his department lending support in all endeavors. He also presides over inpatient services at St Vincent Hospital in Indianapolis, the provider’s flagship. Management of the freestanding centers is a system-wide effort; Fammartino heads operations in line with the scope of his department’s function.

Clearing the Deck

It’s not surprising that cracks in the imaging landscape have spurred St Vincent Health to refine its imaging-delivery practices as a means of fostering growth. “Our vision for imaging,” Fammartino says, “largely entails moving away from tying up so much of outpatient processing on the hospital side to handle last-minute needs to serve inpatients, especially those who are in an emergency state. The inefficiencies of serving outpatients in the hospital are currently too great.” Moreover, he adds, it is impossible to compete effectively in the outpatient-imaging arena if the majority of patients must go to a hospital for service, as many individuals favor the freestanding-center experience over that of a hospital environment.

Toward this end, the system is in the midst of shifting as significant a portion of its hospital-based outpatient services as possible to freestanding centers. This includes all modalities, with a particular emphasis on MRI and CT services. Patients who need more invasive procedures (such as biopsies), or who require multiple tests in addition to imaging, will probably still need to come to the hospital-based imaging department.

Zip codes are being scrutinized to determine whether existing outpatient facilities are conveniently near the homes of sizeable existing patient populations, as well as to identify additional key markets for expansion.

Fammartino and his colleagues believe that this strategy will help St Vincent Health strike a good balance between decreasing the cost of providing inpatient imaging services and increasing outpatient traffic. “Operating a freestanding imaging center, versus operating the same services associated with a hospital-based location, has significant advantages,” Fammartino says. “One clear advantage is the streamlined approach of less overhead and lower fixed-cost structure associated with the freestanding imaging centers.”

In a related effort to enhance operating efficiencies, improve its bottom line, and bolster its radiology business as a whole, St Vincent Health is also evaluating the option of partnering with operators