Leading Texas-sized Austin Radiological Association
When it comes to size and influence, Austin Radiological Association (ARA) has few peers. The practice of 72—and soon to be more—radiologists employs 700 people (580 FTEs) in Austin. In addition to covering every one of the 16 hospitals in central Texas, ARA archives most of the radiological images generated at those sites on its regional PACS. The practice also owns and operates 15 imaging centers throughout the Greater Austin area. Doyle Rabe, CPA, served as administrator of ARA from 1996 to 1998, and he returned in 2001 as CEO. Radiology Business Journal recently sat down with Rabe to discover what it takes to lead a practice this size. RBJ: In a large radiology practice, the CEO is charged with leading the entire organization, including the clinical, operational, and administrative staff. Would you offer some best practices for building collaboration not just with physician owners, but also with the staff? RABE: You have to use an effective mix of leadership and management. The expectation from the physician-ownership side is that you will manage their company effectively. Strategically, that requires leadership skills to move the company in the right direction, with an insight into all of the factors that affect radiology and the medical industry as a whole. That leadership is developed through good stewardship and management of the company they have entrusted to you. I have accomplished that by surrounding myself with a great team of managers. That includes top-level managers at the financial, clinic-operations, business-development, and information-systems levels, and six additional directors to cover clinic management, contracting and compliance, business office, human resources, and hospital services. From my perspective, it’s more about providing good leadership, based on corporate core values, to this team than it is about day-to-day management. That is their job, and I am there to offer experience and insight to guide them. Leading such a large number of employees in this practice can be a daunting process. The diversity you encounter in a specialty-driven radiology practice ranges from neurointerventional surgeons, pediatric radiologists, body imagers, interventional radiologists, and musculoskeletal radiologists on the clinical-practice side to technologists, billing-office staff, customerservice staff, programmers, accountants, and others on the business side. I grew up as a middle child in my family, so analyzing situations and offering solutions is a natural part of my behavior. Much of my time is spent motivating people. I think the key to bringing both of these teams together is communication. My unique style is centered around verbal communication. In the days of email and instant messaging, I still rely on one-onone verbal contact. I am apparently infamous for the stories that I use to illustrate a point or to interject a point of view. I think there is more complete communication between people when they meet face to face, rather than reading a message that often gets misinterpreted. RBJ: Can you offer some best practices for minimizing friction between owners and employees and building one team that works as a unit? RABE: When I returned to ARA, it was to the position of CEO, rather than administrator. I think there is a big difference between the two titles and their job responsibilities. As administrator, your job is to implement policies and procedures as defined and directed by the board and the underlying governance structure. As CEO, you have a seat on the executive committee and you are an integral part of defining the policies and creating the procedures that run the practice day to day, as well as participating in charting the strategic course for the future. As a result, the goals of the organization are clearly communicated from the owners to the employees. All employees report to the CEO, who reports directly to the executive committee. That is not to say there is no input from the radiologists on employees. Through strategic planning and direction, the goals of the employees have been set. Through the annual budget process, the amount of resources needed to accomplish those goals has also been approved. If there are individual issues, the management structure (involving managers, medical directors, and administrators) is used, as defined by the executive committee. These parameters are set using open communication to meet the goal of creating a smoothly operating and profitable operation. RBJ: Would you describe the ARA governance model? Who is included in decision- making, and how? Is this model unique to ARA? Could it work in other practice settings, including those that are not as large? RABE: In 1999, ARA brought in an outside facilitator with radiology experience to lead a work session with the purpose of establishing a good governance structure. That resulted in the current setup, which has not changed appreciably since that time. It consists of a board of directors made up of all shareholders. That board meets once a month, with an agenda that covers major issues such as the annual budget, any purchases of over half a million dollars, electing executive-committee members and officers (this is done each year), physician staffing issues, and decisions that affect the entire practice that the executive committee wanted broader input on; the executive committee also meets once a month. It is responsible for the general business decisions for the company. There are currently nine members, with an additional ad-hoc member who represents the associate radiologists who have not become shareholders yet. The size of the executive committee could be scaled back to fit the size of your practice. At one time, I managed an eight-person group that had three members on the executive committee. In a practice as large as ARA, we also have several subcommittees that have been established by the executive committee. They are chaired by an executive committee member, for the most part, unless special talents are needed, but not available on the executive committee. The largest of these subcommittees, for ARA, is the outpatient committee that manages the 15 outpatient imaging centers that ARA owns. The members consist of the medical directors at each of the imaging centers. They make recommendations to the executive committee regarding the clinical operations and resource needs of the centers. That includes establishing or combining centers, equipment purchases, protocols, staffing levels, modality offerings, supply needs, etc. They meet once every two months and are supported by the chief clinic officer, her two directors, and support staff. The recommendations are reported at the executive committee and voted on there. The IT committee is our next largest, and its membership is made up of radiologists with an understanding of and interest in technology. Currently, there are seven members. ARA owns its own PACS, so it is one of our major committees. The decisions made by the IT committee center on equipment, performance guidelines, software solutions, project priorities, and resource levels. The meeting is supported by the CEO, CIO, and IT staff members. Again, those decisions are approved as recommendations to the executive committee. The staffing committee makes recommendations for radiology staffing levels and work schedules. ARA takes its own call, and this committee establishes those decisions as well. The staff scheduler and the chief clinic officer supply support to this committee. We established a physician-standards committee that handles the peer-review process, quality control, and physician issues. This committee is made up of five elected radiologists and is chaired by the ARA medical director. The last committee is the compliance committee, which oversees the Medicare and HIPAA compliance plan for ARA. RBJ: It sounds like there is a real effort at transparency. RABE: Yes, there are plenty of opportunities for a radiologist to serve on committees. In addition to those opportunities, all committees except the professional-standards committee are open to all radiologists, including non-shareholders. This gives them an opportunity to learn about the governance of the practice and prepares them for participating when they are shareholders. RBJ: How do you know if a practice the size of ARA is operating on all cylinders? What are the success indicators for running a practice this size? RABE: Obviously, the most common indicator for any business is income, but it is only one of the indicators. The income has to be balanced with lifestyle decisions, such as time off and length of the workday. When those decisions are made, the resources are hired to achieve them, and, to a great extent, that will drive the income numbers. The efficiency of your radiologists and staff will also affect the profit margin of your company. ARA has invested in many technologies that improve those efficiencies. We purchased our own PACS (Synapse®, FUJIFILM Medical Systems USA, Stamford, Conn) in 2001 and implemented it throughout our own practice. We realized a quick efficiency increase, for the radiologists, of 20% in the first two years. The conversion to digital equipment increased the throughput of our imaging centers (and, therefore, the technologists) by about the same numbers. The PACS was so well received by the medical community that we now provide PACS services to the largest hospital network in Central Texas. We followed that successful implementation with a conversion to a centralized dictation system and voice recognition that cut our transcription staff by 30%. We are currently migrating to a second-generation voice-recognition system that will reduce staffing by another 50%. We implemented paperless systems in the clinics and the business office. Last year, we converted some of our business office’s data-entry functions using optical character recognition and saved another 15 staff positions. Throughout all of these staffing reductions, we were able to place all of the employees affected into open positions within the company. ARA is constantly looking for additional ways to use technology to increase the efficiency of its operations. Over the past five years, that has amounted to a 30% increase in efficiency for the radiologists and the staff. Those types of improvements are necessary if we are going to survive the cuts in reimbursement that face radiology practices today. In order to measure your success and to identify additional areas for improvement, you have to have a good system of standards and measurements in place. We have developed just such systems over the past six years. We use different methodologies, depending on the department to be measured. In the business office, it is the billing system that holds all of the pertinent data. In information systems, it is an international system that most large computer shops have migrated to and now accept as the standard system. The clinics use information from the billing and scheduling systems, as well as internally developed benchmarks and measurements. Tying these disparate systems back into the overall goals and strategic plan of the organization while maintaining the core values of your company is a real challenge. RBJ: Why doesn’t ARA use a nighthawk service? RABE: We have looked at nighthawk services, but decided that is not the level of service that the hospital systems or referring physicians expect from our group. That is part of being a full-service radiology group. We have a full complement of subspecialized radiologists, and that high level of service should be available 24/7 from a radiologist that referrers are familiar with and feel connected to, we feel. RBJ: What are the most useful skills in the toolbox of a practice CEO in today’s reimbursement environment? RABE: The first thing that pops into my head is negotiating skills. It seems to be more and more difficult to make any progress in contract talks when the insurance companies are consolidating at a rapid pace, making it difficult to use the ultimate hammer of walking away from a contract. You have to be able—to be willing— to do that in order to receive a reasonable rate for your services. At the same time, I don’t feel you want to alienate yourself from them to the point that they seek out an alternative and make the processing of payments a nightmare. Another necessary tool is data reporting/ analysis. We use a rudimentary dashboard reporting system that monitors different practice benchmarks that have been set up; they cover different time spans from daily, weekly, and monthly through annually. We also plot trends over multiple years. We monitor things like turnaround times on reports (hospital and outpatient), editor turnaround, physician signing queues, modality volumes in the outpatient centers, billing data, collections, network downtime, network speed, database storage percentages, and so forth. If any of the information is out of whack, it is reported up the chain immediately for further analysis and correction. We use cost-accounting methods to analyze our operations properly by site, by business entity, and (in some cases) by modality. We track physician productivity using the work units of the relative value system that Medicare has established. These tools, and many others, are used to keep a constant vigil on the health of the practice. RBJ: The Deficit Reduction Act (DRA) effectively handed practices that own technology a significant pay cut. What do you think the radiology community should be doing to defend itself from such arbitrary cuts in the future? RABE: How do you explain the government’s actions sometimes? They were trying to make decisions at the last minute and balanced some other reimbursement changes against radiology technical fees because it had the fastest growth rate and they felt this would cool it. There are so many reasons why that is the wrong way to go about it, but many pundits say they will continue to cut fees until the market sorts out; that may hurt a lot of legitimate businesses along the way. The radiology community has increased its lobbying efforts tremendously over the past few years, but not nearly enough. I saw a statistic recently that indicated the average each radiologist in the country donates to lobbying and research efforts in their chosen field of radiology is less than $100. I am not sure of that number, but it is very low, no matter how you calculate it. ARA has contributed more than $2,000 per radiologist per year. It is going to take that kind of effort to keep radiology a viable medical specialty. I would encourage every radiologist and radiology group to budget the dollars to protect the practice of radiology that they have spent their entire lives developing and preparing for; it seems like cheap insurance for their futures. RBJ: ARA is well known as the market leader in quality and service in Austin. Where are the cost-cutting opportunities? RABE: We looked, for the first time last year, at used equipment. We ended up not buying in that particular instance, in large part because equipment manufacturers are hurting, and they brought the price of the new scanners down within arm’s reach of the used ones. Two years ago, we consolidated some of our smaller imaging centers into larger, more efficient ones, with upgraded digital equipment that can handle more volume. This turned out to be a great solution for us. Last year, we converted our mammography program to digital mammography. Again, with a volume of more than 100,000 screening mammograms, we were able to take advantage of some efficiency opportunities and increase the profitability of the program. ARA’s strong IT department has also enabled us to use technology to our advantage on the clinical and business sides of the practice. If these types of efficiency improvements are not enough in the future, then we will have to question the basic level of service that ARA has always provided. Do you cut back on patient comfort, waiting times, safety, response time, or something else? So far, we have not had to do that. In fact, we have increased our drive for improved customer service. It is the best tool you have. RBJ: ARA owns 14 imaging centers in the Austin area. How has the DRA affected how you lead and plan for growth in the future? RABE: In the past two years, ARA has had the opportunity to open two imaging centers in growing communities. In the past, we would have done so to gain market share, and ridden them long enough to create a profit. In the current climate, we decided not to open them and, instead, to wait for the growth in the communities to justify the expense of opening the centers. In one of the communities, a competitor has opened one instead of ARA. We will have to compete with them when we decide the population will justify a center. I think we will have a higher threshold, in the future, when considering new imaging centers. RBJ: Looking into your crystal ball, what do you see as the future for radiology practices? How do practices in positions of national leadership view the next five years in terms of new alliances, growth, and incremental growth? RABE: Market forces are very powerful. Over the past ten years, we have seen the spread of high-tech imaging equipment into the offices of other specialties. That has led to some of the professional component migrating to other specialists, as well. This move, however, has not been as rapid as some predicted. The alarm regarding a shortage of radiologists in the future is being met by increases in efficiency like the ones I mentioned. Whether or not this will meet the demand in the future remains to be seen. Reimbursement levels, government regulations, and payor restrictions have put a damper on imaging growth in other specialties, unless the margins are very high. If the market calls for increases in access and utilization, then someone will figure out how to provide them at a lower cost, even if that means a product that is inferior to one now provided, but still adequate to meet the needs of the patient. I think the radiology community is going to have to figure out how to respond to that demand. If not, others outside our community will. As it becomes more difficult to maintain the margin in our business, we may have to seek out alliances with other parties to make it work. Those may be with hospitals, which we have done, or other nontraditional parties. Will one of those partners become the federal government? We are looking at the change of leadership in our government. Will that bring some form of national health care, and what would that look like on the reimbursement side? The current model will probably be redefined in the next five years. Will that carry over to the commercial side of health care, and, if so, when? The better your data and the analysis of your practice’s business structure, the better chance you have to respond in a positive way.