Radiology’s Role in a Defragmented System: The Hoag Experience

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In recent years, health-care reform (in all its guises) has spurred providers to investigate new methods and models for delivering services to inpatients and outpatients alike. Some do not affect radiology, but others have major ramifications for the way that imaging is delivered, managed, and paid for, as well as for the integration of radiology with other medical disciplines. An unprecedented, ongoing metamorphosis at Hoag Memorial Hospital Presbyterian (HMHP) in Newport Beach, California, falls into the second category. HMHP is a nonprofit regional health-care–delivery network that now encompasses two acute-care hospitals (Hoag Hospital Newport Beach and Hoag Hospital Irvine, known collectively as Hoag Hospitals); five urgent-care centers; seven health centers; and a network of more than 1,300 physicians. In a move spearheaded by Richard Afable, MD, MPH, president and CEO, HMHP’s orthopedics program—one of California’s largest—was closed in November 2010 and replaced with Hoag Orthopedic Institute (HOI) in Irvine, a specialty-hospital joint venture with HMHP’s physicians. The joint venture created the largest orthopedic specialty hospital and specialty center west of the Mississippi River. It includes Hoag Hospital Newport Beach; two medical groups (Newport Orthopedic Institute and Orthopedic Surgery Center of Orange County, both in Newport Beach); two independently owned ambulatory-surgery centers (Orthopedic Specialty Institute and Main Street Specialty Surgery Center, both in Orange); 35 orthopedists; and the 70-bed HOI facility (with nine operating rooms), which was designed as a specialty orthopedic hospital.   While ownership is divided 51% to 49%, in favor of the physicians, to enable HMHP to maintain its not-for-profit status, governance is split equally. Participating physicians hold 100% of the operating responsibility for the organization, but all entities—the hospital, ambulatory-surgery centers, and imaging—fall under the joint-venture umbrella. Afable made the move based on his belief in the shared value theory espoused by internationally renowned strategy expert Michael Porter, PhD, Bishop William Lawrence professor at Harvard Business School. Porter’s theory holds that if health-care professionals and institutions invest in their own outcomes, they will be more personally invested in treatment and more likely to deliver improved outcomes, an enhanced patient experience, and fewer repeated procedures and readmissions. Afable explains, “According to the formula, value is clinical outcome multiplied by patient experience and divided by cost. For us, adding value means improving clinical outcomes and the patient experience while simultaneously reducing the cost of care.” Early success gave rise to the recent establishment of four other institutes of excellence at HMHP: Hoag Family Cancer Center, Hoag Heart & Vascular Institute, Hoag Women’s Health Institute, and Hoag Neurosciences Institute. While some have referred to this evolution as a peeling off of service lines, Afable begs to differ. He notes, “From a corporate standpoint, it appears to be a move away from HMHP; however, through shared equity comes closer alignment, which opens us up to greater opportunities to add value.” The Upside Stronger allegiances and alliances among physicians from different disciplines have indeed been born of the model, with significant benefits being reaped by radiologists. Miles Chang, MD, is chief of radiology services at Hoag Hospital Irvine, vice chair of the department of radiology for Hoag Hospitals, and a radiologist with Newport Harbor Radiology Associates Medical Group in Newport Beach. He says, “The structure has definitely elevated the level of our interpretations and the perception of the value we offer. We can do studies better, more quickly, and at a lower cost because our musculoskeletal subspecialists work closely with HOI; neuroradiologists, with the Neurosciences Institute; and breast-imaging subspecialists, with the Women’s Health Institute. We have also refined the format of our reports somewhat to reflect the individual subspecialties and facilitate matters for the physicians.” Michael Brant-Zawadzki, MD, FACR, executive medical director of Hoag Neurosciences Institute and a radiologist with Newport Harbor Radiology Associates Medical Group, corroborates Chang’s impression. He adds that a comprehensive PACS makes a contribution here. Although the structure of the HMHP model permits subspecialty