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 radiologists to be deployed to the various institutes when needed, the PACS allows subspecialty radiologists to read studies wherever they happen to be. The closer alignment of subspecialty radiologists with specialist physicians in the institutes of excellence has, in turn, been good for radiology referral patterns. Michael Roossin, MD, is president of Newport Harbor Radiology Associates Medical Group, medical director of Newport Imaging Center, and director of ultrasound at Hoag Hospitals. He deems the volume of patients referred to centers that the practice staffs to be higher now that the institutes of excellence are in place, attributing the trend (in large measure) to the influence on physicians’ referral decisions of a guarantee of subspecialist care for patients. “The fact that a neurology patient will be certain to have his or her study read by a neurology subspecialist (and the like) has a bearing,” Roossin observes. “The one variation is orthopedics, because HOI has its own MRI component, and although we are called upon to help with interpreting studies, patients can be referred there. Still, in all, being so subspecialized is the key to fitting into the model.” Another byproduct of jumping on the institutes-of-excellence bandwagon is enhanced collaboration among radiologists and other physicians. Such collaboration is especially evident within HOI, according to Alan Beyer, MD, medical director of HOI. Beyer describes a sequence of events that unfolded a few months ago, when a large number of studies of different patients revealed the presence of pulmonary emboli. He and his colleagues immediately met with radiologists to discuss the use of spiral CT to identify such emboli and the interpretation of studies that show multiple emboli. “This type of collaboration—and the resultant value and quality of care—would never have been possible in a large-hospital setting,” Beyer says. In just one year, HOI made significant improvements in everything from infection rates (from 0.9% to less than 0.1%) to lengths of stay (2.4 days for total knee/hip replacements, compared with a national average of 3.9 days) to turnaround times (from 40 minutes to 22 minutes). These results were achieved while reducing the cost of care by 20% to 25%. Six months ago, HOI physicians and members of the Hoag Hospitals radiology department engaged in a collaborative effort aimed at improving value by revising certain ordering protocols for imaging. For instance, prior to this endeavor, it was common for older patients who were experiencing knee pain (but had not experienced any trauma) to be have four knee views acquired—when a bilateral weight-bearing radiograph would have sufficed, Beyer says. Together, the constituents drew up guidelines and a revised protocol, he says, “reducing the number of films, in this case, from four to two—and specifying more relevant films, in the bargain.” The results were decreased costs and simultaneous improvements in the clinical experience. Erosion of Purchasing Power In a somewhat less positive vein, the model has wrought significant changes in imaging-equipment purchasing. Prior to its inception, equipment acquisition was imaging driven, Brant-Zawadzki says, “with radiologists pounding their fists at the COO about how much money a particular machine would bring in” and the requirements of the radiology department almost exclusively taken into consideration as buying decisions were weighed. In contrast, purchasing is now clinically driven and under the control of all five institutes of excellence. The final determination of whether a given service will obtain a given piece of equipment, do without it, or cede it to another center is predicated on how the acquisition will affect the bottom line of the institute in question. Its effect on radiology business and strategic development does not come into play. Not long ago, Hoag Heart & Vascular Institute won out over the radiology department when it came to the purchase of a CT-equipped angiography suite. Similarly, Hoag Neurosciences Institute—instead of Chang and his colleagues—recently got approval to acquire an additional SPECT camera to perform ioflupane testing for the early detection of Parkinson disease. “In both situations, greater clinical need was the driver,” Brant-Zawadzki recalls. “The Heart & Vascular Institute has been performing a high volume of percutaneous heart-valve insertions.” Its need for the angiography suite, therefore, was deemed greater than the need of the radiology department. The fact that it has its own imaging equipment has permanently shifted to HOI’s shoulders any determination of when the addition of new technology is warranted there. “The orthopedists, not the musculoskeletal radiologists, make the determination,” Brandt-Zawadzki states. “With a model like ours, lots of different layers and players are involved.” Chang adds, “We see many more cooks stirring the purchasing pot; it’s inevitable.” In addition, in certain instances, sums that might once have been approved for investment in imaging equipment are earmarked for other capital investments instead. If radiologists working under an institutes-of-excellence model want to play a more significant role in the technology-purchasing process, they will need to make a stronger business case for each acquisition. This means bringing evidence to the table that the equipment in question will yield a cost saving and a good return on investment, Brant-Zawadzki says. One aspect of the model that remains in the midst of evolution—and for which the impact on radiology remains to be seen—is payment. Reflecting improvements in value and clinical outcomes, decreases in the cost of care, and a now-enhanced patient experience, HOI participates in a bundled-payment pilot project sponsored by the nonprofit Integrated Healthcare Association. HOI maintains contracts with Aetna, Blue Cross Blue Shield, and CIGNA for total knee replacement. It is also an Anthem preferred network provider, as well as one of 16 California hospitals selected by the California Public Employees’ Retirement System and Anthem to provide a voucher system under which patients receive a $30,000 voucher to pay for a knee or hip replacement. Patients are awarded a 90-day postsurgical warranty; HMHP covers any complications related to the joint replacement during that period. A bundled-payment structure for the other four institutes of excellence has not yet been adopted; Newport Harbor Radiology Associates Medical Group continues to receive direct payments for interpretations, according to Michael Madler, COO. Madler notes that while HOI’s arrangement for hip and knee replacement is still in its infancy, he foresees major changes in the payment structure in the near future, with services provided to patients of the institutes paid for in bundled fashion and subsequently divided among radiologists, surgeons, pathologists, physical therapists, and others. “I think the days of each specialist negotiating separately with each payor will soon be behind us,” Madler says. Political/Organizational Issues The move toward the kind of patient-centered, value-focused, integrated delivery system being established at HMHP bodes well not only for HMHP and systems like it, but also for radiology within and beyond its walls. Nonetheless, as the HMHP experience illustrates, there have been, and will continue to be, bumps in the road that will affect radiology, to a certain extent. Such roadblocks, according to Brant-Zawadzki, encompass a tendency among physicians to view the model as creating an us-versus-them scenario and the devaluation of individual services, including radiology, that are not specifically identified within an institute of excellence. The key to overcoming or minimizing these challenges, he insists, is communicating to stakeholders the value proposition afforded by moving away from a traditionally structured, institution- and physician-centered, service-based organization. Explaining what will change and what will not is crucial, as is clearly defining the institute-of-excellence concept (a subject on which Brant-Zawadzki et al1 reported in 2009). A key communication point is helping constituents to understand that institutes of excellence and affiliated programs are not power-based entities within a given organization, but rather, in Brant-Zawadzki’s words, “philosophical and organizational exoskeletons developed toward optimizing the main mission.” In this model, each individual or service might, at some juncture of a patient’s experience, function as a component of an institute of excellence or affiliated program. This structure can potentially take some of the pressure off unprofitable service lines that face the threat of being discontinued, Brant-Zawadzki notes. Nonetheless, there are political and organizational implications when the issue of revenue allocation is considered. For example, Brant-Zawadzki states, radiology leaders might object to the allocation of revenue from many MRI scans to a neurosciences institute of excellence. “Unless that revenue and expense cycle is, in keeping with the model, reallocated to the programs and centers of excellence as a whole, it would be impossible to achieve a comprehensive analysis of their patient value,” he explains. There also is the question of where radiology generalists fit into the model. At Newport Harbor Radiology Associates Medical Group, leaders found themselves considering how to assign radiologists in the practice who do not subspecialize and, consequently, could not be assigned to serve any of the institutes. “Clearly, we did not want to eliminate them, so we identified other places for them to concentrate on general radiology within our organization,” Chang states. “Any provider choosing to go in the institutes-of-excellence direction will probably need to do the same,” Chang explains, because subspecialization and subspecialty alignment are where the value of radiology reside, in such a model. General body imaging (including body CT exams, plain films, and fluoroscopic procedures) was shifted to the generalists. Some general radiologists needed refresher courses on some of the procedures or studies, but overall, Chang reports, the redistribution of studies went well. In addition, although the advent of the model has not altered the cohesiveness of the radiology department, it has introduced an element of competition between radiologists and certain other physicians in the institutes of excellence. Orthopedists and neurosurgeons, Brant-Zawadzki points out, are growing more skilled at harnessing imaging technology. Such aptitude, coupled with the increasing sophistication of the equipment itself, is (to some extent) enabling these physicians to step partway into radiologists’ shoes. In addition, Brant-Zawadzki says, vascular intervention has been largely taken over by cardiologists. Adding Value to Value Such competition and other disruptive changes notwithstanding, radiologists will continue to play an important part in defragmented health-care delivery. “It simply isn’t practical for clinicians to be handling the bulk of imaging studies,” Brant-Zawadzki says. Afable perceives the ongoing role of radiologists as centering on the addition of value to value, within the HMHP model and others like it. “Clinical outcomes, the patient experience, and cost are all important,” he states. “Does imaging improve clinical outcomes? You bet: Without good, effective imaging, we cannot make accurate diagnoses, whether we are talking about appendicitis or a subdural hematoma. If clinical outcomes and the patient experience are the same at two facilities, though, cost is going to be the deciding factor in where care is obtained.” This is especially true as patients become responsible for a larger share of payment and as health-care reform brings accountable-care organizations to the table. “Appropriate use of imaging adds tremendous value,” Afable says, and appropriate use can start and end with radiologists. He adds that HMHP is currently exploring new means of expanding the institutes-of-excellence concept to other areas of the organization. “We are at the tip of the iceberg,” he concludes, “but wherever we go with it, radiology should have a place in the value chain.”