Radiology and the IDN: The Big Shift

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Growing your high-tech imaging business is just not the same game that it used to be, according to William Barta, corporate director of imaging services for Fairview Health Services (Minneapolis, Minnesota). “The days of patients coming to us just because they have to are gone,” he says. “It’s a whole different mindset from what health care used to be years ago. It really boils down to the economy, and health care is late to the game, from a sales perspective.”

He continues, “Disposable dollars are fewer, and gas prices are up; employers are expecting people to pay a higher percentage of their deductibles or copayments, and people are becoming savvy shoppers. We get pricing calls all the time.”

When times get tough, the tough-minded must become more creative in order to bolster their positions. In Minneapolis, the company is taking advantage of the local corporate environment (which includes the headquarters of Best Buy and Target) to grow its brand through a mobile mammography business that Barta describes as thriving. It’s just one example of the ways in which Fairview Health Services is thinking laterally about driving the delivery of care to its patients.

“We’re like most other providers,” Barta says. “We are looking at expanding hours, requiring and requesting physicians to work later, staggering shifts so that they work in the evenings, and trying to funnel people to their primary-care providers—so they have a relationship built, rather than an emergency-department visit.”

That means purposely pushing business out of Fairview Health Services hospitals and into the primary-care setting, Barta says, which is subsequently driving its imaging business into the community. Inpatient volumes are declining steadily, Barta says, but patients are more acutely ill than ever.

As a percentage of the total imaging volume, more imaging is taking place in outpatient facilities, but if you just shift patients from one setting to another, he says, “You can’t just rest on your laurels and expect to stay alive and stay in the black.”

Every exam must be medically indicated—and, therefore, billable. “The key, today, is appropriate use,” Barta says. “You make sure you’ve got tools or algorithms in place so that physicians are making the right choices, from an exam-sequencing perspective. Reimbursements are down; many of the patients are paid under a DRG. It’s always a delicate balance, and you’re walking the line between billable services and putting through as many patients as you can, for staff productivity.”

Fairview Health Services operates eight hospitals and roughly 70 clinics, but only two imaging centers with advanced imaging modalities. Barta describes this strategic approach as symptomatic of a greater nationwide trend whereby imaging centers are proliferating more slowly and at less distance from one another. Planning decisions are based not only on demographics and geography, but also on an economic perspective.

“We are moving down a pathway of very purposefully deciding what to do with our capital resources, where we deploy them, and what services we offer,” Barta says. “At all sites, should we do cardiology, orthopedics, and interventional procedures?”

Captains of Industry

Fairview Health Services employs the same strategies that drove the captains of industry at the turn of the 20th century. The dictates of horizontal and vertical integration hold that success can be managed by condensing the value chain along logistical lines and controlling costs by outgrowing (or buying out) the competition.

Barta says, “There’s a conversation that occurs every year, with the heads of two radiology groups, to determine what capital we need across the system. From a strategic perspective, where do we want to build or retain business, and where do we want to put another MRI system? Where does it demographically make sense to put in equipment? Where do we need to chip away at the competition?”

At the back end, Fairview Health Services is harnessing the buying power of 24 autonomous facilities as part of a purchasing alliance of which the company is also part owner. The arrangement has worked well, so far, for disposable goods and pharmaceuticals, and now Fairview Health Services is hoping to bring the same approach to capital-equipment purchases.

Barta explains, “Somehow or other, you have to get your arms around your total capital expenditure for the year and say, ‘How do we aggregate this, as best we can, so that we