Growth Strategies for Thin Times

Twitter icon
Facebook icon
LinkedIn icon
e-mail icon
Google icon
golf.jpg - Strategies

In 2004, the specialty of radiology was thriving and blissfully unaware of the decade of austerity ahead. Procedure volumes were on the rise, technology was taking great leaps forward, and medical imaging was the toast of medicine. No fewer than three imaging modalities—MRI, CT, and mammography—had appeared on various millennial lists of the top medical innovations of the 20th century. Life—and practice—were good.

Radiology’s fortunes took a turn on January 1, 2005, when 10 years of reimbursement cuts were initiated by the DRA, setting in motion widespread cost-cutting and productivity-enhancing initiatives (across practice settings) that continue today. Radiology Business Journal interviewed the leaders of three progressive practices in different regions to discover how they have managed to survive, grow, and even thrive in a very punishing business environment: Southwest Diagnostic Imaging Ltd (SDI), Scottsdale, Ariz.; Advanced Diagnostic Imaging (ADI) PC, Nashville, Tenn.; and Consulting Radiologists Ltd (CRL), Minneapolis.

To put the reimbursement cuts into perspective, consider the experience of Southwest Diagnostic Imaging Ltd (SDI), a 105-radiologist practice with 25 imaging centers in the Greater Phoenix area. SDI tracks charges against payments for each class of insurance, including Medicare, and has been doing so for 15 years.

Table. Percentage of 2004
Payments for Global Charges, Southwest Diagnostic Imaging.
2004 100%
2005 95.1%
2006 95.1%
2007 92.7%
2008 95.1%
2009 92.7%
2010 90.2%
2011 80.5%
2012 75.6%
2013 70.7%
2014 65.9%
Courtesy of Rodney Owen, MD, FACR.

Establishing the baseline, in 2004, at 100 percent of global billing charges collected, SDI found that Medicare reimbursement for outpatient imaging declined by 30 to 35 percent over 10 years (see figure and table). Rodney Owen, MD, FACR, co–vice president of SDI and longtime president of Scottsdale Medical Imaging Ltd (SMIL), shares the data with the caveat that the practice reduced charges slightly in 2008. The impact of the cuts, however, is likely to be understated.

“The healthcare inflation rate has been running at three percent over the past 10 years,” he says. “Factor in 10 years of a three-percent inflation rate in terms of 2004 dollars, and we are probably approaching 50 percent.”

While differing in size and market approach, SDI, ADI, and CRL have responded aggressively and proactively to the challenge of a potential 50 percent cut in revenue, using many of the same tactics. “I think it has made us strive to be more efficient, it has made us more service focused, and it has made us look for additional opportunities to diversify the practice,” Chad Calendine, MD, explains. Calendine is president of ADI, with 36 FTE radiologists.

With 37 on-site hospital and clinic clients and many more teleradiology customers, CRL has reached a point where diversification, profitable growth, and sustaining relationships have become the priorities. Christopher Tillotson, MD, president of CRL, says, “Looking at our current environment, going forward, we are getting away from the idea of growth for growth’s sake. In just adding more of the same, your profitability doesn’t go up. What we’ve been trying to do is start to look at how we can provide a broad set of services to a range of clients. We provide subspecialized onsite and remote radiology services as well as mobile and outpatient imaging for urban and rural healthcare providers. By providing more value to our clients, we can strengthen and maintain our relationships.”

Figure. The red line charts the impact on global outpatient payments, over 10 consecutive years, of Medicare reimbursement cuts for medical-imaging services performed at the outpatient imaging centers of Southwest Diagnostic Imaging Ltd. The amount collected as a percentage of global billing in 2004 was defined as 100 percent. Courtesy of Rodney Owen, MD, FACR.

Efficiency measures

Like other well-run practices, SDI has assiduously worked both sides of the efficiency coin: expense reduction and productivity enhancement. A high level of subspecialization is one tactic that the practice has used to maximize work RVUs performed per slot, per work shift. “We definitely found that a group of neuroradiologists can get through the neuroradiology MRI exams a lot faster than general radiologists, and they can offer better quality,” Owen says.

SDI further refined its workflow with the assistance of a process-improvement engineer, hired eight to 10 years ago. “We’ve had that