Building Lasting Partnerships: A Review of Hospital–Radiology Alignment Models

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Advisory Board Co. research reveals that there are multiple avenues through which to pursue hospital–radiologist alignment.

Alignment is an elusive term. It can mean many different things, and pinpointing an exact definition is essentially impossible. At the very least, however, imaging leaders seem to agree that it is good thing, and something for which to strive.

Physician alignment typically refers to the strength of professional, cultural and/or economic relationships between physicians and hospitals. In imaging, this typically refers to the degree of coordinated integration between radiologists, hospitals, and referring physicians—regardless of whether radiologists are independent, employed, or otherwise affiliated with a health system.

While the definition is broad, a significant number of health systems have increased their efforts to improve radiologist alignment in recent years. Evidently, the time has come for radiologists and other imaging leaders to take a critical look at how they can best align themselves with their care partners to be sustainable in the long run. In the face of a healthcare system that demands better coordination, and a regulatory landscape that isn’t particularly favorable to imaging, radiology professionals simply need to work together to demonstrate their value.

One of the best ways to solidify the radiology group–hospital relationship is to formalize it. There has been increasing interest on both sides about establishing performance metrics, co-management agreements and other official partnerships. Some groups already have negotiated successfully these contracts.

Choosing which alignment model is right for your organization, however, is the wrong place to start. In imaging, there is no standard template for alignment, nor is there a manual or menu indicating how to establish these models. Like most things in health care, alignment isn’t that simple.

As it turns out, the most successful radiology alignment models didn’t follow any set approach. Rather, radiologists and administrators collectively identified their goals, came together to discuss potential options for integration and established alignment models unique to the relationships and culture in each situation.

My team at the Advisory Board Co., the Imaging Performance Partnership, has actively researched radiology alignment for some time and recently released our findings to the Advisory Board’s membership of imaging providers. Here is an inside look at some of the alignment models we uncovered.

Conventional alignment models

Many alignment strategies in effect today aren’t particularly novel, but current pressures warrant a review nonetheless. One example is an incentive-based professional services agreement (PSA). A PSA can include financial incentives (or penalties) for radiologist performance on predefined quality and service metrics. This model is a low-risk way to align hospital and radiologist goals without pursuing any sort of structural integration. In a 2014 survey conducted by The Advisory Board Company, about one-third of both hospital and private practice respondents reported having a radiologist PSA in place.

Another way to align without formal integration is to enter into an exclusive provider contract, an agreement that prohibits a health system and/or radiology group from formally contracting with a different radiology partner. The same Advisory Board survey indicated that this model is quite prevalent in imaging. The majority of hospitals contract with only one radiology group, and many hospitals associate with a single group but do not have a formal contract. The vast majority of radiology groups surveyed are the sole contracted provider of radiology services for a hospital—and usually to more than one. In other words, providers without any sort of exclusive provider agreement are a minority ( Figure 1).

Joint ventures also are not new to the imaging industry, but they can play an especially important role in today’s financial and regulatory environments. Radiology joint ventures usually take the form of outpatient imaging centers developed as separate entities with shared assets, in which both parties (the hospital or health system and the radiology group) contribute equity.

One advantage of joint ventures is that they can provide price flexibility, depending on whether they are set up on the Hospital Outpatient Prospective Payment System or the Medicare Physician Fee Schedule. As our health care system