Welcome to the fifth annual radiology-group survey results. A different approach in gathering information was used this year. In the past, the survey was 100% based on submissions provided by the groups themselves. This year, the Radiology Business Journal staff researched the practice market and sought out large groups, asking them to submit information. Some entries were based on information taken from the groups’ websites. The results look complete and do represent the largest 100 radiology groups owned by radiologists in the country.
In 2005, I wrote1 about the existence of national law and accounting firms, speculating about whether national radiology groups would develop. In 2005, the correct answer would have been: not soon. Now, I wonder whether we are at a tipping point and seeing the advent of nationwide radiology groups and megagroups of 250 or more radiologists. The pressures related to decreased reimbursement, mergers, and the growth of hospitals and health systems—and the probability of payment models other than fee for service—are driving changes related to group size. As we see the number of larger groups grow, I predict that in the next five years, we will see some mergers of the largest groups in the country. It is not reflected in the survey results, but we did see the merger of Inland Imaging (Spokane, Washington) and Seattle Radiologists to create another 100-person radiology group.
The 100 largest groups represent 4,602 radiologists, and the 20 largest groups represent 1,504 radiologists. There are approximately 25,000 radiologists in private (nonacademic) practices, so it is still a very fragmented industry. In past surveys, many of the groups showed actual decreases in their numbers of radiologists. For 2012, it appears, the trend has reversed. Only three of the top 50 groups that responded in the past had decreases of more than one FTE radiologist.
We are optimistic about the future for radiology groups. Keep in mind the saying that if a business does not grow, it will die.
Thank you for your participation, Joseph P. White, CPA, MBA, Partner Clifton Larson Allen
After tracking the nation’s largest private practices for five years, we saw the benefits of scale become obvious in 2012. Volumes were relatively flat in 2011, and the median number of procedures performed dropped slightly in two of four practice-size categories. Median procedure volumes increased modestly in the smallest practice-size category (but so did its median number of FTE radiologists). Procedure volumes also increased in the largest practice cohort; its median number of radiologists actually declined, adding credence to the idea that size matters.
Other evidence that practice size could be advantageous is the direct link between size and revenue: The larger practices reported the greatest revenue per FTE radiologist, and the revenue number stepped down with each descending practice-size category. This is the first time since we launched the survey, five years ago, that this could be said.
We increased the number of practices ranked from 50 to 75 in 2011 and from 75 to 100 this year. In the past, we ranked only practices that self-reported their data. This year, we included all sizable practices; in some cases, we obtained figures for their radiologist totals from their websites. The names of those practices are printed in light blue (see table), and their rankings are likely to be undeservedly high because they are ranked by total (not FTE) radiologists.
Evidence that radiology is struggling under seven years of payors’ cost-containment efforts is the fact that, in every practice-size category except the largest, the median number of imaging centers owned declined (Figure 1). Because imaging-center operation is labor intensive, this probably contributed to a decline in FTE employees in each practice-size category (Figure 2).
Another troubling trend is that the median number of hospital contracts declined in all but the very largest practice-size cohort (Figure 3), signaling a more intense, competitive climate in the marketplace.
Survey collaborators Radiology Business Journal and CliftonLarsonAllen are pleased to welcome many new practices into the ranking this year. We made a Web-based survey available at www.imagingbiz.com from July 15 to September 20, 2012. We contacted those practices that did not fill out the survey by email and phone, asking each practice to tell us its number of FTE radiologists, FTE employees, hospital contracts, and owned imaging centers.
For the survey, private practices were defined as wholly owned by the radiologists, with no outside investors. The financial information contributed by more than half of survey participants is confidential, but is used to identify trends.We would like to thank those practices for their trust and their contribution to the knowledge base of the specialty.
At the Summit
Radiology Associates of North Texas (RANT), Fort Worth, Texas, climbed from the number-two position, last year, to claim the top spot, this year, with 122 radiologists. RANT was formed from the merger of three North Texas practices last year, topping out at 105 FTE radiologists, adding 17 FTE radiologists in one year. It shed one imaging center (for a total of 13) and 17 FTE employees in 2012, and it retained the 24 hospital contracts that it held in 2011.
RANT took the top spot from Advanced Radiology Services (ARS) PC, Grand Rapids, Michigan, which held the top position for four years running. The practice weighed in at 108.8 FTE radiologists this year—4.2 fewer than the 113 that it reported in 2011. ARS serves 13 hospitals, with the assistance of 103.5 FTE employees.
This year’s number-three practice, Radia Medical Imaging, Everett, Washington, last participated in the survey in 2009, when it reported 60 FTE radiologists. This year, Radia reported 86 FTE radiologists, 150 FTE employees, three imaging centers owned, and 14 hospitals served.
Charlotte Radiology in North Carolina retained the number-four spot this year, adding 3.5 FTE radiologists, for a total of 85. The practice, a regional powerhouse in breast imaging, was one of the few practices that added imaging centers this year, reporting a total of 27 (seven more than last year).
Last year’s third-ranking practice, University Radiology Group, East Brunswick, New Jersey, maintained the same number of FTE radiologists—85—but dropped to number five in the ranking, edged out by Charlotte Radiology, which reported the same number of FTE radiologists, but more FTE employees. University Radiology Group has ownership interest in 10 imaging centers and serves five hospital clients.
University Radiology Group displaced Austin Radiological Association (ARA) in Texas from the number-five position, even though ARA added 3.5 FTE radiologists this year, for a total of 83.5. The IT-savvy practice, however, kept the distinction of being the most productive private radiology practice in the nation, measured as procedures per FTE radiologist: 19,162.
Are radiology practices getting larger, as is widely believed? Because we increased the sample size, it would not have surprised us if the median practice size had decreased, as it did when we widened the ranking from 50 (median size: 52) in 2010 to 75 (median size: 39) in 2011. The median practice size actually increased almost two FTE radiologists, at 40.5 for 2012.
The median practice size increased in two of the four practice-size categories (Figure 4). The median practice size for groups of fewer than 35 FTE radiologists was 30 in 2012, compared with 27.5 in 2011; in the 35-to-49 category, it was 40.2 in 2012, compared with 40 in 2011; in the 50-to-65 category, it decreased to 55.5 in 2012 from 56 in 2011; and in groups of more than 65, it was 71 (compared with 80.8, last year).
Further evidence that practices are growing larger is the fact that the elite club of private practices of more than 65 radiologists doubled in 2012 to 15 practices, compared with eight in 2011. Practices in that category that did not grow slipped a place or two in the rankings.
Of the practices that participated last year, 29 added radiologists, 19 shed radiologists, and 14 stayed the same. Another widely held belief—that radiologists are working harder—was also borne out by the data, at least for practices of more than 65 FTE radiologists. While the median number of FTE radiologists in this practice-size category actually declined in 2012, the median number of procedures performed increased from 1,007,731 in 2011 to 1,177,500 in 2012 (Figure 5).
This increased productivity could be attributed to the greater resources available to larger practices for IT and support staff, although the percentage of revenue spent on IT was consistent across practice-size categories. The two larger practice-size categories reported spending an average of 3%, and the two smaller size categories spent 2.9%. Nonetheless, that 3% of revenue is a much greater figure for the larger practices than it is for the smaller ones.
The Public-policy Effect
Last year, we reported that the median number of imaging centers owned by radiology practices had increased in all size cohorts, except for the largest practice-size group. In 2012, the median number of imaging centers owned increased in just two of the four practice-size groups: The median number of centers owned by the 35-to-49 cohort increased from four to five and the median number of centers owned by the 50-to-65 group increased from two to five. The largest practices shed imaging centers, for a median of seven (compared with 12 in 2011), and the smallest practices reduced their median imaging-center ownership by half, from four to two.
While the nation’s largest practices continue to see the value of owning technology and operating imaging centers, repeated cuts to the technical component of reimbursement have made it more difficult to turn a profit. Practices also could be under pressure from hospital clients to divest centers that compete with their interests.
This divesting of imaging centers might have been a factor in an across-the-board decline in practice employees: Practices with more than 65 FTE radiologists reduced their median number of FTE employees from 190 in 2011 to 170 in 2012, practices of 50 to 75 radiologists went from 125 to 104 FTE employees, practices of 35 to 49 radiologists reduced FTE employees from 87.5 to 62, and FTE employees of practices of fewer than 35 radiologists declined from 89.9 to 47. Not all practice-size categories shed centers, however, so the decline across all settings could reflect austerity measures due to the application of the CMS Multiple Procedure Payment Reduction to the professional component of reimbursement.
Another disquieting trend across practice sizes was a decline in the median number of hospital contracts in all practice-size categories except the largest. The median number of hospital contracts declined from six in 2011 to five in 2012 in groups having fewer than 35 FTE radiologists, from eight to six in the 35-to-49 cohort, and from 12 to 11 in the 50-to-65 cohort. Practices of more than 65 FTE radiologists increased their median number of contracts from 13 in 2011 to 14 in 2012.
The proliferation of teleradiology companies, which were not included in the ranking unless they could meet the private-practice criteria, might have been a factor. Our list of the eight largest radiology practices—regardless of practice model—shows a teleradiology company as the nation’s largest radiology practice.
Big Is Beautiful
The information provided by this year’s participating practices suggests, for the first time, that size is a clear advantage in the current, competitive marketplace for radiology services. The largest practices generated more revenue per FTE radiologist, increased their median number of hospital contracts, and performed more procedures per FTE radiologist than the smaller groups, in general.
Practices clearly appear to be recognizing the benefits of size and strategically growing their size, whether through mergers or by steadily adding new partners. This year, the percentage of groups in the largest practice-size category increased to 15% of the total, compared with 11% in 2011, and the percentage of groups in the smallest category dropped to 34% (from 43%, in 2011).
In reaching out to known large practices that had not completed the survey, we discovered that many simply were unaware that the survey had been posted. Next year, we will do a better job of alerting readers of Radiology Business Journal about how they can participate and of communicating directly with practice representatives when the survey is posted.
The issue of whether to move to a ranking method that would count total radiologists instead of FTEs is more complicated, and we would very much appreciate your thoughts on this. On one hand, practices that actively participate have a ranking disadvantage, compared with practices that are ranked through a count of radiologists on their websites. On the other hand, moving to a ranking method that is less precise would dilute the revenue data.
In conclusion, we extend our congratulations to the practices included among the 100 largest private radiology practices: It is not easy to achieve what you have done, and we salute your practice-building skills. We also extend our gratitude to the practice leaders who took the time to participate in the annual survey.