Strategic Technology Acquisition in the Era of Accountable Care
Brian C. Maher, MPHWith the passage of the Patient Protection and Affordable Care Act (PPACA), the health-care community is preparing for a tidal shift in how all providers are expected to perform. Hospitals and physicians increasingly will be held more accountable for ensuring that the key pillars of health-care reform are satisfied: improving the quality and accessibility of health-care services while lowering costs. Among many other market factors, new payment mechanisms and regulations established by the PPACA place providers of advanced diagnostic-imaging services squarely in the crosshairs, as lawmakers have repeatedly pointed fingers at the radiology community as a major contributor to the rising costs of health care (especially over the past decade). Members of the radiology community must now accept a wholly new operating environment to come, and must adopt new strategies not only to prosper, but also merely to survive. The greatest efforts to curb the rising costs and utilization of imaging services have been aimed where it hurts most: our wallets. Since the passage of the DRA, new regulations have chipped away at technical-component reimbursement, and they also have made mechanisms to ensure more appropriate utilization of advanced imaging services commonplace, primarily via radiology benefit managers and precertification programs. Many of these regulatory and market forces have resulted (and continue to result) in a softening of annual growth rates for outpatient imaging services. In previous years, advanced modalities such as CT, MRI, and PET grew at double-digit rates, but the outpatient-market projections of The Advisory Board Company (Washington, DC) suggest much slower—albeit positive—growth rates for these modalities: 3% to 5% annually. Slower growth rates, coupled with lower reimbursement rates expected in the future, portend decreased profitability for outpatient imaging services (and ultimately, reduced access to capital to fund new technological and strategic investments). Looking to the future, radiology providers will need to be ever vigilant and to place additional scrutiny on how limited capital dollars are allocated, each year, toward new imaging-technology investments. In short, the cost of getting it wrong will be significantly greater than in years past. Reform’s Impact Key to the effectiveness of health-care reform is the establishment of new payment models designed to transform the manner in which providers are reimbursed, rewarding the quality (rather than the quantity) of care. These new models—including bundled payments, episode-of-care payments, and shared-savings programs, among many other provisions of the PPACA that directly target radiology utilization and reimbursement (Table 1)—will have a profound impact on funding appropriations for capital equipment and on the rationale behind acquiring premium, versus workhorse, technology. Perhaps the most groundbreaking of the new accountable-care payment models and regulations affecting future imaging-technology decisions is the shared-savings model. Set forth as a voluntary Medicare program in 2012, accountable-care organizations (ACOs) represent a collection of providers financially and/or legally aligned in such a manner as to permit the sharing of savings that result from besting a predetermined spending benchmark for a given patient population. ACOs will require improved coordination among providers, with added incentives to minimize unnecessary services in order to meet certain cost thresholds. According to The Advisory Board Company’s Imaging Performance Partnership research, radiology will be greatly affected by accountable-care models on several fronts. These will include:
  • • greater involvement of radiologists, as consultants and educators, in determining appropriate treatment strategies and educating physicians on order appropriateness;
  • • downward pressure on traditional demand drivers, with ordering physicians taking on greater responsibility for keeping costs low and ensuring order appropriateness;
  • • increased relevance of outpatient imaging centers, due to lower costs and greater access; and
  • • emphasis on the need for lower-cost, capacity-enhancing technology, as opposed to premium equipment for only niche applications and/or patient populations.
Right now, it is challenging to determine exactly how greatly imaging demand—and ultimately, profits—will be affected by accountable-care models. Nonetheless, radiology providers should immediately explore, with greater attention, mechanisms to lower costs while maintaining high-quality services and efficient operations. One way to help rein in the cost of care is to ensure that the most appropriate imaging technology is deployed in the correct setting. Premium equipment might find a role in the hospital environment, where it will support the growth of other clinical service lines, but lower-cost, workhorse technology will still benefit the vast majority of patients in the outpatient setting. To determine the appropriate level and siting of imaging technology, providers must pay particular attention both to modality volume (by procedure and patient type) and to the distribution of volume among equipment and sites. It is important to note that, based on research conducted by The Advisory Board Company, the overwhelming majority of advanced-imaging volume is represented by routine applications (Table 2), reinforcing both the importance and the sustainability of using standard-of-care technology for many years to come. New Imperatives With vendors showcasing new innovations in imaging technology at the RSNA® 2010 96th Scientific Assembly and Annual Meeting in Chicago, Illinois, it is increasingly difficult for providers to determine which technologies are necessary, versus those that might be considered nice to have. Given the downward pressures of new payment models and other regulations affecting future access to capital, hospitals and imaging centers will need to be judicious in determining the most appropriate technology, both now and in the future. Imaging providers will need to ensure that future technology purchases align accordingly with the need to improve quality and access while managing costs better. Improving quality of care: There is no refuting the value and importance of advanced diagnostic-imaging services in health care today. New innovations seek to provide better means of noninvasive screening, diagnosis, and monitoring for myriad diseases and conditions. Nonetheless, the quality of diagnostic-imaging services is closely scrutinized, as quality relates to both effectiveness and appropriateness. Now, chief among new challenges in imaging quality is measuring the long-term effects of medical exposure to ionizing radiation. Increased cancer risks have been ascribed to CT and fluoroscopic procedures, and this has not gone unnoticed, due to negative press reports and a handful of sentinel events across the country. image
Table 1.Potential Impact of Reform and Regulation This attention, however, has led to marked improvements in awareness within and outside the radiology community, with members of industry, regulators, and clinicians all focusing on reducing radiation dose for applicable exams. There is no shortage of novel dose-management techniques, from prospective ECG gating modes to iterative reconstruction algorithms, and more improvements are anticipated for the future. While it’s unclear to what extent federal, state, or other regulations will affect radiation-dose management and associated technologies, acquiring technology with low-dose capability now represents a significant step in providing high-quality—and safe—imaging services. Imaging technologies that seek to reduce unnecessary downstream interventions will also satisfy new quality imperatives. Hybrid PET/CT imaging is now fundamental to cancer treatment planning, based on its demonstrated ability to change the management of cancer patients to a more appropriate course of therapy. Similarly, breast tomosynthesis—though not yet commercially available—might reduce unnecessary downstream tests, given early results suggesting that it could produce lower recall rates and greater diagnostic confidence than traditional 2D digital mammography can. With each new innovation in technology, we will hope to see a direct correlation with improved safety and clinical outcomes. Improving access to care: Due to the passage of the PPACA, millions of newly covered lives will enter the health-care marketplace (most after 2014), and imaging providers will need to become more efficient to accommodate the anticipated moderate increase in volume. Technology that enables providers to handle greater throughput and that allows more exams to be performed (without considerable staffing or operational changes) will have a greater role, moving forward. For this and many other reasons, digital mammography is now considered requisite technology for institutions offering breast-health services. Providers using digital mammography can better accommodate more patients daily, owing to the significant reductions in exam time (often cited as 50% or more, compared with film mammography), allowing both more expedient imaging and greater per-unit capacity. Another imaging technology likely to have a significant impact on accessibility is wide-bore or high-field open MRI. Equipped with standard-of-care imaging capabilities, these systems allow a more accommodating patient experience, reducing anxiety and claustrophobic reactions that degrade optimal scanning conditions. For many organizations, wide-bore and open MRI scanners have reduced the need for time- and resource-consuming sedation, allowing more patients to be imaged by decreasing reliance on anesthesia delivery and by promoting better management of MRI schedules. image
Table 2.Procedure Mix for Advanced Modalities: 2009, 2014, and 2019 Wide-bore and open MRI scanners also permit bariatric patients to be imaged more comfortably, meeting an immediate market need. Though debate remains today regarding the ability of high-field vertical open scanners to serve as workhorse units, there is little doubt that more accommodating MRI scanners—either open or wide-bore, but more likely to be the latter—are becoming the industry (and market) standard. Bending the cost curve: The diagnostic-imaging industry has often been singled out as a major contributor to the escalating costs of health-care services. Imaging providers, however, can play an integral role in managing costs by ensuring that the most appropriate technology is used in the most appropriate setting. To that end, it is important to understand the incremental benefits afforded by technological innovations, relative to added costs. Though vendors have recognized the economic hardships of hospitals and imaging centers, offering price reductions on selected equipment classes, premium imaging systems still command premium prices. Despite the significant cost differential between premium systems and their standard-of-care counterparts, the incremental benefits of premium technology are commonly limited to advanced applications and/or niche populations (Figure 1). Moving forward, imaging providers will have greater options within modalities, but they must still be pragmatic when weighing premium versus workhorse technology. Emerging as a trend, across all imaging modalities, is the need for greater automation in imaging protocols. From start to finish, considerable opportunities exist to improve efficiency and reduce variability (which can lead to increased costs or alternatively, less revenue-generating scanner time). Providers can expect more productivity-enhancing features, especially in new MRI and ultrasound systems. Because many of these will be made available only with premium technology, however, there is still a price tag attached. In addition, administrators must not neglect the importance of training and of process efficiencies in determining whether a need for costly productivity-enhancing features exists. Looking to the future: Though standard-of-care functionality will still be highly desired for many years to come, radiology also must prepare for the dawn of personalized medicine, in which genomic information will be used to make individual, tailored care decisions based on a person’s genetic characteristics. image
Figure 1. The incremental benefits of premium technology are commonly limited to advanced applications and/or niche populations, despite significant cost differentials; source: The Advisory Board Company. image
Figure 2.A practical approach to prioritizing planned acquisitions can improve return on investment for imaging technology; source: The Advisory Board Company. Diagnostic imaging will increasingly be involved in aspects of translational medicine, helping scientists to identify genomic and proteomic biomarkers for cardiovascular diseases, cancer, neurodegenerative conditions, and many other clinical processes. Leading the way will be the molecular-imaging modalities of hybrid PET/CT, SPECT/CT, and (in the next several years) PET/MRI. While these modalities, and the accompanying targeted radiotracers that they will require, might not be widely adopted into clinical practice for many more years, imaging specialists must still consider the untapped potential of these modalities to contribute to new scientific and clinical discoveries in the personalized-medicine field. Adding Rigor As the radiology community embarks on a new era of health-care delivery, having regimented processes to evaluate new imaging technologies and assess their respective impact on different clinical services will be imperative. These processes should solicit the perspectives of many key stakeholders, both within and outside the radiology department, and should be well grounded in robust data to support the business case for the technology in question. Paying particular attention to the needs of ordering physicians will be more important. For example, if little interest exists among neurologists, orthopedic surgeons, or oncologists for a 3T MRI system to support their respective needs, now and into the future, then deciding to acquire a 3T scanner might not be prudent at this time. While it is still important to recognize advanced imaging services as a revenue-generating opportunity, accountable-care models emphasize imaging’s role as an ancillary service—and as a result, new imaging-technology needs must be matched with the overall strategic needs of the organization. Research from The Advisory Board Company indicates that institutions are mobilizing efforts to match technologies with discrete service-line growth opportunities and overall vision for the organization, with some setting limits on the level of technology for tertiary-care centers, community hospitals, and outpatient imaging centers. For a smaller institution to acquire premium equipment, such as a 320-slice CT scanner or a 3T MRI system, a very compelling and data-backed business case must be made. To accomplish this, it will be imperative for radiology administrators to evaluate current and projected inventory needs continually and to develop methods for assigning priorities to both replacement technologies and those that are new to the institution. Regularly collecting information on the level and functional status of technology; on utilization statistics for discrete pieces of imaging equipment, relative to maximum capacity levels; and on market-growth forecasts is a requirement for determining when it is necessary to purchase incremental units. Further, staying abreast of the latest technology developments and innovation will improve future decision making. A comprehensive imaging-technology evaluation can be burdensome for the radiology administrator. A considerable return on this investment exists, however, because such an evaluation helps eliminate shortsighted purchases, identify strategies for optimal equipment use, avoid temporal spikes in capital-budget needs, and identify bulk-purchasing opportunities (Figure 2). As radiology reaches a crossroads in the new era of accountable care, both challenges and opportunities will exist in planning for new diagnostic-imaging technologies. Developing regimented technology-evaluation processes and ensuring that due diligence is undertaken for each investment will ensure that the right technologies are deployed, at the right place, and at the right time. Brian C. Maher, MPH, is a consultant with The Advisory Board Company (Washington, DC), a health-care research and consulting company.