A new era in healthcare is inspiring radiology practices to reach across traditional boundaries and forge alliances with hospitals, health systems, and other practices
It is not your imagination: Organizations increasingly are aligning throughout healthcare to deliver radiology services via practice consortiums, co-owned imaging center assets, and other business partnerships. Some alliances are offensive responses to a consolidating marketplace; others are defensive mechanisms calculated to provide protection. In an information age where data points reign supreme, access to data is a key strategy.
Take, for example, Navesink Radiology LLC, Little Silver, N.J., and Advanced Radiology Solutions (ARS), Toms River, N.J., previously two semi-rivals in the Garden State.
Edward Rittweger, MD, president of Navesink, a 12-radiologist practice, provides imaging services for 225-bed Bayshore Community Hospital, Holmdel, N.J., and the 476-bed Riverview Medical Center in Red Bank, N.J. ARS, a slightly larger practice led by Thomas Yu, MD, provides services at the 176-bed Southern Ocean in Manahawkin, N.J.
After Meridian Health, a not-for-profit healthcare organization in New Jersey, acquired Bayshore and Southern Ocean about four years ago, Yu and Rittweger found themselves sitting in the same room on the same committees. They formed a friendship that planted the seeds of a future business partnership.
Separated by about 60 miles, Navesink and ARS entered into discussions about collaborating in various ways. The Meridian Health organization encompassed five hospitals and the original vision was to work in close collaboration, developing shared protocols and clinical concepts. “Our intent was to bring all four groups together in a collaboration, but one of the groups wanted to remain independent,” Rittweger says.
The nontraditional aspects of the ARS/Navesink partnership began to emerge when Rittweger took a call from the CEO of his billing company. The executive announced that he was starting an analytics division within his company that would support radiology group collaboration and asked Rittweger if his group would like to head the New Jersey charge. The resulting management-service organization (MSO) came to fruition under the name Phoenix Health Alliance.
With clinically integrated networks and accountable care organizations (ACOs) so heavily driven by data analysis and data collection, the goal of Phoenix was to provide crucial data while also helping to quantify radiology’s contribution to the care process. “Unfortunately, radiology is currently very poorly defined, almost not defined,” Yu believes. “Instead, our profession is being defined by nonradiology professionals.”
In Yu’s opinion, more and better data, fueled by innovative partnerships, is necessary, in part because nonradiologists don’t fully understand the value and the metrics by which one can accurately measure the results of medical imaging services. “They only see the expense of a potential test, they don’t see the downstream benefit of early diagnosis, reduced unnecessary surgeries, or patients having great outcomes because they avoided unnecessary procedures,” he says.
In forming the partnership with Navesink, Yu aimed to develop a bigger data pool for the analytics necessary to justify radiology, especially in the setting of risk sharing and value-based payments. “The idea is to create committees that will actually develop practices, evidence-based medicine, standardized quality, statistical measurements, and metrics that demonstrate real value,” Yu says.
Four years ago, Arl Van Moore Jr., MD, FACR, saw similar practice benefits emerge when he helped to develop the first national consortium of private radiology practices in 2010, Strategic Radiology, representing 17 practices. “We got together to see how we could work together in developing best practices,” says Moore, chairman and CEO of Strategic Radiology (SR), Charlotte, N.C. “We are gradually sharing best practices in a lot of different areas. We have a QA committee that is developing standards across the SR network. We set up our own radiology Patient Safety Organization where we can share QA data between our groups. In doing so, we are looking to find ways to quantify and compare one practice to another in the future.”
The initial alliance between Navesink and ARS occurred four years ago, prompted when Bayshore was acquired by Meridian.
Riverview Medical Center, in Red Bank, N.J., (also recently acquired by Meridian Health) was being covered by a different radiology group and the system had indicated it would like the radiology practices to consider working together. In response, Rittweger negotiated what he dubbed a “merger light” to combine the two groups at the two hospitals—Bayshore and Riverview—while not combining any of the group’s imaging facility assets.
“For the sake of time, and not getting caught up with financial issues and outside imaging-center valuations, we determined the quickest way to do it was just to merge the hospital practices,” he reveals. “Later, we thought about it and realized it was a fairly quick and easy process.”
Pushing through some of the initial resistance, Yu and Rittweger began to develop a new radiology network in New Jersey under the banner of Phoenix Health Alliance. “Smaller groups were looking for ways to get bigger,” Rittweger explains. “We like the idea of being able to develop a collaboration where groups can remain relatively independent, and still work together on any one of several levels.”
Yu emphasizes that Phoenix Health Alliance is “not a merger of medical practices,” but an MSO in which independent practices join to share resources, including data, billing, group purchasing, access to benchmarks, and analytic support. “We’re not sharing personnel,” Yu adds. “If we did, we might face restrictive covenant issues, or antitrust issues, and we didn’t want to run into any of that.”
Working in the expanded network without the financial entanglements has allowed Rittweger and Yu to collaborate with outside groups and grow the number of participating practice, a number they declined to share. “At the same time, the groups are able to maintain their independence,” Rittweger adds. “They control their own group, but still have a much larger structure to support them.”
Hospital clients served by the partnership receive 24/7 subspecialty coverage provided by the consortium, something that smaller groups struggle with, especially after hours. “We’re able to offer data analytics to evaluate peer review, turnaround times, and quality indicators,” Rittweger says. “We will be able to help them with decision-support analytics and work with referring physicians to help them reduce unnecessary studies and function as a real partner with our system.”
ARS provides professional reads for Southern Ocean, Shore Medical Center, Community Medical Center, and Meadowlands Hospital, all in New Jersey, and these hospital clients benefit from the Phoenix Health Alliance partnership. “We work with them in their ACO —or clinically integrated network project—to deliver the type of information and data to prove that their radiology groups are necessary, just, and high quality, with reproducible results,” comments Yu. “Armed with this information, they are not being penalized for utilizing a particular test too often.”
“Right now, too many payors have one mantra—reduce, reduce, reduce,” Yu continues. “The idea of quality is not always about doing less. There may be some things we want to do more of, but we must identify them through evidence-based evaluation. We provide that for our hospital partners.”
Recently, Meridian Health System became a member of the AllSpire network of seven large hospital systems—three in New Jersey and four in Pennsylvania—underscoring the rapidly changing nature of the hospital industry. The possibilities are not lost on Yu and Rittweger who would welcome extending their network to include other radiology groups in the AllSpire network.
Skin in the game
While data acquisition is a common goal in practice consortiums, practice–hospital alignments often come together around shared imaging center assets. When Inova Health System in Falls Church, Va., wanted greater participation in the outpatient radiology market, the not-for-profit entity serving 2 million patients looked to the 81-radiologist practice, Fairfax Radiological Consultants (FRC), Va.
FRC owns and operates 13 outpatient-imaging facilities throughout Northern Virginia, plus an additional three that are now partially owned in a joint venture with Inova. According to Lynn Elliott, CEO of FRC, two of the joint-venture outpatient centers are in Fairfax, with one devoted to multimodality imaging, and the other to PET/CT. The third is an MRI facility in Reston, Va.
The Inova/FRC deal is based on a 65/35 percent ownership split, with Inova owning the majority. FRC provides professional services to Inova Fairfax Hospital (833 beds), Inova Loudoun Hospital (183 beds), and Inova Fair Oaks Hospital (182 beds).
Financial returns thus far have been very solid for the Inova/FRC pairing, Elliott reports. Both parties also discovered unexpected perks in the strengthened relationship. “I think it’s opened the eyes to both sides about the possibilities that are available when you have two players like FRC and Inova working together,” says Elliott.
As an active provider of outpatient imaging services at a time when many practices and entrepreneurs have exited the business, FRC is content to buck the trend, believing that outpatient imaging will continue to be a mainstay. “I think outpatient imaging, owned by independent physicians—radiologists primarily—may not be around forever in its current form,” Elliott says. “I do think outpatient imaging is here to stay and will probably take on greater prominence in the future.”
Similar partnerships likely will continue to be a trend, but Elliott believes success or failure will depend on familiar fundamentals. “Basics such as appropriate management and cooperation are still essential,” he says. “I’ve heard stories where these types of arrangements have not worked out, and they are never a sure thing.”
Elliott contends that value-based payment methods for healthcare that encourage efficiency and cost effectiveness will naturally skew toward outpatient imaging, because, “It clearly can be done more economically in the outpatient arena than on the hospital campus.”
FRC continues to operate 13 solely owned imaging centers, which has not adversely affected its relationship with Inova. Says Elliott: “I think it’s because we have worked together on the three centers that we do own together. We continue to discuss opportunities to expand that type of operation. You can never predict the future, and you don’t know when changes in the industry may change that dynamic, but it has not been a liability for us thus far.”
Ultimately, the consolidation trend in healthcare is real, and industry veterans agree it is not going away in the foreseeable future. “The dynamics of the industry are driving the desire to get bigger,” Elliott says. “That is the way the whole industry is moving. You don’t see anybody getting smaller these days. Getting bigger, if done the right way, yields economies of scale. The resources the hospital brings—capital strength and name recognition, combined with FRC’s operating expertise and physician relationships—helps provide a consistent message. At the end of the day, it benefits patients as well.”
One practice + two health systems
Jim Tierney, CEO of Suburban Radiology Consultants (SRC), a 65-radiologist practice based in Minneapolis, Minn., agrees that the trend is toward bigger organizations, partly driven by the inherent benefits of greater efficiency. “The bigger you are, the more efficient you can be,” he says. “The bigger you are, the more depth you have with regard to subspecialization.”
In one of the more unique alliances in healthcare today, SRC operates three imaging centers in a three-way partnership between the practice and two competing health systems, an arrangement that dates back to 1998. Tierney and Aaron Binstock, MD, group president and body radiologist, attribute the deal to progressive administrations at Allina Health, Minneapolis, Minn., and HealthPartners, Bloomington, Minn.
“The area that we are in was really underserved with respect to outpatient imaging centers,” Tierney says, “meaning there were none. It appeared to us that it was not going to be long before some of our competitors were going to move in, open up shop, and compete with both us and the hospitals. Over a series of meetings, we were able to convince two health systems that it would be best for us to do this together, even though we knew there would be some decrease in the hospital outpatient imaging.”
Three imaging centers were built from the ground up: A main 37,000-sq-ft multimodality center in Coon Rapids, Minn., and two smaller facilities, one in Coon Rapids and another in Maple Grove. Today, those centers see 1,000 patients a week, most of them at the main site. To put the volume in perspective, the average number of procedures performed per week in an imaging center was 193 in 2011, according to a 2013 report in this journal.1
All of the major capital, equipment, and governance issues are handled by a Suburban Imaging board of directors, which has equal representation from each of the three parties. Suburban Radiology provides day-to-day operations including billing under a management services agreement.
Building the relationship
The partnership has been good for patient care, and good for the relationship. “It was good before and it’s better now,” Tierney says. “We’re working together to provide high-quality, low-cost imaging, and everybody is on the same team. Nobody is really focused on where the imaging is being done. We are more interested in finding the best place to do imaging from the patient’s perspective.” The three shared Suburban Imaging sites bill under the less generous Medicare Physician Fee Schedule rather than the Hospital Outpatient Prospective Payment System.
The day-to-day relationships between the practice and the healthcare systems are being built through physician-to-physician interface, and Tierney believes it has strengthened the practice’s ability to provide good care by helping referrers order the right exam. “It has gotten us more involved with their imaging direction in the clinics and in the hospitals,” he says.
Nonetheless, keeping the peace among partners takes effort. “We communicate openly to make sure that everybody feels comfortable with where the volume is going,” Tierney says. “We compete for volume, but we work cooperatively.”
Decreasing the sensitivity to where patients are imaged has been the biggest hurdle to overcome, Tierney adds. “Everybody has their own silo, and everybody is worried about their own volume,” he says. “That’s one hurdle that in some ways continues to be difficult.”
Interestingly, the lack of imaging IT system interoperability is an obstacle to maintaining the transparency necessary for trust, practice president Binstock points out. “That is a work in progress,” he explains. “We want to make sure that everything is visible to all the partners, all of the time. We have to start finding ways to integrate and share. We’re working on finding better ways to share archiving and access to imaging studies.”
Between the partners, there are three different PACS, creating more than the average share of IT headaches. “We have to share the images, so finding a smooth and easy way of getting those images into their system when they need to be—that is the work in progress,” Binstock says.
- Proval C. Imaging-center growth hits the wall in 2013; volumes plummeted in 2011. Radiology Business Journal. 2013;4:28-32.