A Midsize Private Practice Shows How to Sustain Independence by Blooming Where Planted
At a time when myriad market pressures are pushing many independent radiology practices into the arms of investor-owned companies, some private groups are just saying “No thanks.” But that’s not always easy. The enticements on offer—expanded strategic resources, Big Data management capacities, high-finance know-how and more—are considerable.
Many of the groups holding onto their autonomy in this consolidating business climate have something in common: They find a way to get bigger and stronger on their own.
Midstate Radiology Associates is a sterling case study in this strategy. As recently as 2015, the Meriden, Conn.based practice had 11 radiologists and two advanced practitioners (APs) serving a single hospital and two outpatient imaging centers. It was still about the same size as at its founding in 1955. By the end of 2019, Midstate had grown to more than 40 rads and seven APs serving four Hartford Healthcare hospitals while running 17 outpatient imaging centers and three vein centers.
How’d they grow so fast? To find out, RBJ spoke with two members of the group’s leadership: President Gary Dee, MD, who also serves as chair of the Hartford Healthcare Radiology Council, and Director of Operations Tom Cappas, MBA, MS, who additionally serves as a regional radiology director for the seven-hospital, two-state Hartford Healthcare system and co-chairs its imaging capital committee.
Innately Entrepreneurial
It was right around five years ago that the two realized Midstate Radiology Associates, or MRA, had to pursue rapid growth in a concerted way.
“The entire healthcare landscape had changed,” Dee recalls. “You now had national practices with backing from investors. If you couldn’t afford to keep up, you weren’t going to grow.”
Today, even more than five years ago, competing in this consolidating climate requires investing heavily in IT infrastructure, software and other technologies, he points out. Small groups can’t afford the $1 million-plus it takes to maintain that level of investment year after year.
And extending wherewithal was only part of the appeal of getting bigger. Equally important was ensuring autonomy.
“We’re entrepreneurial,” Dee says. “We’re businesspeople and we want to make our own decisions as much as we can.”
To this Cappas adds that MRA’s competition is largely coming from national players that don’t offer partnership tracks or other career goals for young radiologists to pursue.
“We can offer something very different: a larger private-practice group that has quality of life in mind and ownership status in the business with a bit of sweat equity,” Cappas says. “It’s a big difference from what these publicly traded larger groups are doing with employer/employee models.”
Attractive to Neighboring Rads
To add high-performing radiologists, and fast, MRA had to add whole high-performing practices. So in 2016, they merged with another area practice and rebadged it as an MRA operation. Another merger followed two years later under the same plan. More are likely on the way.
“When we look to grow market share and deepen our business relationships with another practice, we look for a group that has the same culture, work ethic, complementary service areas and, lastly, very similar incomes,” Cappas explains.
As for sweetening the pot, each incoming group automatically gets two seats on MRA’s board of directors. As president, Dee can make some decisions for the organization without going to the board. However, matters affecting physicians directly—hiring and firing, setting salaries, allocating vacation time—must be board-approved.
“If you ask member physicians what they want, they want job security,” Dee says. “They want a good place to work. And they want some financial security. Our radiologists feel that, in the board, they have protection from their own respective groups.
“I think this structure works well,” Dee continues. “Groups that have 14 or 15 members voting—and I know a couple of groups that do that—can’t get anything done.”
Indispensably Responsible
Deep-pocketed corporate consolidators, many of which are publicly traded, tend to have difficulty aligning their mission and vision with that of their client hospitals and health systems, Cappas maintains.
“They have an obligation to their shareholder first,” he says. “In my opinion this is not conducive to strong alignment. At the same time, it’s a given that no private practice can outspend these forces. We have to create value for our health systems.”
For MRA, that customer is seven-hospital Hartford Healthcare.
“We truly love our health system,” Cappas says. “Hartford Healthcare is a market leader and the only integrated health system in the state of Connecticut. Its unified culture of accountability and innovation continually inspires Midstate Radiology Associates to be the best. It’s a true partnership.”
“You don’t want your radiology reading service to become a commodity chosen only on price,” Dee says. “Aligning with your client health system gives you a huge amount of stickiness with your health system that you need today. That was another motivator for us to pursue growth.”
Cooperative Value Creation
To solidify the sense of partnership with Hartford Healthcare, MRA has taken on running and managing joint-venture operations with outpatient imaging centers as well as managing hospital radiology operations.
“Hospital operations are very challenging,” Cappas says. “But we look to create value for our health system by managing both service lines together. And we’ve done so to reduce costs, reduce variation, increase clinical standardization, provide best-in-class experience for our customers and create more value with alignment.”
The road to that destination began more than 20 years ago, they reflect, when Dee created a joint venture with one outpatient imaging center and one hospital.
“All these years later, we now have one management team overseeing 21 hospital and outpatient imaging locations,” Cappas says. “This new management team and structure was created three years ago. It’s designed to create value for Hartford Healthcare and our collective patients and physicians.”
Constant Customer Care
Success to this point doesn’t assure success going forward. Dee and Cappas say they’re well aware of the risks inherent in all market economics. But they’re confident their moves to this point have put MRA in position to continue growing and, in the process, move from strength to strength.
“Just like any other business, we don’t know the future,” Dee says. “We don’t know what the next elections are going to bring. We’re trying to drive quality and offer the best technologies while under financial pressures, and we don’t know what the next big disrupter is going to be.”
“Look what Amazon has done to their market sectors,” Dee adds. “They’ve blown everyone else away. What’s going to be the Amazon of healthcare?”
Cappas seems to have been ready for that question.
“We will be the Amazon of radiology,” he says. “Our motto is ‘Yes.’ We figure out how to make things better and easier for our patients, referrers and all our stakeholders.”
“This takes us back to that entrepreneurial mindset we mentioned earlier,” Cappas concludes. “Everything starts around improving access to care and building the best experience possible. That’s been the key differentiator for us, and we’ll never be satisfied with our successes. We owe it to our customers.”
Dave P. has worked in journalism, marketing and public relations for more than 30 years, frequently concentrating on hospitals, healthcare technology and Catholic communications. He has also specialized in fundraising communications, ghostwriting for CEOs of local, national and global charities, nonprofits and foundations.