Radiologists and other physicians who think a change in occupancy at the White House may sweep away the white waters of healthcare reform are probably deluding themselves, said radiologist and practice consultant Lawrence Muroff, MD. Muroff delivered one of several talks on “The Impact of ACA on Radiology,” during a refresher course at the recent meeting of the Radiological Society of North America in Chicago.
“The issues that confront medicine in general and radiology in particular are on a glide path and there is very little that is going to happen in Washington to change that,” Muroff said. “Clearly, this is not the time for business-as-usual attitude, yet getting people to change is very, very difficult.”
As a consultant to many radiology practices across the country and longtime leader of the annual Economics in Diagnostic Imaging meeting, Muroff has a unique vantage point from which to observe radiologist sentiment, and the view is not pretty. Radiologists appear to be in full-out denial, bent on pursuing the same path that brought success over the past 20 years—one that is no longer viable.
A new healthcare dynamic is in place, Muroff said. Of the many new challenges facing the specialty, he identified five.
Challenge No. 1: Declining reimbursement.
This downward reimbursement trend is impacting the technical component in particular, but also now is evident in the professional component. Noting that as of 2013 radiology had endured 12 reimbursement cuts, Muroff pointed out some unintended consequences on radiology practice.
“In order to compensate for the decline, some radiology practices have gotten into the mode of increasing productivity,” he said. “I’ve encountered two practices over the past year that are averaging more than 30,000 procedures per radiologists per year. While neither practice was sophisticated enough to be able to equate studies to RVUs, Muroff equated the practice’s productivity to a “hamster-wheel” activity.
Radiologists who shut themselves away in their offices or at a reading station in their home and focus only on clinical productivity are not performing the nonclinical tasks such as consulting, serving on hospital and practice committees, practice building, educating technologists, going to conferences and doing all the things that maximizes the practice’s chances for tenure at a hospital.
This behavior obviously leads to commoditization, he pronounced. “If you are not available or visible at your hospital, it doesn’t matter whether you are behind a locked door in your office, at home, in Zurich, Sydney or India,” he said. “All you are is a nameless, faceless interpretation and that interpretation could be provided by anyone in any place.”
Furthermore, one result of healthcare reform is that radiologists likely will be paid for studies they previously
read for free, with millions of newly insured now in the system. A second unintended consequence of healthcare reform, however, is that people with insurance tend to get more studies than those without insurance, creating more downward pressure on reimbursement.
“It’s not clear yet how many more studies these people are getting, but what is clear is that the reimbursement for those studies is very low,” Muroff said. “Most likely what most practices will see is a decrease in the dollars per work RVU they are performing. In other words, they will be doing more studies for a lower reimbursement rate leading to an overall decrease in the average work RVU in the practice.”
Muroff predicts that compensation will decline even further. “Alternative payment systems will impact reimbursement as well,” he noted.
Challenge No. 2: Washington’s love affair with family practice (and radiology’s image problem).
Muroff described the lead character of the ’70s-era television show “Marcus Welby, MD” as an “avuncular general practitioner toiling in the vineyards of medicine, solving the medical and social problems of the community.” He says: “This is basically the image that health policy makers have of family practice. They fail to remember that Marcus Welby had one patient per week.”
Because Washington sees family practice physicians as overworked and underpaid, more dollars are likely to be routed away from specialists (including radiology) and toward general practitioners in the zero-sum game of physician reimbursement and the Medicare Physician Fee Schedule. “The perception of radiologists is exactly the opposite, because we have an image problem,” Muroff said.
He shared a recent anecdote in which a car service driver asked him if radiologists go to a real medical school like other physicians. “I thought we had dispelled a lot of this misperception about radiologists, but it is alive and well and for us a very unhealthy situation,” he shared.
“If a significant number of individuals don’t even think that radiologists are physicians,” he added, “how long can we justify being one of the most highly paid specialists in all of medicine? How can we not expect to take further major reimbursement cuts in the future?”
Challenge No. 3: More demands from hospital administrators for increased coverage, better service and subspecialization.
What Muroff perceived as “an almost epidemic situation” in the U.S. is radiologists and their hospitals parting company—almost always initiated by hospital administrators. “Virtually every hospital administrator will say there’s a quality problem, but in my experience its rarely quality,” Muroff said. “Quality seems to be a code word for behavior and service.”
He dismissed quality as the instigator, primarily because he believes radiology does such a poor job of quantifying and articulating its quality that it makes the perfect pretext. The real reasons hospitals are separating from their radiologists are behavior and service.
“The hospital is tired of hearing complaints from referring physicians or technologists or other employees of the hospitals,” Muroff maintained. “The second reason is that they don’t like us competing with them.”
The anti-competitive issue makes little sense to Muroff. If there is an economic opportunity to open an office down the block from the hospital and the hospital won’t open a center and and won’t joint venture with the practice, then a competitor will. He acknowledged, however, that it is a very real concern.
“This is a very visceral issue with hospital administrators,” he said. “There have been some outstanding groups that have lost their contract because of perceived or actual competitive initiatives.”
If you are a dispassionate outsider, he said, the service demands also make sense. “You would want to go to a hospital that had more radiologists on site, more hours of onsite coverage, more subspecialties,” he said. “These are not unreasonable demands: They want to own our practice.”
Employment, however, continues to be unusual in the private practice setting for radiologists—the ACR pegs the number of employed radiologists at more than 20%; EDI estimates that between 10% and 15% of radiologists are employed. Muroff predicts that the pressure for employment will increase, and radiologists need to obtain the leadership skills necessary to join and contribute to the organizational hierarchy.
“They don’t like us,” Muroff warned. “We tend to send our most objectionable practice member—and in most practices a lot of people are vying for the title of most objectionable practice member—and we send that individual to negotiate with a highly testosteronized hospital administrator, and we expect to get a positive result.”
In the realm of service, practices need to be ready to provide not just subspecialty expertise, but redundant subspecialty expertise in the event that, for instance, the neuroradiologist goes on vacation. “Hospitals are starting to realize that if you can’t provide it, somebody else can,” Muroff said. “One of the major reasons groups are being replaced is that it’s relatively easy to do so.”
As a result, Muroff predicts that alignment will become a major issue in the near-term future. “Groups already are being asked to take sides,” he said. “Big groups that cover multiple systems are being told, ‘Look, you’re either for us or you’re against, and you pick one system or the other.’ This is going to occur with increasing frequency and bring both problems and opportunities for the radiology group. Far more common, is the demand to sell your outpatient offices to the hospital.”
Challenge No. 4: The evolution of nontraditional, national entrepreneurial radiology companies competing for hospital contracts and outpatient business.
In the not too distant past, three or four corporations controlled 75% of private practice in Australia. While there were several failed efforts at doing the same thing in the U.S. in the ’90s, the current environment is very different, Muroff said. “Previous failures are not insurance against future more successful efforts at corporatization,” he noted.
A few things have changed since the ’90s, Muroff said. In the past, the corporate entity invited the radiology practice to join the organization, and if it declined, that was the last the practice saw of the entity.
“Current practices cut the radiologists completely out of the equation,” he said. The new corporate radiology deals directly with administrators in the C-suite, and the radiologists are not even aware that the contacts have been made and discussions in progress.
Muroff calls this “disintermediation,” and suggested that those practices with good relationships with their administrator may have heard at least once during the past year that he or she got a call from a corporate radiology provider. “If you don’t have a good relationship, you’ll never hear about it,” he notes.
The goal of these companies is to go public or be acquired by a public company, and to do that, they must show growth and profitability. A little more than 50% of U.S. practices outsource their call, but in the past few years, 0% of EDI attendees who had not outsourced their call were thinking of doing so, and 15% were considering taking call back in-house, he said.
“If the market is static, this could be a problem for these companies,” Muroff suggested. “So where’s the money? The money is in hospital contracts. We have to understand that this is not business as usual. There are several companies that can and will take your contract.”
Radiology practices are sabotaging themselves in multiple ways, Muroff said. They do a poor job of managing problem radiologists and they don’t share their quality stories with the hospital.
“With these companies, if there is a problem, the radiologist is gone in 24 hours,” Muroff said. “They may not be gone from the company, they may be working somewhere else, but they are gone from the hospital.”
Likewise, while most practices do quality projects, they rarely share them with the hospital. “These companies do on a monthly basis,” Muroff said. They also provide 24/7/365 subspecialty expertise at discounted rates.
The unintended consequence of disintermediation is further commoditization of radiology services as hospitals change radiology practices more easily and more often. Not only is the specialty devalued in the minds of payors and providers, but with medical students as well. “The other trend I am seeing throughout the country is the need for security more than anything else,” Muroff said. “People are willing to take employment that would offer security over financial reward.”
Challenge No. 5: Alternative payment models.
People have been predicting the demise of fee for service (FFS) for 20 years, but with 18% of the gross domestic product allocated to healthcare, the public has reached its limit, Muroff said. Radiologists increasingly will be challenged to adapt to new payment models.
“You can understand what is happening if you follow the money,” he advised. “All of these alternative payment methodologies shift the risk from the payor to the provider.”
In fee for service, the more studies a radiologist reads, the more he or she gets paid, and the risk is on the payor. Alternative payment models—including bundles for a disease entity or a hospital stay or population management—are calculated so that the risk shifts from payor to provider.
Most radiologists don’t have the data they need to prepare for bundled payments. “If your hospital administrator says you have a meeting Tuesday to discuss how the bundled dollars will be split, how many of you radiology leaders would know what your fair share would be?” Muroff asked. A mobile application developed by the health policy institute of the ACR will allow a practice to do just that based on 5 million episodes of care, he added.
An unintended consequence of professional payment bundling is that it accelerates employment, primarily for family practitioners, who can join only one ACO. Radiologists, on the other hand, can be polygamous and join multiple ACOs.
“So, why should they want to employ us?” Muroff asked. “The reason is simple. It’s easier to split the bundled dollar if everyone is on salary. If there is money left over, you bonus the doctors—more likely you bonus the administrators and the shareholders. If there’s not enough money, there is a sort of withhold and if there isn’t, next year your salary is lower. If we want to remain independent, we must have the information technology to allow us to produce the data necessary to do so.”
In conclusion, Muroff insisted that the status quo is no longer serving the specialty. “In the old days, all we wanted to do was get our slice of the pie,” he said. “Now we have to understand that the pie is going to be smaller. To stay the same, we have to have a slice of somebody else’s pie or better yet, grow and develop a different type of pie—diversify our income, parlay our intellectual property.”
All radiologists have been winners to date, but in the future—even now—there will be losers, too. “In the past, it took work to fail, now it’s going to take work to succeed,” he said.
Radiology practice must do six things to succeed in the future, according to Muroff.
- First, understand that what you have now is not guaranteed. “It’s going to take work and planning to have a successful practice, both academic and private,” he said.
- Second, you must streamline operations in every corner of the practice. “We have to optimize the operations of our practice to compensate for declining reimbursement,” he asserted.
- Third, Muroff, ever the entrepreneurial radiologist, urged radiologists to seek new sources of revenue. “For all radiologists, I believe income diversification is a must for success,” he said.
- Fourth, expect turf battles to intensify. “If we continue with business as usual, there are others who will gladly take what we have, and, in many cases, they will,” he said.
- Fifth, your clout in Washington will be roughly equivalent to your RadPAC contribution. “We have few friends at the national level, and it is time for everyone, private and academic, to know that PAC contributions are essential,” he said.
- Sixth, in the shift from volume to value and from output to outcomes, don’t expect the workload to decline or to be paid for your cognitive skills—get ready to demonstrate value.
“To my mind, there has been a very murky description of all of that,” Muroff said. “With all of the people talking about Imaging 3.0 and the shift from volume to value, you could easily infer that somehow volume is going to go down and you are going to get paid for your cognitive skills.”
Muroff said he could not conceive of any payment model where volume in radiology will decline. Reducing training slots and going leaner in the practice practices than you already have would be mistakes. Instead, concentrate on demonstrating value.
“Volume is going to go up, but radiologists are going to have to show value—I like the word significance—or you are going to be irrelevant,” Muroff warned. “Somebody else will do what we do. A culture shift is not a luxury it is an imperative for professional survival, and you have to decide if you and your colleagues are up for the challenge.”