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When a Hospital Replaces a Private Practice—With a Teleradiology Provider page 12

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August/september 2013 | Volume 6, Number 4

4 Radiology BusiNess JouRNal | august/september 2013 | www.imagingbiz.com

CONteNts

FeAtures

18 gearing up for Value-based payment: the race to Define Quality in radiology By George Wiley As CMS churns out generic quality measurements, the specialty is scrambling to generate meaningful measures of its own, with revenue expected to be increasingly at risk for those who do not comply.

28 Imaging-center growth Hits the Wall in 2013; Volumes plummeted in 2011 By Cheryl Proval Pressure on reimbursement and increased competition took their toll on the imaging-center market in 2013, with the first reported declines in inventory, per-center volumes, and annual visits.

34 Hospital–radiologist Alignment: together, but separate By Rich Smith Radiology groups use shared-management agreements to retain independence while achieving necessary alignment with hospitals.

18

34

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CONTENTS AuguST/SEpTEmbEr 2013 | Volume 6, number 4

publiShErCurtis Kauffman-PiCKelle · [email protected]

EDiTOrCheryl Proval · [email protected]

ArT DirECTOrPatriCK r. Walling · [email protected]

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ASSOCiATE EDiTOr Cat vasKo · [email protected]

ONliNE EDiTOrlena Kauffman · [email protected]

CONTribuTiNg WriTErSCynthia e. Keen;

ezequial silva iii, mD;riCh smith;

george Wiley

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Radiology Business Journal is published bimonthly by imagingbiz, 210 W. main st., suite 101, tustin, Ca 92780. us Postage Paid at lebanon Junction, Ky 40150. august/september 2013, vol 6, no 4 © 2013 imagingbiz. all rights reserved. no part of this publi-cation may be reproduced in any form without writ-ten permission from the publisher. Postmaster: send address changes to imagingbiz, 210 W. main st., suite 101, tustin, Ca 92780. While the publishers have made every effort to ensure the accuracy of the materials presented in Radiology Business Journal, they are not responsible for the correctness of the information and/or opinions expressed.

DEpArTmENTS

8 AdView A Yawning Void By Cheryl Proval

10 The bottom line New CT and mri Centers Could Affect us All By Ezequial Silva III, MD

12 priors 12 Strategy | When A hospital replaces a private practice— With a Teleradiology Company By Cynthia E. Keen

14 health iT | bill russell, SVp, CiO: Why health Care Needs the Cloud (Among Other Things)

40 Advertiser index

42 final read from the imagingbiz Web Journals

12

Please address all subscription questions to Jean laviCh at [email protected].

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Medical BillingPractice Management

$


risk, at the request of payors, and as they launch health plans of their own (radiology practices, too, will need to understand all costs of providing service as they move into risk assumption).

Maybe it’s the complexity of the task, and maybe it’s complicity in the game of financial charades that underpins the US health system. If payors, including patients, knew what things cost, they might demand a fair price.

In the editorial pages of the Wall Street Journal,4 a general surgeon wrote about a patient in his 60s who almost canceled a hernia surgery when he found out that his out-of-pocket cost would be $20,000. Because the patient had a low-cost insurance plan without provider-network requirements, the surgeon was free to counsel the patient to bypass his insurance and negotiate self-pay rates for the outpatient procedure directly with the surgeon, anesthesiologist, and hospital—for a grand total of $3,000.

If you don’t know what things really cost, then you can continue to hold onto the creaking, makeshift, petrified reimbursement system that offers the comfort of the status quo. It’s not easy to let go of something that you’ve always known—and to embrace the unknown. It’s time, however, to find out what services cost—even if it means that you are on the losing side of a revalued code or two.

The ability to get a price that covers costs is at the heart of the fiscal solvency of the specialty. I know that there are radiology administrators and practice CEOs who understand activity-based cost accounting. Help CMS do that.

Editor’s note: References for this article are posted in the online version at www.imagingbiz.com/rbj.

Cheryl [email protected].

As Ezequial Silva III, MD, makes perfectly clear

in his guest editorial in this issue (page 10), the entire continuum of radiology delivery services is inches away

from getting slammed—again. The root of radiology’s latest problem is in a 2007 report1 (based on data of an even earlier vintage) from RTI International, LLC, that recommends separate cost centers for MRI and CT.

Those cost centers just became the method for calculating cost-to-charge ratios under the Inpatient Prospective Payment System (IPPS). CMS has proposed using the same methodology in its proposed rule for the Hospital Outpatient Prospective Payment System (HOPPS).

The objective of the mind-numbing 2007 report makes perfect sense: “The purpose of the project is to develop more accurate estimates of the costs of Medicare inpatient hospital stays that can be used in calculating relative resource weights per . . . DRG under the . . . IPPS. The project revisits the links between costs and charges as reported on hospitals’ Medicare Cost Reports and examines methods of refining the cost-to-charge ratios . . . that are the conversion factors used to transform Medicare claims data into estimates of average cost per DRG.”1

I don’t fault CMS for wanting to get a handle on the cost of the health-care services that we, the people, finance; do you? The author points out that DRG weights were originally constructed from claims-level cost estimates derived from hospital cost-to-charge ratios for ancillary services and per-diem nursing costs.

This system subsequently was changed to the current system of using departmental cost-to-charge ratios to convert charges to cost. This was largely because the original system was believed to overvalue surgical procedures and undervalue other types of care.

The OppOsiTe effecTNow, the pendulum has swung back

the other way, and concerns have arisen anew over weight compression, in which low-cost DRGs are overvalued and high-cost DRGs are undervalued. Unfortunately for radiology, CMS has used cost data for MRI and CT that even the report’s author acknowledges as unrealistically low. The new cost centers for MRI and CT do the exact opposite of their intention: undervalue the most cost-intensive services.

The impact on the IPPS is that payments for the most common CT procedures are reduced from 20% to 34%. Payments for MRI procedures are reduced slightly less than 15%, Shaun Lillard of the Advisory Board Co Imaging Performance Partnership calculates.2

There’s a silver lining for hospital radiology departments, Lillard writes. In breaking out MRI and CT into their own cost centers, CMS makes other codes receive what he says are more accurate cost estimates, and some procedures would see significant bumps in reimbursement: Ultrasound payments will increase between 42% and 62%, and payments for level II cardiac imaging would nearly double from the 2012 rate, he estimates.

If (as proposed) the new cost centers are applied to HOPPS, outpatient imaging would not share in the upside, due to the DRA effect: A procedure’s technical component is paid for at the lower of the HOPPS and Medicare Physician Fee Schedule rates. Coming at a time of contraction in the freestanding–imaging-center sector and of sharp declines in per-center procedure volumes (see article, page 28), this effect could be dire. Lillard believes that CMS policy is shaped by a March 2013 Medicare Payment Advisory Commission report3 that recommends bringing reimbursement for hospital-based outpatient imaging and freestanding imaging centers closer to parity.

financial charadesWhy hospital CFOs don’t pay more

attention to the cost basis of individual DRGs is an ongoing mystery to me—though someone has to be taking an interest, now that hospitals are assuming more

A Yawning VoidDoes anyone really care that we have a loose grip on what it costs to deliver our services?

AdView

CMS proposes paying hospitals the same amount for a head CT exam as for a skull radiograph in 2014. This is but one example

of the payment anomalies that will occur when CMS applies data from the recently created CT and MRI cost centers to the determination of hospital payments.

CMS has finalized the rule1 using these data within the Inpatient Prospective Payment System, subjecting CT- and MRI-intensive DRGs to payment reductions. It has proposed2 applying the same methodology to the Hospital Outpatient

Prospective Payment System (HOPPS); this will have broader implications, since the DRA caps physician-office payment at the lower of the HOPPS or Medicare Physician Fee Schedule amount. Therefore, physician-office payments also will suffer concordant reductions in payment for CT and MRI services.

The ACR® and others are appealing to CMS to abandon the use of CT- and MRI-specific cost centers and cost-to-charge ratios in the final HOPPS rule, which will be published in the Federal Register later this year. If CMS does not completely abandon the proposal, CMS should consider delaying its implementation or establishing minimum data-quality requirements. If all else fails, our last hope for maintaining appropriate payments is to improve our own cost reporting.

The new CT and MRI cost centers were created in 2010, based on a 2007 study3 of charge compression prepared for CMS by RTI International, LLC. RTI’s recommendation of the creation of new CT and MRI cost centers was somewhat puzzling, since the report itself pointed out, “Many facilities had very low cost ratios on these nonstandard lines . . . This raises questions about the relative

accuracy of their cost finding. . . . [CT and MRI] services are very capital intensive, and accurate cost ratios will depend on providers’ being able to assign actual equipment depreciation and lease costs directly to the cost centers, rather than the traditional method of allocating average capital costs based on square footage.”3

In fact, subsequent analysis has shown that the recently acquired CT and MRI data are flawed; are not reflective of the actual costs for CT and MRI services; and are, therefore, unworthy of application to actual payment amounts. The misallocation

of CT and MRI costs is widespread, with a significant number of hospitals reporting little or no capital cost for CT and MRI. A recent internal analysis by Direct Research, LLC, estimated that of 4,380 hospitals reporting CT and MRI data, only 179 (4%) captured the appropriate cost data.

parTly Our faulTIn some ways, the inappropriately

low charge information from the CT and MRI cost centers is the result of our own billing shortcomings. We are not properly allocating the appropriate costs to the CT and MRI cost centers. As the RTI International study and subsequent analyses have shown, cost reporting for CT and MRI is challenging for hospitals, given the capital-intensive nature of CT and MRI. This makes it difficult to capture all overhead costs related to equipment, labor, and overhead appropriately.

Moreover, assigning costs related to equipment depreciation and leases is even more difficult. Therefore, many facilities use the long-standing method of allocating average capital costs based on square footage. In other words, the hospitals are treating CT and MRI systems as hospital fixtures (hospital overhead) instead of

as equipment (a radiology-specific cost), resulting in significant cost allocations being lost.

We can do better with our cost-center allocations. A new reclassification system is required to allocate these capital costs better, and this requires the engagement of radiologists, IT system administrators, hospital radiology-department directors, and finance officers. A direct-allocation method should be used (rather than the square-foot method whereby CT and MRI costs are allocated to other cost centers across the hospital).

Ideally, CMS will recognize the payment anomalies created by the flawed data from the new CT and MRI cost centers—as well as the downstream effects on physician-office payments—and will abandon the HOPPS proposal altogether. In the meantime, radiology professionals should acknowledge and address the billing shortcomings exposed by the flawed data and take steps to improve our charges. The DRA has forever linked hospital and office payments, so this battle belongs to all of us to fight.

Ezequiel Silva III, MD, is the director of interventional radiology and treasurer for South Texas Radiology Group in San Antonio, is chair of the ACR® practice-expense subcommittee, and is an ACR RVS Update Committee advisor; [email protected].

References1. US DHHS. CMS-1599-F. CMS-1455-F. h t t p : / / w w w. o f r. g o v / O F R U p l o a d /OFRData/2013-18956_PI.pdf. Published August 19, 2013. Accessed August 19, 2013.2. US DHHS. CMS-1601-P. http://www.gpo.gov/fdsys/pkg/FR-2013-07-19/pdf/2013-16555.pdf. Fed Regist. Published July 19, 2013. Accessed August 16, 2013.3. Dalton K. A study of charge compression in calculating DRG relative weights. http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Reports/downloads/dalton.pdf. Published January 2007. Accessed July 30, 2013.


The BoTTom Line

New CT and MRI Cost Centers Could Affect Us All

bY EzEqUiAl SilVA iii, MDIs radiology partly to blame for faulty CMS data?

In some ways, the inappropriately low charge information from the CT and MRI cost centers is the result of our own billing shortcomings.

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When hospital executives express dissatisfaction with professional radiology services, local radiology

practices should put on their nimble-response shoes and communicate. If they don’t, national teleradiology companies will, and the experience at Stamford Hospital in Connecticut is a case in point.

Today’s cost-oriented, results-focused health-care environment is forcing hospitals to rethink how they operate, and no relationship in the care continuum is immune from scrutiny. When a local radiology practice lost a decades-long contract with a midsized community hospital, the hospital issued a request for proposal (RFP); ultimately, it entered into an agreement with a national teleradiology company.

Sharon C. Kiely, MD, MPM, CMO of Stamford Hospital, presented her hospital’s reasoning in “Nationwide Radiology: Coming to Your City Soon,” presented at the RBMA’s 2013 Radiology Summit in Colorado Springs, Colorado, on May 22. The session was moderated by Joseph White, CPA, MBA, CMPE, of CliftonLarsonAllen.

The key factor in replacing the radiology practice was aligning with a communicative partner, Kiely says. More specifically, what sealed the deal with the new provider was its willingness to specify report-turnaround times and stand behind them.

Kiely explains that Stamford Hospital was in a financial turnaround mode when she joined the organization in 2012. Located in an affluent (but highly competitive) market, Stamford Hospital had broken ground on a new hospital facility that would double its bed size, double the capacity of its emergency department, and more than double

the number of its operating rooms. A campaign to recruit world-class physicians was also underway, and Kiely and her colleagues were concerned that the radiology department would not meet the challenge when the hospital opened in 2016.

A FAmiliAr StoryThe litany of complaints might sound

familiar. Emergency-department physicians were not happy with turnaround times on stat exams; some types of exams had as much as a seven-day wait; and the hospital wanted tighter alignment with the practice on outpatient facilities.

“We needed to look under the hood,” Kiely says. “We didn’t take anything we were told at face value. We looked at statistics and at benchmarks, we did our research, and we asked a lot of questions.”

Every medical-staff leader was invited to be part of the evaluation committee, but only two people came forward to participate actively. “Chairs of various services all were in agreement that they couldn’t figure out why the radiology practice was performing so badly,” she says.

The evaluation team tried to work with the practice to improve service, suggesting new performance models that included setting standards for turnaround times, call coverage, use of speech-recognition

software, and ongoing peer review—and measuring results. Junior radiologists in the practice seemed more interested than senior members, Kiely notes, but nobody felt comfortable critiquing other radiologists’ reports and interpretations.

With the assistance of CliftonLarsonAllen, an RFP was developed. It was heavily weighted in the favor of radiology practices in the region, but the RFP was also sent to several national teleradiology groups, Kiely explains.

the WinnerThe finalists included two

teleradiology groups, and one of them won the contract. The implementation started in October 2012, with all services provided by the teleradiology company except breast-imaging interpretation.

A separate contract was awarded to local employed radiologists. “We wanted to develop a sound, flexible relationship with a group that would communicate and work through problems with the hospital as a partner, not an adversary,” Kiely explains.

Kiely reports that the transition has not been 100% smooth, but hospital physicians are happy with turnaround times of less than 20 minutes for stat exams and four hours for all other exams. The


{priors}When a hospital replaces a Private Practice— With a Teleradiology Company

s t r a t e g y

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priors

With more than 800 active health IT applications to maintain, Bill Russell has no time for distractions.

The senior vice president and CIO of St Joseph Health—a nonprofit integrated health-care network that includes 14 hospitals in California and Texas—has

a lot on his plate. There’s even more since the system’s February 2013 affiliation with the network of Hoag Memorial Hospital Presbyterian to form the regional

Covenant Health Network (Irvine, California), covering an area stretching from California’s Orange County to the High Desert.

Russell, a relative newcomer to health care, has IT expertise informed by 26 years of consulting in the telecommunications, banking, engineering, and manufacturing industries. He specialized in cloud consulting at the time of his leap into health care.

It’s surprising that it is not the sector’s regulatory and security concerns that differentiate health care from the world of business IT, in Russell’s opinion. “Every industry has stringent security requirements, and while the regulatory environment in health care is complex, to be sure, it is just as complex in

other industries,” he says.The differences, he believes, are data

complexity and the proliferation of proprietary systems. “The complexity is enormous, compared with tracking investments, balances, production, and even supply-chain activities,” he notes. “In the coming years, health care will become very personalized, and this will increase the number of permutations and variations on the data.”

For this reason, he believes that health care should focus on data management that is specific to health care and not distinctly an IT function (which is where cloud-based applications enter). “For example, we need to understand that the care and maintenance of data centers, servers, storage, and—in some cases—networks are not distinctly health-care work, and we should move these items to the cloud,” he says.

initiAl Cloud moveSThe easiest cloud technologies to

implement are infrastructure-as-a-service, or IaaS, technologies, which cover the data center, servers, storage, network, and management platform associated with that equipment. “We view this as an opportunity to get out of the data-center–maintenance business,” he says. “This will save us several million dollars over the next three years.”

St Joseph Health also deploys a number of software-as-a-service (SaaS)

technologies, including a cloud-based vendor-neutral archive (VNA) for medical images and a popular open-source analytics platform. In the next two years, it will roll out a cloud-based human-resources application.

“SaaS provides some interesting opportunities and challenges, as we move forward,” Russell says. “While the central storage of information such as PACS images is intriguing, you have to be aware of vendor and data lock-in. We expect to be able to access just about every piece of data we store in the cloud programmatically, through application programming interfaces (APIs): We don’t want to trade one trap for another. Proprietary clouds are what we are trying to avoid.”

For instance, if St Joseph Health wants to deliver PACS images to a patient portal, it doesn’t want to be locked into the vendor’s portal solution. “We want to be able to extract those images using APIs and deliver them in whatever portal we decide to use,” he explains. “We use a cloud-based VNA for storing and delivering our images to various platforms.”

To choose a cloud solution, ask the same questions asked of any application, Russell advises: Is it open? Does it have service-oriented architecture? Does it have APIs? How good are those APIs? How secure is it?

“We need our cloud providers to

bill russell, SvP, Cio: Why Health Care Needs the Cloud(Among Other Things)

h e a l t h i t

on-site radiologists participate in tumor boards and administrative meetings, and they are active in the teaching program.

Teleradiology exams—about 20% of the total—are provided in final form, eliminating workload pressure that previously existed when next-day overreading of preliminary reports was the norm. Problems are being worked out, and hospital leaders are happy with their decision, Kiely says.

White advises radiology practices not to underestimate the quality of

services available from (and the savvy marketing of those services by) national teleradiology companies. He says that high-quality, well-run services are being offered, and in addition to being offered at a lower cost, more kinds of service are being provided.

Furthermore, these services are being promoted through sophisticated, persuasive marketing efforts. Citing one well-known teleradiology company, White recommends reviewing the formatted reports that it uses to respond

to hospital RFPs. “You can get a free report, in terms of the percentage of interpretations that could be outsourced and that should be read locally,” White says. “The sample the company mails you is an impressively prepared report. The technology that it uses to analyze a prospective hospital’s data is unique. This is what you are competing with—today—for a hospital’s business.”

Cynthia Keen is a contributing writer for Radiology Business Journal.

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understand that when we put our data out there, they don’t own our data. They can’t trap our data,” he says. “We need to be able to get to discrete data elements at every stage of the development cycle. When we look for cloud providers, we are looking for characteristics found in service-oriented architecture.”

Time and again, Russell returns to the potential efficiencies that can be achieved using a cloud-based application. If a hosted cloud application doesn’t provide appropriate security and an architecture that maintains what he calls clear layers of abstraction, then Russell will build and maintain a private cloud to provide the platform for the application.

the eSSentiAl ShiFtBuilding platforms that provide

future flexibility through layers—not silos that trap information in proprietary information systems—is the essence of Russell’s work at St Joseph Health, as the health system moves into uncharted territory under health-care reform. “We have to start thinking in platforms,” Russell says. “

He continues, “None of us really knows the future; we can see glimpses. Every new technology we put into place

must be viewed in its ability to interact with and provide value as a whole, and not just as an individual piece. We have close to 800 applications at our system, many of which were selected for the value they bring to one department or a single site in the system. When they were selected, they were celebrated for their ability to address a problem that we faced. Over time, the problems change, and applications become obsolete.”

He adds, “Platforms have the ability to evolve. Platforms have layers of abstraction that allow us to put new interfaces and workflow on existing data and deliver new value to the organization. This is a paradigm shift in health care: Health care thinks in big, proprietary systems. We have to break out of that.”

Health care’s immediate opportunities to rehabilitate its IT profile lie in integration, application rationalization, and data governance, Russell notes. “While none of these items are quick hits, they represent millions of dollars in savings for health care,” he says. “Understanding where every application fits in your environment and how everything interacts is really the most important thing. It’s data governance, and it’s application governance. A lot of times, in health care, we collect applications. We don’t throw away old applications; we just add new applications on top.”

When Russell describes service-oriented health-care IT architecture, he makes it sound almost simple: A database layer is abstracted from a communications layer, which is abstracted from a presentation layer. “We never really get bottlenecked or trapped. We can replace a layer instead of a complete application silo,” he explains. “In reality, if we have the right architecture, we could take the data abstracted from the presentation layer, and if we put another presentation layer on top of those data, they still have value, and we can still do some things with those data.”

SeCurity bugAbooS And the JetSonS Future

Although he states that security is equally important to all of the industries in which he has served, Russell does not minimize its importance. “Above all else, our top priority in health-care IT is to ensure that the appropriate security

measures are in place to protect the confidentiality of all of the data that are being stored at all times,” Russell says. “I can’t emphasize enough that you can’t outsource security. We have to ensure that our cloud providers adhere to the policies and regulations that our specific industry requires, and in some cases, this will take some solutions off the table.”

Security begins with the business-associate agreement, and Russell uses a third party that penetrates the cloud environment and audits practices outlined in the agreement. “We need to know what those data are; who has access to them; where they are being stored; how they are being stored; and what the policies, procedures, and practices are concerning those data,” he explains. “That will rule out some providers: You struggle to do that with a Google.”

Looking into the future, Russell envisions a bigger clinical role for the cloud in a Jetsons-like future. “I hope we can get through the privacy and security concerns and get to a point where I personally have more monitors on my body than my car has on it,” he says. “In a family with heart issues, it would give me peace of mind to know that I can be monitored every minute of every day, and that technology will sift through the mountains of data and identify potential issues prior to their becoming an event. If we can predict it, a week or so before the heart event happens—with an early-warning system—it would go a long way in improving the health of our communities.”

He sees an even more important preventive role for technology in teaching children how to live healthy lives by providing them with the feedback and encouragement that they need to “stay the course, over their lifetimes,” he says. Russell checks his phone about 50 times a day. “Email, stocks, online games, Facebook, and Twitter: This is the new norm,” he says. “If we had more ways to check on our health, we might have the opportunity to nudge behavior, at a young age, and have long-term impacts.”

Editor’s note: This article and its sidebar were originally published in the August 2013 issue of Radinformatics.com.

—Cheryl Proval

the Cloud ACCording to ruSSell

Before becoming CIO of St Joseph Health (Irvine, California), Bill Russell encountered much vagueness in the understanding of cloud computing. In the interest of clarifying a murky subject, he identifies the following five characteristics that a platform must possess in order to be considered a true cloud:• a self-service Web-based provisioning tool;• a granular accounting method that offers the ability to meter the quantity and location of use;• a service-based solution that can be accessed through an application programming interface, or API, to access data and to provision and deprovision services as needed; • a pay-as-you-go business model in which you pay only for what you are using; and• scalability, with the ability to scale use up and down very quickly.

Another characteristic that is relevant in other industries (but in limited use in health care) is multitenancy, which offers tremendous cost benefits. “There’s a huge value in multitenancy,” Russell says. “In health care, there are very few things we can do in a multitenant environment because of our regulatory environment.”

—C. Proval

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As CMS churns out generic quality measurements, the specialty is scrambling to generate meaningful measures of its own, with revenue expected to be increasingly at risk for those who do not comply

Cover | Quality in Radiology

Today’s radiology dashboards let you know how your department or practice is running. They chart patient flow; report-turnaround

times; critical-results reporting; and dozens of other data points that reflect cost, efficiency, productivity, and (sometimes) effectiveness. One of the primary goals of these dashboards is to support quality improvement, as CMS and other payors begin to link payment to performance—and to define performance using quality measurements.

Yvonne Y. Cheung, MD, MS, holds quality-improvement black-belt certification from the American Society for Quality. Cheung, a musculoskeletal radiologist at Dartmouth-Hitchcock Medical Center (Lebanon, New Hampshire), holds dual associate professorships in radiology and orthopedic surgery at Dartmouth’s Geisel School of Medicine. She also is Dartmouth-Hitchcock Medical Center’s radiology vice chair for quality and safety.

In 1896, Dartmouth College was the site of the first clinical radiography ever performed in the United States. Today, Dartmouth-Hitchcock Medical Center radiology, like many of its sister hospital departments, is creating quality-improvement measures and displaying them on dashboards (along with run charts), Cheung notes.

As far as Cheung is concerned, health care is finally catching up with Motorola’s Six Sigma™ quality-improvement principles: recognize, define, measure, analyze, improve, and control. These

were initiated by Motorola in 1985, and manufacturers have since applied them to reduce the production of flawed goods.

“This system got adopted by different industries and is now slowly moving to health care,” Cheung says. “There are different levels and abilities in improvement work, based on certain methodologies. We are making changes at all levels.” In fact, there are many radiology quality-improvement initiatives in the works now, coming from CMS, hospitals, health networks, specialty societies, insurers, and imaging providers.

For health care as a whole, some argue, the proliferation of quality measures has gone too far (and too quickly): Quality markers are getting in the way of care. That’s what members of the US Senate


By George Wiley


Committee on Finance complained of in June 2013, when they called for more attention to be paid to patient outcomes as quality measures. At that time, Sen Max Baucus (D–MT), the committee’s chair, was quoted as saying that Medicare uses 1,100 different measures in its quality-reporting and payment programs. He then asked whether we really need more than a thousand measures.1

The committee’s senators went on to suggest that quality outcomes should be tied to provider payments not in traditional fee-for-service reimbursement models, but in team-based delivery models (such as accountable-care organizations). Cheung doesn’t think that there are too many quality-improvement initiatives in radiology, but she does agree

v Radiology is moving full-steam ahead to develop clinical quality measurements, and the ACR® is providing impetus and support in the form of national data registries.

v Maintenance of certification (MOC) and the associated practice quality improvement (PQI) projects—monitored by the American Board of Radiology (ABR)—might be optional for holders of lifetime credentials, but nonparticipants will see penalties imposed by CMS in 2015.

Preload: Previewv Individual institutions are blazing their own trails in quality improvement, developing solutions for critical-results notification and implementing Response Evaluation Criteria in Solid Tumors (RECIST) rules for all oncology patients.

v A private-practice consortium and the teleradiology arm of a radiology benefit management (RBM) company are addressing legal concerns inherent in sharing data across practices and institutions by creating a patient-safety organization (PSO), as designated by the Agency for Healthcare Research and Quality (AHRQ).


www.imagingbiz.com | august/september 2013 | Radiology Business JouRnal 19

Coverage Registry documents the in-house night-reading methods that work best. Radiology practices that join the NRDR receive twice-yearly benchmark reports on how they stack up in each registry category.

The ACR also operates RADPEER™, which selectively reviews prior reports from its clients to make sure that radiologists are interpreting exams correctly. This broad-based program attempts to reassess radiologists’ skill levels.

Burleson says that there are many elements of quality improvement that make the process difficult. On one side, there is the need to lower expenses in health care. “The cost of health care, at its current rate, is unsustainable, if you look at the Medicare trust fund and the growing volume of seniors. Another impetus for improving quality is getting value and paying for what is necessary,” she says. “Just being efficient may not be the best care, so you must also evaluate the care provided.”

Generating evidence of value and effectiveness is tricky, however. “Accuracy of diagnosis is really important, but it’s pretty difficult to pinpoint and measure, even though there are a number of peer-review programs that look at that,” Burleson says. “You can use peer assessment as a training program to work through peer review, but accuracy is an element that’s difficult to manage, on a national scale.”

Appropriate use of imaging is a bedrock quality-improvement concept

that, soon enough, quality assessment and reimbursement will go hand in hand.

“Quality improvement is something big,” she says, adding that payors are going to ask for it. “This is something that everyone should be doing,” she notes.

ACr’s Top-down viewJudy Burleson, MHSA, the ACR’s

senior advisor for quality metrics, says that today’s quest for quality improvement in health care began with a 1999 report by the US Institute of Medicine.2 It found that up to 98,000 preventable deaths per year were occurring in hospitals due to lax standards or unobserved care protocols.

“That was the impetus for a number of programs and for federal legislation that supported quality and safety initiatives in Medicare, and then in private payor and purchaser groups,” Burleson says. “That was the wake-up call, and a number of programs were initiated from that.”

While the Institute of Medicine’s report called for preventable deaths to be halved in a decade, that hasn’t happened. A recent survey of 10 North Carolina hospitals found a patient-harm rate of 25.1 per 100 admissions, and the estimated number of preventable hospitals deaths annually remains close to 90,000. Some estimates3 suggest that today, there is a one-in-seven chance that a hospital patient will suffer harm.

To what degree the old and the new preventable-death/harm measurements are comparable isn’t clear, and neither are the reasons that the preventable-death rate is nearly unchanged. What is clear

is that a massive quality-improvement infrastructure is being laid down in health care, with radiology deeply involved; its intent, more than ever, is to deliver effective care.

According to Burleson, quality measures largely center, thus far, on fee-for-service care. The ACR and other specialty organizations have been responsible for many quality initiatives; so has CMS, often using private consultants (such as the Lewin Group). Quality standards also have been developed at single institutions, and some have then spread throughout the industry.

The ACR is involved in quality measures ranging from imaging-appropriateness guidelines to CMS initiatives such as the Physician Quality Reporting System (PQRS), the physician value-based payment modifier, and physician quality and resource-use reports (QRURs). It operates the National Radiology Data Registry (NRDR), which is likely to provide critical guidance in the future.

The most well known NRDR registry is probably the Dose Index Registry, which allows participants to compare their CT dose indices with regional and national benchmarks. Participating facilities receive periodic feedback comparing their results (by body part) with overall registry values.

The NRDR includes a CT colonography (CTC) registry that documents the effectiveness of CTC and helps to develop benchmarks for CTC process and outcomes measures. The ACR Night



There are gaps in your knowledge—and gaps in care, unless they are recognized. The hardest place to learn error recognition is in practice, but the realization that you have a gap is really the only way to address improvement.

—Milton J. Guiberteau, MD, FACr

singled out by the ACR, but it has been deployed mostly piecemeal, by asking referring physicians to look at specific exams for specific conditions. Burleson says, “That’s a big area of development for quality measures and initiatives.”

Carrots Become SticksThe PQRS has been in use by CMS

since 2007. It offers physicians modest incentive payments to report on specified quality measures when they see Medicare patients. For instance, Burleson says, radiologists can report on the radiation dose and/or the time of exposure associated with a fluoroscopic exam. The ratio of exams for which these data were reported to the total number of exams performed creates a PQRS quality score (which can be used to compare providers).

Of the hundreds of PQRS reporting measures, only a few are specific to radiology. Tracking and reporting them, patient by patient, is time consuming; that is one reason, Burleson says, that the PQRS participation rate is only about 16%. Many physicians are willing to forgo the incentive payment to avoid the drudgery of reporting.

CMS, however, is preparing to turn the payment carrots into penalty sticks. Beginning in 2015, instead of receiving a bonus of up to 2%, radiologists will lose up to 2% if they shun the PQRS. The problem, Burleson notes, is that CMS will use 2013 PQRS data as a baseline, so to avoid the penalty, radiologists should begin reporting PQRS data now.

CMS is also implementing a value-based modifier that will rank physician groups on how they perform, Burleson says. The PQRS quality data will be coupled with cost measurements that CMS is developing. A tiered system will

be set up (with providers compared on both cost and quality), and high-scoring providers that land in the top tiers will receive higher payments. “The best tier will receive reimbursement above the base level, the middle groups will have no change, and the low-quality and high-cost groups will be penalized,” Burleson says.

CMS is beginning the value-based payment-modifier program this year for groups of 100 physicians or more, Burleson says, although the proposed rules4 have been released too recently to analyze. She adds that groups can elect to be tiered. That’s where the QRURs will come in: They will give feedback to physicians and physician groups on where they rank for quality and cost, making it easier for them to decide whether they want to be tiered (in the hope of receiving higher reimbursement).

The ACR is working with the ABR and the American Board of Medical Specialties (ABMS) on MOC and PQI projects. The ABR certifies MOC and PQI projects for radiologists and radiology groups; Burleson says that the ACR has worked to make radiation-dose documentation a PQI reporting measure to satisfy the ABR’s MOC/PQI requirements.

In 2010, CMS began making incentive payments to physicians who completed both PQRS and MOC/PQI requirements; radiologists must complete 75 CME hours every three years for MOC. At least 25 of those hours must consist of individual or group self-assessment activities within either standardized (ABR-approved) or self-designed PQI projects.

Milton J. Guiberteau, MD, FACR, is a nuclear-medicine specialist at St Joseph Medical Center (Houston, Texas); professor of radiology at Baylor College of Medicine; and the ABR’s president-elect and assistant executive director for the

MOC program. He says, “Self-assessment is complex, but from the very beginning, it has been integral to the continuous professional development goals of MOC. There are gaps in your knowledge—and gaps in care, unless they are recognized. The hardest place to learn error recognition is in actual practice, but the realization that you have a gap is really the only way to address improvement.”

MoC and PQIThe MOC incentive payment will

turn into a penalty for noncompliance in 2015, but Guiberteau says that the ABR isn’t sure just how that process will work (or whether CMS will tie the penalty to a value-based payment modifier). For diagnostic radiologists who attained their initial board certification in 2002 or thereafter, MOC is mandatory for retaining certification.

Radiologists who first received board certification prior to 2002 were given lifetime certification. They don’t have to complete MOC/PQI, although Guiberteau says that it is in their professional best interests to do so. “We believe that MOC is where physicians demonstrate that they are maintaining and updating a knowledge base throughout their careers,” he says. “It’s the first step in maintaining a quality practice.”

Guiberteau acknowledges that holders of lifetime board certification might not be inspired to undertake the CME steps required for MOC just to receive a small CMS payment incentive. He thinks that they will become more inspired when the incentive becomes a penalty in 2015. In some instances, the younger physicians in a practice (who must perform MOC and want the CMS incentive) could have conflicts with older physicians who don’t want the added obligation.

Guiberteau says, “We don’t monitor practice conflicts, but there is a concern, on the part of younger physicians, that they will miss out on incentive pay or will have to pay penalties.” He suspects that in some practices, lifetime certificate holders will probably be obligated, in the near term, to meet MOC requirements.

“The Joint Commission is not requiring it, but it is emphasizing that board eligibility/certification is an important

issue,” he says, adding that hospitals are looking at continuous certification as an element in future admitting-privilege decisions. “I don’t think, down the road, that it will surprise anyone if MOC becomes a requirement,” he says.

PQI is part of MOC, with at least a third of CME hours to be spent on it. PQI projects can be associated with almost anything in a practice. “There are now myriad PQI projects that would qualify,” Guiberteau says.

One common PQI focus is turnaround time for radiology reports. A practice or department that changes a process to lower turnaround time could document that change to meet the PQI requirement. It also could choose to document steps taken to reduce radiation dose, Guiberteau adds.

In any quality initiative, he notes, the key to radiologists’ participation is relevance. “If physicians are not finding the reporting or quality measure relevant, they probably won’t respect it, in the sense

that they feel that it’s not really helping their practices,” he says. “The idea, for the ABMS and others, is to make sure that the measure is not overly complicated and burdensome, but is relevant enough (and meaty enough) to have an impact on performance.”

reCISTNonetheless, some quality measures

are complicated and burdensome enough to spur resistance—even if they are highly relevant. An example is RECIST, the protocol now in place for assessing effectiveness in nearly all tumor-treatment trials.

Nancy J. McNulty, MD, is an associate professor of radiology and anatomy at the Geisel School of Medicine. She says that RECIST is only one of the available reporting standards for tumor assessment, but is an important one. “It is essential to accuracy and to ending confusion,” she says. “Our department (and a lot of others) instituted exclusive use of

RECIST. We have adopted use of RECIST for all oncology patients, whether or not they are part of a clinical trial.”

McNulty says that RECIST ensures that the same protocol will be used to measure tumors before and after treatment, but measuring tumors can be difficult; the RECIST protocols were recently simplified, but still require judgment. McNulty says, “There are a lot of judgment calls on indicator lesions in a RECIST table.”

McNulty acknowledges that there has been resistance to RECIST. It’s much faster for radiologists to dispense with RECIST and just compare exams visually. “There are concerns on its impact on time,” she says. “Those are valid concerns.” She adds, however, that only RECIST can give truly comparable assessments of tumor-treatment impact. Mandating RECIST use for all tumor cases at Dartmouth-Hitchcock Medical Center has paid off, too: She says, “Clinical satisfaction from our referrers has been high.”

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Zotec Partners. The total solution.

Radia Inc, a physician-owned, 85-radiologist prac-tice based in Everett, Washington, prides itself on providing high levels of service to patients across its service network of nineteen hospitals and sixteen clinics across the state. The practice’s motto is “pa-tient-centered imaging,” and over time, that focus on optimizing care has led to significant technology investments, says Richard W. Satre, MD, CEO.

“We believe in closely collaborating with hospi-tals and clinics to expand the range and quality of imaging procedures offered,” Satre says. “We have invested significant resources in technology. Our physicians, in combination with our technology, allow us to offer our partners customized radiology solutions designed to meet the specific needs of their organization.”

“Our physicians, in combination with our technology, allow us to offer our partners customized radiology solutions designed to meet the specific needs of their organization.” — Richard W. Satre, MD, CEO of Radia

Two years ago, practice leadership noticed that one area of operations needed improvement to provide optimal service and care to client organizations and their patients: its billing platform. “Our market, like many, is undergoing rapid change,” Satre observes. “Former fierce competitors are now in one system. This is changing our relationship with them, al-though it’s too early to tell whether this is for the

better. In addition, many of our hospitals are chang-ing their IT infrastructures, challenging our ability to get information into and out of the different hospi-tals and clinics.”

After considering three billing providers, the leader-ship team at Radia selected Zotec Partners and began the transition to the new billing system in the first quarter of 2011. “The decision to outsource revenue cycle management can make leadership a tad uneasy given the impact on cash flow and revenue, as well as the overall brand of an organization, if such a transi-tion doesn’t go well,” Satre notes. “It was only after significant research and due diligence that our board of directors made that decision, and I am delighted to say that both the ramp-up and sustainment of our new partnership has exceeded expectations.”

Efficiencies and Intelligence

Achieving efficiencies in the billing cycle was only the first step, however. Soon Radia began to focus on the business intelligence Zotec provides through its reporting tools, looking daily at both routine and ad hoc metrics both to optimize current operations and to explore new opportunities.

Radia has always strived to provide optimum patient care, which, Satre says, is a goal that includes ensur-ing the availability of necessary imaging exams and providing these exams and their results in a timely and cost-effective manner. Today, business intel-ligence plays a strong role in meeting this goal. “We frequently review referral patterns by physicians and physician groups, demographic shifts in the patients

Business Intelligence Series #10

The Data-driven Approach to Patient-centered ImagingRadia leverages business intelligence to continuously improve service to providers and patients

Zotec_0809_2013.indd 20 8/20/13 12:13 PM

[email protected] zotecpartners.com

317.705.5050

11460 N. Meridian St.Carmel, IN 46032

we serve, payor mix, volume by modality, RVUs by modality and site, and so on,” says Satre. “Such data is frequently shared with our hospital partners to better serve our patients.”

Referring physician data gleaned from the Zotec system is also utilized to develop surveys, which Radia administers to referring physicians on behalf of its hospital clients. Additionally, Satre says, partner-ing with Zotec has enabled Radia to provide strong service to patients following their diagnostic stud-ies. “I think it is safe to say that no one likes to pay bills,” he says. “However, when they do, we want our patients to interface with a billing system that is in-tuitive and user-friendly for them. Zotec understands the importance of making what may be the last in-teraction between the patient and Radia as pleasant as possible, and has demonstrated its commitment to employing best practices in this area.”

Looking Forward

As the practice’s relationship with Zotec continues, Satre looks forward to developing further initiatives aimed at improving provider and patient service using business intelligence. For instance, he says, the practice can utilize business intelligence to support radiolo-gist recruitment. “Monitoring wRVUs by physician and specialty helps us proactively maintain the appropriate band-width for our specialties,” he notes. “That is a key strategy in our physician recruitment activities.”

“Our board of directors frequently leverages business intelligence to determine whether our strategy, goals and key initiatives are materially moving our organization in the direction and at the speed needed to maintain relevancy to our customers.” — Richard W. Satre, MD

Most importantly, going forward, business intelligence will be leveraged by the practice to plan strategically for the future. “Our leadership meets annually to re-view our twelve- and 24-month strategies,” Satre says. “Our board of directors frequently leverages business intelligence to determine whether our strategy, goals and key initiatives are materially moving our organi-zation in the direction and at the speed needed to maintain relevancy to our customers.”

Sample view of Zotec client cZAR business intelligence platform.

Zotec_0809_2013.indd 21 8/20/13 12:13 PM

Zotec Partners. The total solution.

Radia Inc, a physician-owned, 85-radiologist prac-tice based in Everett, Washington, prides itself on providing high levels of service to patients across its service network of nineteen hospitals and sixteen clinics across the state. The practice’s motto is “pa-tient-centered imaging,” and over time, that focus on optimizing care has led to significant technology investments, says Richard W. Satre, MD, CEO.

“We believe in closely collaborating with hospi-tals and clinics to expand the range and quality of imaging procedures offered,” Satre says. “We have invested significant resources in technology. Our physicians, in combination with our technology, allow us to offer our partners customized radiology solutions designed to meet the specific needs of their organization.”

“Our physicians, in combination with our technology, allow us to offer our partners customized radiology solutions designed to meet the specific needs of their organization.” — Richard W. Satre, MD, CEO of Radia

Two years ago, practice leadership noticed that one area of operations needed improvement to provide optimal service and care to client organizations and their patients: its billing platform. “Our market, like many, is undergoing rapid change,” Satre observes. “Former fierce competitors are now in one system. This is changing our relationship with them, al-though it’s too early to tell whether this is for the

better. In addition, many of our hospitals are chang-ing their IT infrastructures, challenging our ability to get information into and out of the different hospi-tals and clinics.”

After considering three billing providers, the leader-ship team at Radia selected Zotec Partners and began the transition to the new billing system in the first quarter of 2011. “The decision to outsource revenue cycle management can make leadership a tad uneasy given the impact on cash flow and revenue, as well as the overall brand of an organization, if such a transi-tion doesn’t go well,” Satre notes. “It was only after significant research and due diligence that our board of directors made that decision, and I am delighted to say that both the ramp-up and sustainment of our new partnership has exceeded expectations.”

Efficiencies and Intelligence

Achieving efficiencies in the billing cycle was only the first step, however. Soon Radia began to focus on the business intelligence Zotec provides through its reporting tools, looking daily at both routine and ad hoc metrics both to optimize current operations and to explore new opportunities.

Radia has always strived to provide optimum patient care, which, Satre says, is a goal that includes ensur-ing the availability of necessary imaging exams and providing these exams and their results in a timely and cost-effective manner. Today, business intel-ligence plays a strong role in meeting this goal. “We frequently review referral patterns by physicians and physician groups, demographic shifts in the patients

Business Intelligence Series #10

The Data-driven Approach to Patient-centered ImagingRadia leverages business intelligence to continuously improve service to providers and patients

Zotec_0809_2013.indd 20 8/20/13 12:13 PM



For the inconsequential errors we generate letters. The ones with consequential errors get phone calls... . [The PSO] generates the ability for us to talk about the data without being threatened.

—Norman Scarborough, MD

Cheung (McNulty’s colleague) is working on several ongoing quality initiatives. In one, the department undertook to determine why patients were waiting. One factor, it turned out, was that often, the previous patient had arrived late. “One of our parking lots was far away from radiology,” Cheung says, “so we used a closer parking lot in the reminder letter. The other thing we did was encourage patients to show up early: If your appointment is at 9 am, be there at 8:50.”

ANCrMaria Damiano, MBA, RT, is corporate

manager of information systems and assistant director for medical-imaging IT at Brigham and Women’s Hospital (Boston, Massachusetts). Early in her career there, Damiano saw a way to save money in coronary angiography. What she did became an industry standard—and an example of how one institution can change the way that care is delivered on a broader scale.

“The challenge, at the time, was cost,” Damiano recalls. “The cost of silver had skyrocketed for cine film. We were running 60 frames of film per second;

what if we reduced it to 30 frames per second? We ran tests and found that the image quality was the same—and you could cut the radiation dose in half. It was good for everyone.”

Today, film is no longer used for angiograms, but Brigham and Women’s Hospital retains its leadership role in quality improvement. The latest advance that Brigham and Women’s Hospital has made available is a display program called Alert Notification of Critical Radiology Results (ANCR).

Critical-results communication is a weak spot in radiology, and failure to communicate critical results is a leading cause of malpractice lawsuits. Under ANCR, there are three categories of discrepant results, marked with red, orange and yellow alerts. Red alerts go out for results that show immediately life-threatening conditions; orange alerts are for findings that could lead to serious consequences if not attended to quickly, and yellow alerts are for conditions that could become dangerous if not treated.

All alerts show up on ANCR dashboards. Red and orange alerts prompt face-to-face conversations or physician-to-physician phone calls

between reporting radiologists and referring clinicians. The fact that phone calls or face-to-face consultations have taken place must be documented in the system to close the loop; until the loop is closed, ANCR keeps issuing alerts. For yellow alerts, paging systems or email can be used, but the referring clinician must sign off that the message has been received to close the loop in ANCR.

Damiano can’t document that ANCR has saved lives, but she can document that it has reduced the time needed for critical results to be communicated reliably. Today, yellow alerts are normally documented within 15 minutes (the old standard was five days). For orange alerts, she says, the median response time is now less than a minute, and for red, it is three minutes.

At Massachusetts General Hospital in Boston, ANCR is being rolled out for cardiology. It’s being implemented for pathology and noninvasive cardiology at Brigham and Women’s Hospital, which also is studying how ANCR might be used to ensure that follow-up exam recommendations are heeded. “If we can’t see that an exam’s been done, we may send a note to the referring physician,” Damiano says. “You can’t always tell. The patient may have had the exam somewhere else.”

PSosPSOs were created under the Patient

Safety and Quality Improvement Act of 2005. They are designed to allow the exchange of adverse-event data so that adverse events can be understood and minimized. One advantage of PSOs, which are administered and listed through the

www.imagingbiz.com | august/september 2013 | Radiology Business JouRnal 25

AHRQ, is that the data are confidential (and can’t be used as a basis for lawsuits). Adverse events affecting specific patients are still subject to litigation, but the PSO data are privileged and protected.

With the exception of health-insurance carriers, any health-care entity that can attest that its goals include patient safety and quality can form a PSO and apply for listing with the AHRQ. The PSO applicant must include a patient-safety work product, which is the information that it wants the PSO to protect.

Norman Scarborough, MD, is vice president and medical director of MedSolutions, an RBM that provides—through a subsidiary, Premerus—subspecialized imaging interpretations to clients nationwide. Premerus recently received its PSO listing. Scarborough says that Premerus intends to use its PSO to analyze internal peer-review data, including documentation of interpretation errors.

Premerus randomly selects 2% of its cases (with patient-identifiable data removed) to be reinterpreted by a second physician, who issues his or her own report. This report and the original report are compared by a third radiologist, who determines whether there is concordance. If there are discrepancies between the reports, both reports are sent to a committee that determines the correct interpretation—or whether either report is correct. The radiologist who missed the correct interpretation will then be assigned an error score of one (minor) to four (serious).

“For the inconsequential errors, we generate letters,” Scarborough says. “The ones with consequential errors get phone calls.” Scarborough adds that the peer-review data from Premerus will constitute its PSO patient-safety work product. All Premerus clients with nonidentifiable patient data in the pool must agree to participate in the PSO, and the PSO provides the peer-review data with a level of protection. The data are treated as privileged, he says, adding, “That generates the ability for us to talk about the data without feeling threatened.”

Strategic radiologyStrategic Radiology, LLC, is an alliance

of 16 member radiology practices from around the country. Collectively, it has more than 1,000 radiologists under its umbrella. Lisa Mead, RN, MS, CPHQ, is Strategic Radiology’s director of quality and patient safety, and she reports that Strategic Radiology recently registered its own PSO with the AHRQ. Strategic Radiology will use the PSO to aggregate data from its members and improve methodologies for evaluating safety and quality.

“We expect that each of the practices will become a provider to the PSO and will look at different projects to send to the PSO to benchmark and improve processes,” Mead says. “It might be radiation dose—across multiple machines and protocols—across the physicians’ practices. We want to see whether the PSO will generate more data and provide some protection for sharing the data.”

Mead says that Strategic Radiology hasn’t yet defined its patient-safety work product; if radiation exposure is one of the PSO measurements, Strategic Radiology members will probably take all of their dose protocols and put them on an analytical grid to see which ones yield optimized dose. The best dose protocol will then be adopted by all Strategic Radiology members, she says.

“The intent of the PSO is, first, to decide what to measure and then aggregate,” she explains. “We might want to do a root-cause analysis for near misses. The goal is to create a safe way to share information that might be protected.”

Mead adds that the PSO is just one more quality-improvement tool in what she calls a giant shift toward defined and measurable processes, whether those involve radiation dose, turnaround time, critical findings, or productivity. “We

have to move from ‘I think it’s working’ to ‘I know it’s working,’” she says. “We have a big mission, and if we can use big-data tools to make sure the service is improving for patients, that’s important work.”

George Wiley is a contributing writer for Radiology Business Journal.

references1. Reichard J. Washington health policy week in review: Medicare doc payment bill may be vehicle to tighten quality measurement. http://www.commonwealthfund.org/Newsletters/Wa s h i n g t o n - H e a l t h - P o l i c y - i n -Review/2013/Jul/Jul-1-2013/Medicare-Doc-Payment-Bill-Quality-Measurement.aspx. Published July 1, 2013. Accessed August 13, 2013.2. US Institute of Medicine. To err is human: building a safer health system. http://www.iom.edu/~/media/Files/Report%20Files/1999/To-Err-is-Human/To % 2 0 E r r % 2 0 i s % 2 0 H u m a n % 2 01999%20%20report%20brief .pdf. Published November 1999. Accessed August 13, 2013.3. Millenson M. The toll of preventable errors: how many dead patients? Health Affairs Blog. http://healthaffairs.org/blog/2012/03/09/the-toll-of-preventable-errors-how-many-dead-pat ients / . Published March 9, 2012. Accessed August 13, 2013.4. CMS. Details for title: proposed changes for calendar year 2014 physician quality programs and the value based payment modifier. http://www.cms.gov/Newsroom/MediaReleaseDatabase/F a c t - S h e e t s / 2 0 1 3 - F a c t - S h e e t s -Items/2013-07-08-2.html. Published July 8, 2013. Accessed August 14, 2013.

The intent of the PSO is, first, to decide what to measure and then aggregate. We might want to do a root-cause analysis for near misses. The goal is to create a safe way to share information that might be protected.

—Lisa Mead, rN, MS, CPHQStrategic radiology

Agress believes that DICOE takes accreditation to a considerably higher level. “This is a comprehensive evaluation of our entire department and everything that goes into the process of patient care,” he says. “More than ever, patients are looking for that kind of recognition: They want to find the best. Thanks to the ACR, there’s now a way for them to see which hospitals have the best radiology.”

As radiologists take the lead in advancing quality across the continuum of patient care, hospital administrators are also taking notice. “The DICOE award strengthens our relationship with our hospital administration,” Agress says. “Being one of the very first in the country to be recognized by an organization as well respected as the ACR shows that we are very committed to excellence.”

Helping a Small Hospital Stand OutAs a small, rural hospital on the coast of Maine, Mount Desert

Island Hospital also understands the impact that achieving DICOE makes on the community. John Benson, M.D., F.A.C.R., medical director of medical imaging, says, “We have a highly skilled team using advanced technology. We have generous donors, and we’re well supported by our local community, but there’s always a perception that bigger is better, and there’s a 500-bed hospital just 50 miles away.”

He continues, “Achieving DICOE can put a small hospital on the map. It shows that you can have a superior radiology practice, even without the resources of a large hospital. A patient can feel safe, and our referring physicians know that they can trust us as a top-quality partner in the decision-making process.”

Radiology practices can learn more about applying to join the elite DICOE community by visiting acr.org/DICOE.

In this age of profound changes in health care delivery models, radiologists must find new strategies for staying viable. One such approach is Imaging 3.0™, an evolution of radiology

being led by the American College of Radiology to help shift the culture of radiology. Imaging 3.0 provides measures that ensure quality and safety, including a new achievement—the Diagnostic Imaging Center of Excellence™ (DICOE)—awarded to radiology departments and practices that demonstrate the highest levels of imaging quality, safety and patient care. The DICOE program takes a radiology department or practice to the next levels of imaging efficiency, safety and quality of care. This process goes beyond accreditation to recognize the best imaging practices and diagnostic care through comprehensive assessment of the entire medical imaging enterprise, including structure and outcomes.

The Pinnacle of Medical Imaging CareIn order to receive the DICOE distinction, imaging

facilities must be accredited by the ACR in all modalities that they offer for which ACR accreditation is available. They must participate in the Dose Index Registry® and General Radiology Improvement Database™, in addition to adhering to the radiation safety guidelines of Image Wisely® and Image Gently®. An ACR team (comprising a radiologist, a medical physicist and a radiologic technologist) will conduct an on-site survey to review all aspects of the facility’s operations.

In May 2013, the ACR recognized the nation’s first-ever DICOE facilities. They are Hackensack University Medical Center, or HUMC, in Bergen County, New Jersey, and Mount Desert Island Hospital in Bar Harbor, Maine, which served as the beta-testing sites for the program.

Harry Agress Jr., M.D., F.A.C.R., chair emeritus of the department of radiology at HUMC, says, “When a patient sees that HUMC is an ACR DICOE facility, it says that this is an institution that has gone beyond the norm to achieve a national standard of excellence. This achievement shows our patients that we want to take the extra step for them—that we take their imaging extremely seriously and that we’ll do whatever we can to give them the best possible care.”

Using DICOE as a BenchmarkThe imaging team at HUMC always believed that it had built

a top radiology department and established best practices, but it had no way of knowing how well it was actually doing, compared with other departments. “There are honors within many other areas of medicine; however, there were very few avenues for recognition of an entire radiology department—until now,” Agress says.

New Diagnostic Imaging Center of Excellence™ Merit Distinguishes the Best in RadiologyACR selects two medical centers as first to achieve new quality and safety status

ACR_spread.indd 2 8/20/13 12:46 PM

Agress believes that DICOE takes accreditation to a considerably higher level. “This is a comprehensive evaluation of our entire department and everything that goes into the process of patient care,” he says. “More than ever, patients are looking for that kind of recognition: They want to find the best. Thanks to the ACR, there’s now a way for them to see which hospitals have the best radiology.”

As radiologists take the lead in advancing quality across the continuum of patient care, hospital administrators are also taking notice. “The DICOE award strengthens our relationship with our hospital administration,” Agress says. “Being one of the very first in the country to be recognized by an organization as well respected as the ACR shows that we are very committed to excellence.”

Helping a Small Hospital Stand OutAs a small, rural hospital on the coast of Maine, Mount Desert

Island Hospital also understands the impact that achieving DICOE makes on the community. John Benson, M.D., F.A.C.R., medical director of medical imaging, says, “We have a highly skilled team using advanced technology. We have generous donors, and we’re well supported by our local community, but there’s always a perception that bigger is better, and there’s a 500-bed hospital just 50 miles away.”

He continues, “Achieving DICOE can put a small hospital on the map. It shows that you can have a superior radiology practice, even without the resources of a large hospital. A patient can feel safe, and our referring physicians know that they can trust us as a top-quality partner in the decision-making process.”

Radiology practices can learn more about applying to join the elite DICOE community by visiting acr.org/DICOE.

In this age of profound changes in health care delivery models, radiologists must find new strategies for staying viable. One such approach is Imaging 3.0™, an evolution of radiology

being led by the American College of Radiology to help shift the culture of radiology. Imaging 3.0 provides measures that ensure quality and safety, including a new achievement—the Diagnostic Imaging Center of Excellence™ (DICOE)—awarded to radiology departments and practices that demonstrate the highest levels of imaging quality, safety and patient care. The DICOE program takes a radiology department or practice to the next levels of imaging efficiency, safety and quality of care. This process goes beyond accreditation to recognize the best imaging practices and diagnostic care through comprehensive assessment of the entire medical imaging enterprise, including structure and outcomes.

The Pinnacle of Medical Imaging CareIn order to receive the DICOE distinction, imaging

facilities must be accredited by the ACR in all modalities that they offer for which ACR accreditation is available. They must participate in the Dose Index Registry® and General Radiology Improvement Database™, in addition to adhering to the radiation safety guidelines of Image Wisely® and Image Gently®. An ACR team (comprising a radiologist, a medical physicist and a radiologic technologist) will conduct an on-site survey to review all aspects of the facility’s operations.

In May 2013, the ACR recognized the nation’s first-ever DICOE facilities. They are Hackensack University Medical Center, or HUMC, in Bergen County, New Jersey, and Mount Desert Island Hospital in Bar Harbor, Maine, which served as the beta-testing sites for the program.

Harry Agress Jr., M.D., F.A.C.R., chair emeritus of the department of radiology at HUMC, says, “When a patient sees that HUMC is an ACR DICOE facility, it says that this is an institution that has gone beyond the norm to achieve a national standard of excellence. This achievement shows our patients that we want to take the extra step for them—that we take their imaging extremely seriously and that we’ll do whatever we can to give them the best possible care.”

Using DICOE as a BenchmarkThe imaging team at HUMC always believed that it had built

a top radiology department and established best practices, but it had no way of knowing how well it was actually doing, compared with other departments. “There are honors within many other areas of medicine; however, there were very few avenues for recognition of an entire radiology department—until now,” Agress says.

New Diagnostic Imaging Center of Excellence™ Merit Distinguishes the Best in RadiologyACR selects two medical centers as first to achieve new quality and safety status


For Benson, the DICOE award is the culmination of his team’s hard work in building a high-quality imaging service. “DICOE is saying to our patients and colleagues that we have a great team, we have very high standards of practice and we have top-notch quality assurance programs. We’re recognized by the ACR as one of the best facilities in the country in delivering imaging services. That’s a really big feather in our cap.”

Establishing a Framework for ExcellenceBoth DICOE recipients believe that preparing for the

process and participating in the site survey were invaluable learning tools. “When we first saw the DICOE application, we realized that there were many things that we were already doing well, but we also saw some areas that needed improvement,” Agress says. “Using the DICOE standards gave us a framework for reviewing our entire department and defining our strengths and weaknesses.”

Benson and his team had a similar approach. “We looked through the standards and realized that we needed to do some background work, such as shoring up our accreditations, signing up for required registries and tweaking our quality assurance plan,” he says. “It was a very thorough assessment, and it was relevant to a medical imaging department. During the visit, we also took away several new ideas—for example, critical-results tracking—that we are implementing in our system. There were definitely changes for the better that we’re making as a result of the DICOE evaluation.”

Going through the DICOE process also delivered unexpected benefits to the HUMC radiology department. “This effort required tremendous teamwork. It brought people from many different disciplines—physicians, nurses, technologists, physicists, administrators and support staff—together as a team,” Agress says. “It provided a great opportunity to get feedback and coordination from all aspects of our practice and to learn from one another. Going through the process also helped strengthen communication within our department.”

Driving Business ValueSince the DICOE program measures imaging efficiency and

the safety and quality of care, its attainment can potentially help radiology practices realize important financial benefits and demonstrate radiology’s excellence to policymakers. “I expect that our business will increase as a result of being recognized as a center of excellence,” Benson says. “It will certainly help our hospital compete with other nearby hospitals.”

Now that the DICOE award has been established, its initial recipients believe that more and more patients, referring physicians and payers will be seeking facilities that have been acknowledged as top performers. “The advantages of receiving the DICOE award are multifaceted,” Agress says. “For referring physicians, it demonstrates that we’re the kind of place to which they want to send patients to have their studies done. Patients can see that we have gone to another level of quality in imaging care. In terms of payers and evolving federal government standards, demonstrating quality has become more and more important, and it will continue to be one of the major competitive factors in health care reform. Confirmation of high-quality care has never been more imperative.”

The DICOE award has come at a critical time for the radiology community. “Radiology has been under the gun for many years, and the next few years will not be any different. The economic environment is rapidly changing, and we’re moving to a value model, rather than the volume model,” Benson explains. “Quality is becoming increasingly important, especially with some of the alternative payment approaches, such as the use of accountable care organizations. Having this kind of recognition for excellence is exactly what payers and the federal government will be considering in the new health care model. Now is a great time for this new initiative.”

Call to ActionAgress stresses that it’s time for the radiology community

to shape its future—versus being shaped by it. “Rarely does a patient come into a hospital without needing some form of imaging that will help his or her physician make major decisions about diagnosis and treatment,” he says. “A patient’s care is extremely dependent on how well we, as radiologists, do our jobs. We see our roles not only as those of interpreters of images, but also as those of consultants and contributors to patient management. Achieving the DICOE award represents an opportunity for radiology practices to play a major part in the future of medicine by promoting better quality and more efficient (and appropriate) patient care.”

“Having this kind of recognition for excellence is exactly what payers and the federal government will be considering in the new health care model.”

—John Benson, M.D., F.A.C.R.

Now, top-quality radiology teams can demonstrate that they are practicing Imaging 3.0™ and can receive recognition for outstanding diagnostic imaging and patient care by achieving the new ACR Diagnostic Imaging Center of Excellence™ distinction.


Pressure on reimbursement and increased competition took their toll on the imaging-center market in 2013, with the first reported declines in inventory, per-center volumes, and annual visits

Top 20 ImagIng-CenTer ChaIns | Fourth Annual Report

Persistent decreases in outpatient imaging reimbursement and a dramatic decline in volume finally took their toll on the imaging-

center market, with a resulting 3.65% decline in the total number of freestanding outpatient imaging centers. This is the first contraction since the dip that followed the stock-market crash in 2009.

Over 10 years, the freestanding outpatient imaging-center market has exhibited consistent year-over-year increases (except in 2009) in the number of centers. The market benefited, in the early years, from the rapid growth of imaging utilization; growth since 2005 is likely to have been spurred by hospitals’ imaging-center acquisitions as health systems bulked up their community presences.

Until this year, the market appeared impervious to eight years of health-policy decisions aimed at curbing imaging growth by slashing reimbursement. In fact, last year’s increase in the number of centers came as a surprise to many observers, who saw many center owners looking for a way out and saw much evidence of distress. This year’s counts reveal that both the number of imaging-center chains and the overall number of imaging centers declined—a trend seen in every region of the United States.

Of greater concern is the steep 35.25% decline in the number of procedures performed per week per center, with a correlated drop in the average number of visits per center per year; there were no exceptions across regions. Both of these indicators are based on the most recent data available (from 2011).

This is the fourth annual report published by Radiology Business Journal on the freestanding outpatient imaging-center market. This overview of the nation’s outpatient imaging-center market and its 10-year trends is based on data provided by IMS Health (formerly SDI and Verispan), a health-care–research consulting company. Imaging centers located on hospital grounds are not included in the counts.

market ContractionAt the close of the first quarter of

2013, the imaging-center market had lost 3.65% of its record 2012 size, making it smaller by 258 centers (Table 1, page 29). The number of imaging-center chains (defined as organizations owning two or more centers) also declined.

While it is possible that a small number of these centers were purchased by hospitals and are close enough to the mother ship to qualify as hospital-based outpatient imaging centers, it is safe to assume that most of them were simply shuttered. The state-by-state counts indicate that the losses were distributed throughout the country.

Not one state added centers, inventory stayed the same in another 14, and the rest saw attrition in their imaging-center inventory (see figure, page 29). The states that lost the greatest number of imaging centers, compared with last year’s report,1 were among the states that had the greatest number to begin with: Texas (40) and California (27). Even Florida, where Medicare is the predominant payor, saw 19 centers close. Arizona, Mississippi, and Pennsylvania appear to have lost a

28 RAdiology Business JouRnAl | August/september 2013 | www.imagingbiz.com

By Cheryl Proval

Volumes Plummeted in 2011

greater percentage of centers than most states.

With 6,816 imaging centers, the market still has its second-largest tally of centers in 10 years (Table 1)—proof that there continues to be vitality in the outpatient imaging arena. Signs of growth, however, are few and far between.

One sign that size might confer advantages is the 2% increase in the percentage of imaging centers owned by chains, which now own 68% of all centers. Just being a chain, however, was no insurance against failure. In 2013, the number of imaging-center chains declined by 36 organizations (Table 2, page 29).

The Biggest playersThere was scant change among the top

20 imaging-center chains, with the number of centers owned inching up or down (mostly down) by one or two centers (Table 3, page 30). The total number of centers owned by the top 20 chains increased by 16 centers, but only because two of last year’s players on the entrepreneurial side—CDI and Insight Imaging—merged to create the market’s second-largest imaging-center chain, Insight Imaging/CDI (Lake Forest, California). This left room for a new organization to enter the top 20: Promedica (Toledo, Ohio), with 21 centers.

None of the imaging-center chains increased the number of centers that they owned. Most stayed the same, and three saw declines. Even the new megasized organization created by the merger of CDI and Insight Imaging reduced the 2012 sum of their two parts by one, to top out at an even 100.

Imaging-center Growth Hits the Wall in 2013;

www.imagingbiz.com | August/September 2013 | RAdiology BuSineSS JouRnAl 29

Figure. US imaging centers (by state and region), 2013.

Year Chains Centers

2003 351 2,499

2004 506 3,281

2005 687 3,818

2006 995 4,478

2007 1,011 4,572

2008 1,030 4,700

2009 953 4,383

2010 945 4,433

2011 902 4,533

2012 903 4,677

2013 874 4,641

Table2. Chain Size

Number Imagingcenters Year of owned,managed, Affiliated Notaffiliated centers orleased

2003 5,163 2,499 48% 52%

2004 5,450 3,281 60% 40%

2005 5,753 3,818 66% 34%

2006 5,969 4,478 75% 25%

2007 6,241 4,572 73% 27%

2008 6,455 4,700 73% 27%

2009 6,150 4,383 71% 29%

2010 6,311 4,433 70% 30%

2011 6,383 4,533 71% 29%

2012 7,074 4,677 66% 34%

2013 6,816 4,641 68% 32%

Table1. Chain Affiliation

15

689

172

92

106

49195

28

33

627

18426

48

121

13112

36

37811

182

12

124

47

138

128

30

33

5755

80

93

265320

93

58

56

11

166

278

22

124

522

13

8

61

Puerto Rico14

Total6,816

Southeast 1,468

South Central354Southwest

Central764

Pacific 925

Rocky Mountain 434

North Central 365 Great Lakes

969

Mid-Atlantic1,178

New England 344

545

139

213

94 79

Virgin Islands1

Indicates decline in number of imaging centersIndicates no change in number of centers

Top 20 ImagIng-CenTer ChaIns | Fourth Annual Report


RadNet, with 219 centers in 2013, handily retained its position at the top of the top 20 imaging-center chain list, despite the fact that it had one less center at the end of the first quarter of 2013 than it had in 2012. There is a wide gap of 119 centers between market leader RadNet and the second-largest chain, Insight Imaging/CDI, yet this merger provided the only upward movement on the list.

Had HCA (Nashville, Tennessee) not lost two of its 100 locations—leaving a total of 98 outpatient imaging centers in 2013—it would have shared the second berth with CDI/Insight. Novant Health (Winston-Salem, North Carolina) and MedQuest Associates (Alpharetta, Georgia)—acquired by Novant in 2007 and operated as a wholly owned subsidiary—occupied the fourth and fifth positions. Both managed to retain the same number of imaging centers that they owned last year (80 and 78, respectively): a feat in itself, in a contracting market.

Several well-established partnerships among the hospital and entrepreneurial

factions of the top 20 players appear to have served each party well: at number 10, Dignity Health (San Francisco, California) on the hospital side and at number six, SimonMed Imaging (Phoenix, Arizona) on the entrepreneurial side, as well as Novant Health (number four) on the hospital side and MedQuest Associates (number five) on the freestanding side. All four partners held onto their 2012 numbers, while every other organization on the top 20 list lost one or two centers. In fact, one of the largest entrepreneurial outpatient imaging organizations in the country, Alliance Imaging (Los Angeles, California) does not even show up on our list because its business model has been to partner with hospitals to develop hospital-based outpatient imaging centers.

It will be interesting to see whether seventh-ranking Tenet Healthcare Corp (Dallas, Texas) picks up the acquisition pace in 2014. One avowed reason for Tenet’s acquisition of Vanguard Health Systems (Nashville, Tennessee), with 28 hospitals in five states, is the opportunity

to build out ambulatory care in Vanguard’s markets.

overall Volumes and Weekly VisitsDespite an increase of more than

25% in the inventory of freestanding imaging centers since 2003, historically, the average number of procedures per week has held fairly steady—even rising since 2005, the year that the DRA was passed (Table 4). Our counts of visits per week per region, however, lag behind the current imaging-center counts by more than a year, meaning that we don’t see the correlation between center numbers and volumes until two years later. We have speculated, in past reports,1-3 about whether and when declining imaging volumes would catch up with imaging-center operators.

Now, that speculation is over. This year’s counts—from 2011—display a sharp and precipitous 35.25% drop in volume. Volumes per week declined from a 10-year (and possibly all-time) high of 298 per week in 2010 to 193 per week in 2011.

procedures perYear Imaging center per centers week (average)

2000 3,068 216

2001 3,366 271

2002 4,159 291

2003 5,163 267

2004 5,450 259

2005 5,753 243

2006 5,969 259

2007 6,241 245

2008 6,455 258

2009 6,150 266

2010 6,033 298

2011 6,393 193

Table 4. Procedures per Week

Imaging-center chain headquarters Centers, Centers, Change, 2013 2012 2012–2013

RadNet Inc Los Angeles, CA 219 220 –1

Insight Imaging/CDI (combined) Lake Forest, CA 100 101 –1

HCA Nashville, TN 98 100 –2

Novant Health Winston-Salem, NC 80 80 0

MedQuest Associates Inc Alpharetta, GA 78 78 0

SimonMed Imaging LLC Phoenix, AZ 56 56 0

Tenet Healthcare Corp Dallas, TX 55 55 0

Dignity Health San Francisco, CA 50 50 0

Doshi Diagnostic Imaging Services Hicksville, NY 35 36 –1

Cleveland Clinic Health System Independence, OH 35 35 0

Community Health Systems Franklin, TN 34 34 0

Ascension Health Saint Louis, MO 31 31 0

Tri State Imaging Consultants Rockledge, PA 28 28 0

Catholic Health Initiatives Englewood, CO 27 27 0

A1 Medical Imaging Diagnostic Centers Sarasota, FL 25 25 0

ProScan Imaging World Headquarters Cincinnati, OH 25 25 0

Outpatient Imaging Affiliates Nashville, TN 23 23 0

South Texas Radiology Group/Imaging Centers San Antonio, TX 22 22 0

Shields Health Care Quincy, MA 22 22 0

Promedica Toledo, OH 21 – –

Total 1,064

Table 3. Top 20 Chains

PercentRegion Centers, 2011visits 2010visits 2009visits 2008visits change, 2013 2010–2011

Great Lakes 969 15,394 11,904 11,794 10,900 22.67%

Pacific 925 14,476 16,394 15,573 13,300 –11.7%

NewEngland 344 12,054 13,210 13,727 11,755 –8.75%

RockyMountain 434 10,604 17,646 16,522 14,595 –39.91%

Southeast 1,468 10,488 16,645 16,420 14,384 –36.99%

SouthCentral 354 9,664 15,494 14,930 13,448 –37.63%

Mid-Atlantic 1,178 9,274 17,095 15,193 13,639 –45.75%

SouthwestCentral 764 7,916 12,243 11,388 11,942 –35.34%

NorthCentral 365 7,859 13,024 12,617 13,670 –39.66%

Total* 6,801 10,040 14,851 14,240 13,070 –32.4%

Table5. Average Visits per Center (by Region)

* Puerto Rico and Virgin Islands (15 facilities) not included.

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to payors. This year, the IHNs saw their share of the total freestanding imaging-center market decline slightly, from 26.2% in 2012 to 25.5% in 2013 (Table 6).

How much of the decline in volume is due to increased imaging appropriateness and how much is due to recessionary effects is hard to say, but with downward pressure on reimbursement and volumes dropping, every advantage helps—and size might be one of them. If an imaging-center chain is large enough to command volume discounts and has the market clout to negotiate favorable payor contracts, then it has a market advantage. This might account for the status quo among the leading 20 freestanding imaging-center chains.

Just across the horizon is 2014, when the Patient Protection and Affordable Care Act will kick into higher gear: If providers can hang on until 2014, they will see an estimated 32 million more patients added to the Medicaid program, as well as potentially millions more patients who will be eligible for subsidies when they purchase health insurance through the state and federal exchanges. Whether providers can maintain profitability on Medicaid reimbursement remains to be seen.

Cheryl Proval is editor of Radiology Business Journal.

References1. Proval C. 2012’s top 20 imaging-center chains: third annual report. Radiology Business Journal. http://www.imagingbiz.com/articles/view/2012s-top-20-imaging-center-chains-third-annual-report. Published September 4, 2012. Accessed August 12, 2013.2. Proval C. 2011’s top 20 imaging-center chains: second annual report. Radiology Business Journal. http://www.imagingbiz.com/ar t ic les /v iew/2011s- top-20-imaging-center-chains-second-annual-report. Published September 4, 2011. Accessed August 12, 2013.3. Kyes K. The top 20 imaging-center chains. Radiology Business Journal. http://www.imagingbiz.com/articles/view/the-top-20-imaging-center-chains. Published September 3, 2010. Accessed August 12, 2013.

Top 20 ImagIng-CenTeR ChaIns | Fourth Annual Report


It’s not surprising that an almost equally dramatic reduction in the average number of weekly visits per center (Table 5, page 31) was seen for 2011: just slightly less than the reduction in volumes, at 32.4%. The downward trend expressed itself across all US regions, with just one exception.

The Mid-Atlantic region, which had the second-greatest number of patient visits per center last year, experienced the greatest decline, from 17,095 visits in 2010 to 9,274 in 2011—a whopping 45.8% drop. The Mountain and North Central regions also experienced steep and abrupt drops in volumes, from 17,646 visits in 2010 to 10,604 in 2011 (39.9%) and from 13,025 visits in 2010 to 7,859 in 2011 (39.7%), respectively.

New England was the region with the smallest decline, from 13,210 visits in 2010 to 12,054 in 2011 (an 8.75% decrease). In 2010, all regions except New England and the North Central region experienced increases, and we speculated then that health-care reform in Massachusetts might have tamped down demand. The only region with a greater number of visits in 2011 than in 2010 was the Great Lakes region, which saw visits per center increase 22.7% in

2011, from 11,904 in 2010 to 15,394 in 2011.

In looking at the corresponding overall number of imaging centers for 2008–2011, the years for which we have counts for visits per center, we see the inventory increase in 2011 and visits per center decline. Knowing that the number of imaging centers increased by 131 in 2012 (not including the 560 previously uncounted sites that IMS Health discovered and added to its database last year), the outlook for volumes in 2012 and 2013 is guarded.

hindsight perspectiveThese numbers put the lack of

activity among the top 20 imaging-center chains into perspective, suggesting that maintaining the status quo is something of an achievement in itself. The outpatient imaging-center market has become increasingly challenging and competitive in the past eight years, with a steady diet of reimbursement cuts and ever-greater regulatory requirements.

This year, the market chill extends even to the integrated health networks (IHNs), defined by IMS Health as entities that align health-care facilities in order to deliver integrated health-care services

share of 1,783network headquarters Centers network relationships

HCA Nashville, TN 98 5.5%

Novant Health Winston-Salem, NC 77 4.3%

Ascension Health Saint Louis, MO 57 3.2%

Dignity Health San Francisco, CA 46 2.6%

Cleveland Clinic Health System Independence, OH 41 2.3%

Catholic Health Initiatives Englewood, CO 35 2%

Community Health Systems Franklin, TN 34 1.9%

Providence Health and Services Renton, WA 23 1.3%

Trinity Health Novi, MI 23 1.3%

Promedica Health System Toledo, OH 21 1.2%

Total 455 25.5%

Table 6. Integrated Health Networks’ Centers

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Radiology groups use shared-management agreements to retain independence while achieving necessary alignment with hospitals

Shared ServiceS | Hospital–Radiologist Alignment

Alignment increasingly occupies the thoughts of health-care s t a k e h o l d e r s — i n s u r e r s , legislators, and regulators,

but especially hospitals and physician groups. Because alignment sets the stage for service and quality improvements, as well as for the implementation of cost-control mechanisms, the interest is warranted. Hospitals have sought to employ both primary-care and specialty physician practices for the ability to impose quality and cost uniformity through top-down policies, procedures, and cultural mandates.

Although hospitals have yet to make radiology practices a focus of their alignment designs, that has not stopped some imaging providers—especially those who savor their independence—from striving to achieve alignment of their own design with the hospitals they serve. Many radiology groups, in fact, recognize alignment as both a noble and a desirable aim.

For this reason, Radiology Associates of Canton (RAC) in Ohio recently entered into a contractual arrangement that delegates to the group certain roles and responsibilities that were formerly the exclusive domain of the hospital. Specifically, RAC is now comanaging the radiology department at Canton’s Aultman Hospital, with responsibility for strategic planning and radiology-related capital investments, as Syed Zaidi, MD, president and CEO of RAC, explains.

RAC and Aultman Hospital formed this comanagement agreement at the beginning of 2013, after two years of discussion. The idea was initially sparked when the parties realized that such an arrangement represented the most flexible (and potentially powerful) means of helping each other satisfy their business needs.

Zaidi says, “Each side basically wanted more responsiveness. The hospital wanted faster turnaround time on imaging studies and reports, while my group wanted to eliminate certain inefficiencies built into he radiology department. Both of us were stuck in a status quo of mutual dissatisfaction. Despite that, there was a sense that things could be better, if only we each would


By Rich Smith

Together, but Separate

give the other a chance to improve, and that’s what our comanagement agreement seeks to do: give each side the ability to improve.”

The essential differenceComanagement/shared-management

agreements are different from exclusive-provider contracts, according to attorney Thomas W. Greeson, JD, of Reed Smith

v Independent-minded radiologists seeking hospital alignment are turning to comanagement/shared-management agreements.

v Hospitals welcome partners who can take on departmental management duties, as well as participating in quality and cost-containment initiatives.

Preload: Previewv In addition to providing an extra source of revenue, these agreements can provide radiology groups with a measure of security in an increasingly competitive environment.

v Groups must ensure that they can deliver what they promise because more than at-risk revenue is at stake: so is the reading contract.

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LLP. “Comanagement entails managing the radiology department with the hospital, not for the hospital,” he explains. “Comanagement agreements allow radiology groups to have a positive impact on care—and give them an additional source of compensation. These agreements can also be a valuable tool to help radiology groups achieve longer-term security in their contractual arrangements with their hospitals.”

Greeson continues, “For example, a hospital that issues tax-exempt bonds to finance on-campus capital projects involving radiology is likely to have, with the radiology group, an exclusive provider contract lasting just two years (or possibly three). That is done to satisfy IRS requirements surrounding the issuance of those bonds. Now (although hospitals typically don’t use tax-exempt bonds to finance outpatient imaging centers), if the radiology group has both a two-year exclusive provider contract and a separate 10-year contract for shared management of the outpatient imaging center, the hope would be that the hospital will naturally be inclined to keep renewing its two-year on-campus contract with the radiology group because of that off-site companion 10-year contract.”

The comanagement agreement between RAC and Aultman Hospital took effect relatively recently, but Zaidi says that the benefits already are accruing. “It’s giving us more control, more participation, and more cohesiveness with the hospital,” he says. “We turned our relationship toward the positive.”

Greeson notes that in almost all instances, the radiology group acts as the suitor, when it comes to initiating these arrangements. “It is incumbent upon the radiology group to make the first move,” he says.

Indeed, that is precisely how the RAC–Aultman Hospital deal came to be. In late

2011, Zaidi says, “I decided to reach out to the leaders of Aultman Hospital. At the same time, the CEO of Aultman Hospital had temporarily taken charge of radiology after the vice president of radiology was moved to cardiology, and a leadership vacuum in radiology was temporarily created. It was by chance, then, that our interests coincided. It helped that the hospital’s CEO and I were, in a way, departmental outsiders. Looking at our mutual interests from the perspective of outsiders afforded a much clearer view of what needed to be done to remedy things and how best to go about achieving it.”

Zaidi adds, “The more we talked, the more it made sense that some kind of comanagement arrangement would be the best course of action to improve the relationship. For radiologists, obviously, if you don’t have a good relationship with the hospital administration, you have a chance of losing the contract. For the hospital, if it doesn’t have a good relationship with the radiologists, then—by definition—it’s not providing good service to clinicians and their patients.”

common GoalsGreeson says that the starting point for

negotiations is a mutual understanding of the purpose and objectives behind such an agreement. “In other words, why should you do it?” he asks. “Beyond that, the radiology group needs to be able to articulate its value as a prospective shared-management partner of the hospital, and the hospital needs to be able to understand this value proposition. The idea is emerging that the radiologists in a shared-management agreement will ultimately be the clinical gatekeepers of appropriate imaging, consulting with referring physicians to help them understand better which diagnostic imaging service or test is right, under the clinical circumstances.”

W. Kenneth Davis Jr, JD, a partner with Katten Muchin Rosenman LLP, indicates that the parties in a shared-management agreement must be careful to articulate all such roles and responsibilities clearly. He says, “Who will do what tasks, how they will be performed, and when they will be completed are questions that must be resolved.”

He adds, “If you are the radiology group, and the agreement shifts the responsibility to perform or accomplish a particular thing to you, then the agreement needs to spell out adequately that you have the authority or discretion to execute it—and to control the how, when, where, and what of the actions you take in the course of executing it. The last thing you want is to be given the responsibility for something, but to have the agreement written in such a way that it allows for the possibility of having the rug pulled out from beneath you.”

Another element of the discussion is financial. Davis says that the agreement should not feature any type of cost shifting without compensation. “Fair and reasonable compensation needs to be paid to the party providing the management services,” he says. “Frequently, that will be radiology. It also makes sense that some part of this compensation should be performance based. Additional compensation should be paid if radiology is hitting certain clinically based, quality-based performance objectives.”

Nonetheless, some hospitals apparently believe that radiologists ought to be willing to assume added functions without additional compensation. “The attitude is that radiologists have already been compensated enough, just by virtue of possessing an exclusive contract,” Greeson says. “Their view is that anything you add with regard to marketing, administration, or decision making on capital-equipment acquisition is only to be expected—because the hospital has granted you this right to provide services, in its radiology department, on an exclusive basis.”

Know the risksCompensation is not the only issue

upon which negotiations can founder. Greeson says, “Radiologists need to

It’s giving us more control, more participation, and more cohesiveness with the hospital. We turned our relationship toward the positive.

—Syed Zaidi, Md



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understand that they cannot provide illusory services. They need to give serious, extensive contemplation to what it is that they propose to do (and how they will actually deliver those services). That includes determining what the administrative-service roles are and how they are quantified, in order to make sure they are performed properly and well.”

Davis advises radiologists (before approaching a hospital about shared management) to ponder whether the group can, through this contractual device, genuinely improve quality of care, improve access to that care, and reduce its costs. Even more important is whether the agreement will permit the group to become more deeply insinuated into the fiber of the hospital. If so, “The hospital might, afterward, find itself less free to invite another group to take on some or all of the outsourced reading,” Davis says.

Due diligence must be conducted in order to uncover and explore the risks inherent in the proposed relationship, Davis adds. “At bottom, a shared-management agreement is a deal, so you want to build an intelligent agreement that includes mechanisms to facilitate and encourage the parties to work together, while also ensuring that each side is accountable to the other,” he says.

Sometimes, though, one side or the other ends up unable to carry its share of the burden. “The biggest risk is in the failure to manage what’s been agreed to,” Davis says. “Failure can happen when you are made responsible for something without having the discretion and authority to enact change and to manage.”

Failure could be disastrous because,

Davis adds, “It places you at risk of losing not just the benefits of working closely with the hospital to improve quality and become more competitive in the marketplace, but also of losing the overall opportunity to read. Because an unavoidable risk of these agreements is the possibility of failure, you need to have a good mechanism, first and foremost, to try to fix what’s become broken—before you take the step of unwinding and separating.”

Failure will affect two things: the agreement and the quality of the relationship that the group enjoys with the hospital. Davis says, “The relationship needs to be protected because few are the groups that can claim that the majority of their revenue comes from the technical component or from reading nonhospital exams. Thus, anything that causes the relationship to sour can potentially jeopardize future revenue.”

clarity, Purpose, and a Good YardstickGreeson observes that the shared-

management agreements most likely to succeed are those in which the radiology group can satisfactorily describe the service it intends to provide, deliver it in accordance with the plan, and demonstrate its success and ongoing value. Zaidi says that success must be demonstrated through the use of formal performance measurements—and pay for performance.

“It’s a measurement of sharing the risk,” he says. “If we perform well, there will be good result. If we don’t do well, then we lose that potential income.”

Under the RAC–Aultman Hospital agreement, Zaidi functions as medical

director of comanagement, while four other RAC members serve as medical directors. Together, they form an operations committee.

“One medical director,” he says, “presides over quality assurance; another, over the residency program (to maximize the value of residency in clinical care); the third, over patient services (to optimize the positioning of radiology in the clinical continuum, so as to maximize our value there); and the fourth, over outreach to our physician customers (in order to ensure our responsiveness to their needs—while also soliciting their cooperation, when it comes to changing ordering patterns or other issues affecting quality).”

He continues, “We now have a steering committee, which oversees the operations committee: the four RAC medical directors plus the hospital CEO, the vice president of radiology, and other leaders. It meets every three months to review strategic decisions and map out plans.”

an alternative approachThe need for radiology groups to offer

strong value propositions has led some groups to become affiliated as consortia. By uniting under a single banner, several area groups can offer robust capabilities and a broad geographic reach, dramatically boosting their chances of persuading a hospital to say yes to a shared-management agreement.

That, however, is not the only way that comanagement and consortia can work. For instance, a short time ago, Advanced Radiology Consultants (Park Ridge, Illinois) became part of Integrated Imaging Consultants through a shared-management agreement, of sorts, between itself and seven other area radiology groups. This step was taken in order to align the groups’ interests, as a whole, with a those of a key client that they have in common: Advocate Health Care (Downers Grove, Illinois) a regional integrated delivery system of 12 hospitals and more than 250 other sites of care.

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Hospital is one of Advocate Health Care’s two flagship hospitals.

John P. Anastos, DO, president of Advanced Radiology Consultants, says, “We’ve created something more expansive than a shared-management organization,” stressing that Advocate Health Care was not involved in forming Integrated Imaging Consultants. He adds, “It’s an integration where we retain our independence, but have structured the entity so that it can engage in single-signature contracting for hospitals, PHOs, private payors, and others. We are using the power of economies of scale to bring added value to ourselves (as individual groups) and to the Advocate Health Care hospitals we serve.”

Anastos believes that the arrangement will promote opportunities to enhance the revenues of all of the participating groups in Integrated Imaging Consultants. It will also permit the consortium’s members to decide jointly on ways to reduce costs. “We’re looking at improved contracting rates—to create a tide that raises all boats, rather than just some,” he says. A driver of the groups’ decisions to share responsibilities, as a consortium, was their belief that having consolidated leadership (and a more streamlined process for making major decisions) will allow the groups to provide services to Advocate Health Care more efficiently.

responding to Market NeedsDavis says that a virtue of shared-

management agreements is their adaptability to the changing needs of the industry. “I’m seeing forward-thinking hospitals talking seriously with radiology groups about having the radiology group become more involved in the management of the outpatient department—because the reality is that

many radiology groups will do a really good job of managing imaging,” he says.

Davis also predicts that an increasing number of hospitals will want radiology groups to manage radiology utilization and, by extension, to help manage the risk—and hospitals will be more willing to pay the radiology groups to do that. “The hospitals, for their part, will bring together the support services necessary to accomplish this,” Davis predicts, including clinical decision-support software.

Greeson, too, expects that providers will come to rely more on shared-management agreements. “In a changing economic climate, with declining reimbursements for both technical- and professional-component services, radiologists need to find ways to work with physicians to provide diagnostic and interventional services more efficiently and economically,” he says. “This need will not wane, but will only increase in importance. It is, therefore, incumbent upon every radiology group to engage in self-assessment, looking for ways to position itself to be the group that adds value for the hospital—while also being compensated for that and increasing the security of its relationship with the hospital.”

Shared management is really all about relationships: reinforcing them and building upon them, in Zaidi’s estimation. He says, “Shared-management/comanagement agreements are a very good way to resolve those kinds of problems. In our case, both sides are taking seriously their pledges to be more responsive to each other and to work toward the same set of goals: better patient care and greater efficiency in its delivery. This bodes well for our mutual interests—the areas where we can (and need to) achieve alignment.”

Rich Smith is a contributing writer for Radiology Business Journal.

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It’s Murphy’s Law as applied to health IT: Just as PACS platforms are reaching maturity, image-storage

needs have exceeded their capabilities. Alexander Towbin, MD, Neil Johnson chair of radiology informatics at Cincinnati Children’s Hospital Medical Center in Ohio, says, “There’s more and more interest in storing other images outside of radiology. Add to that the fact that meaningful use is encouraging sharing of patient data between two hospitals, including images, and the traditional PACS archive quickly becomes outdated.”

Towbin views radiology as the tip of the imaging iceberg in the hospital

setting. “Radiology is the most organized in terms of imaging informatics, but other specialties are catching up,” he notes.

“Cardiology is approaching the same level, while dermatology and pathology, among others, are just beginning to work on digital imaging and imaging workflow. A lot of times their images are just sitting in someone’s office on a shared drive. There are best practices that radiology has applied that can help, but we know our workflow doesn’t necessarily match up with theirs.”

Continued at www.imagingbiz.com/health_it

Futureproofing the Imaging Archive

For Leaders in Medical Imaging Services

By Cat Vasko

Efficient Expansion on Medicare Margins: Eisenhower Radiology Medical GroupBy Cat Vasko

Lack of Investment in Imaging Equipment Might Contribute to Accelerated ConsolidationBy Colin McDermott, CFA, CPA/ABV,and Corey Palasota, CFA

Few would disagree that it’s increasingly difficult to operate as a freestanding im-aging-service provider. Reimbursement

continues to face pressure, patients have be-come more savvy regarding their copayments, and increased competition from hospital opera-tors has caused industry participants to become intensely focused on cost efficiencies.

We have entered an environment where economies of scale and focused expertise will cor-relate with enhanced competitive advantages;

Continued at www.imagingbiz.com

Lessons From Year One of the Pioneer ACO Program: Bellin-ThedaCare Healthcare PartnersBy Cat Vasko

On July 16, CMS announced the results of its accountable-care or-ganization (ACO) program, the

Pioneer ACO Model. The program was designed to test the impact of higher lev-els of shared savings and risk on ACO suc-cess, and it attracted 32 participants from around the country. After the first year of participation, seven Pioneer ACOs that did not produce shared savings announced their intention to transition to the lower-risk

Continued at www.imagingbiz.com/medical_imaging_review

Appropriateness and the ACO: How Radiology Can Position Itself to LeadBy Cat Vasko

Radiology groups’ conversations with their hospital partners are undergo-ing an evolution, in the experience

of Edward Rittweger, MD, president of Navesink Radiology (Red Bank, New Jer-sey). “In the past, most of the hospital dis-cussions involving imaging have been about decreasing turnaround times and increasing efficiency in response to decreased reim-bursements,” he says. “As we move forward, however, it will be more important for the radiology group to assist the hospital

Continued at www.imagingbiz.com/radanalytics

Visit www.imagingbiz.com to view the complete articles published in the imagingBiz Web Journals.

Eisenhower Radiology Medical Group has accomplished what many would consider impossible: rapid, recent

expansion during a recession, with a patient base composed primarily of Medicare beneficiaries. The 17-radiologist group, located in Rancho Mirage, California, has added three imaging centers to its roster in as many years, according to Blair Dick, business administrator for the practice.

“One of the biggest challenges we’ve faced was expanding from one facility to four in this economic environment, which is one of the worst we’ve ever faced,” Dick says.

Continued at www.imagingbiz.com/medpracticebiz

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