THE BIG PICTURE

Does Size Matter?
By Curtis Kauffman-Pickelle

The recent business news about Microsoft making a run at Yahoo has me ruminating about the deal-making climate in outpatient imaging and how the current trend toward strategic partnerships, mergers, and acquisitions is changing the competitive landscape in many markets around the country. RadNet's acquisition activity alone is driving consolidation in the imaging-center marketplace to the point where one can envision a true national network large enough to rival models seen in the clinical-laboratory industry. It seems that not a week goes by without a press release coming across my desk announcing the latest RadNet acquisition.

Is bigger necessarily better, though?

Certainly there are synergies, economies of scale, contracting clout, group-purchasing power, and other benefits to be found in rolling up a group of independent operations into a management group that provides certain centralized back-office functions and other added-value support. These advantages, however, might be offset by the accumulation of a debt burden that the formerly independent operation may not have had to service, thereby putting a damper on its ability to compete effectively in a market that requires increased expenses in areas such as marketing and technology. Nimbleness will also be a key to future survival in a market where the supply-to-demand ratio is leaning toward imbalance, as we are seeing in some market areas.

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Consolidation Ahead: Imaging Mergers and Acquisitions
By Duane Sachs and Jerry Sokol

Over approximately the past 10 years, there have been distinct phases of mergers and acquisitions activity in the medical imaging market. At the turn of the millennium, there was optimism about the state of the market, and consolidation was taking place at an accelerating pace.

The amount of consolidation activity seen then seemed likely to continue to accelerate (out of the high single digits and into the double digits) as the use of medical imaging for diagnostic purposes grew, and particularly as the value of imaging in preventive medicine became more apparent.

Both of these trends favoring higher imaging volumes were reinforced by the knowledge that the aging of the baby-boom generation would bring even more demand for imaging. Financial sponsors looked at the sector and became involved, feeling that the industry was ripe for consolidation. Several high-profile acquisitions were accompanied by escalating stock values. For one provider company, for example, its stock price increased 14% in 2000 and 103% in 2001.

By the end of 2002, it was amazing how quickly the optimism in the market had shifted. The increased capacity that flowed from the decisions of equipment manufacturers to flood the market with magnets (offered at attractive financing levels) led to some operational problems in the major imaging companies. One company, for example, failed to meet expectations, while senior executives resigned at two other prominent companies.

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Q&A with Doyle Rabe: Leading Texas-sized Austin Radiological Association
By Cheryl Proval

When it comes to size and influence, Austin Radiological Association (ARA) has few peers. The practice of 72-and soon to be more-radiologists employs 700 people (580 FTEs) in Austin. In addition to covering every one of the 16 hospitals in central Texas, ARA archives most of the radiological images generated at those sites on its regional PACS. The practice also owns and operates 15 imaging centers throughout the Greater Austin area. Doyle Rabe served as administrator of ARA from 1996 to 1998, and he returned in 2001 as CEO. ImagingBiz.com sat down with Rabe to discover what it takes to lead a practice this size.

ImagingBiz: In a large radiology practice, the CEO is charged with leading the entire organization, including the clinical, operational, and administrative staff. Would you offer some best practices for building collaboration not just with physician owners, but also with the staff?

RABE: You have to use an effective mix of leadership and management. The expectation from the physician-ownership side is that you will manage their company effectively. Strategically, that requires leadership skills to move the company in the right direction, with an insight into all of the factors that affect radiology and the medical industry as a whole. That leadership is developed through good stewardship and management of the company they have entrusted to you.

I have accomplished that by surrounding myself with a great team of managers. That includes top-level managers at the financial, clinic-operations, business-development, and information-systems levels, and six additional directors to cover clinic management, contracting and compliance, business office, human resources, and hospital services. From my perspective, it's more about providing good leadership, based on corporate core values, to this team than it is about day-to-day management. That is their job, and I am there to offer experience and insight to guide them.

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The Shifting Landscape of Cardiac CT Angiography Reimbursement
by Cathleen Biga

Many imaging providers have been wishing for changes in reimbursement policies for cardiac CT angiography (CCTA) for some time. Changes are about to be made, but those wishes may not be granted. In December 2007, CMS proposed major restrictions on coverage for CCTA that could take effect as early as March 2008. The conclusions that CMS discussed in the proposed coverage determination would, if implemented, have a profoundly negative impact on Medicare beneficiaries by limiting needed access for clinically appropriate indications for using this technology (see sidebar).

Whether or not the new CMS National Coverage Determination (NCD) for CCTA is implemented, other reimbursement controversies have the attention of providers. Prominent among these is the issue that providers face of how to report appropriately and accurately on the data obtained during CCTA studies. These collaborative or supplemental readings often constitute a gray area for payors, so imaging providers may need to adopt a team approach. It is important to note that these are not separately billable services. Using a team approach provides an accurate and timely interpretation of the data obtained and provides our patients the highest quality care.

There are several business models that are in use. All models need to ensure that all providers are appropriately trained and credentialed to provide the interpretation of these studies. Let's discuss some of these models. Using a competitive reimbursement model, the referring physician who is ordering the test, selects the study's reader, who bills for the full interpretation; this is especially likely if neither specialty concedes primary reader status to the other. Some feel if the selected reader is a cardiologist, the noncardiac portion of the study may still require interpretation; conversely some wonder if a radiologist can completely interpret the coronary tree.

Under a collaborative reimbursement model, a cardiologist reads the cardiac portion of the study and a radiologist reads the soft tissue. They then issue a blended report. This may represent a reimbursement quandary in order to ensure that both readers are compensated fairly for interpreting the same study, understanding that only one may bill. Medicare's basic position is that patient care is paramount and a team approach may accomplish this. It is then incumbent on the providers to ensure appropriate coding, interpretation, and reporting. It is equally important to check with your local carrier, however, before assuming that this will be the case everywhere. In general, supplemental readings will not be stand-alone services for which separate billing can be made.

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How Managed Care Targets Imaging Centers—and How to Fight Back
By Ron Howrigon

With the cost of advanced imaging technology always on the rise and reimbursement continually declining, now, more than ever, it is crucial that imaging centers negotiate optimal managed care contracts. Unfortunately, managed care is currently targeting imaging centers, owing to concerns about overutilization and escalating costs. How can imaging center businesses emerge from negotiations unscathed?

To put it bluntly, imaging centers cannot afford to accept managed care negotiators' opening offers. Contracts must reflect the realities of doing business in the post-Deficit Reduction Act market, including the price of advanced technology, high staffing costs, the need to remain profitable, and, ideally, the fiscal flexibility to grow the business through new partnerships and ventures. Center negotiators must arm themselves with a new set of negotiating tactics in order to engage effectively with payors.

The Campaign

As the cost of outpatient imaging exceeds $100 billion annually, increasing at a rate of around 20% a year, managed care organizations have an incentive to target imaging providers, and they are attacking imaging centers on all fronts: pay for performance, tiered networks, radiology utilization management, and accreditation are all platforms that, sensible as they may sound, work in service of the company's interests-not the imaging center's

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Improving Gadolinium-based Contrast Safety
by Jeffrey C. Weinreb, MD, FACR

It is clear that gadolinium-based contrast agents (GBCA) for MRI improve detection (sensitivity), characterization (specificity), disease staging, and diagnostic confidence levels. It has also become clear that nephrogenic systemic fibrosis (NSF) is associated with their use in patients with preexisting kidney disease. For radiology, the challenge is to minimize the risk of NSF while retaining, when appropriate, the advantages of GBCA use.

GBCA Characteristics

GBCAs consist of an active element (gadolinium chelate), an added safety measure (an extra chelating agent) in some products, and a solvent (water). GBCAs increase reliability and may decrease examination times; this is particularly true in MR angiography. Increased signal (enhancement) on T1-weighted images is the result of GBCA's ability to shorten the T1 relaxation time of nearby water protons.

GBCAs are administered intravenously at an injection rate of 1 to 5 mL per second, with the dose depending on the specific application, but typically 0.1 mmol/kg. This total dose of 15 to 30 mL is sometimes increased for MR angiography, for multiple examinations, or for imaging patients with brain metastases or multiple sclerosis.

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Marketing the OIC:Is It Time to Go Directly to Patients?
by Steve Smith

Across the nation, outpatient imaging centers (OICs) are looking for ways to protect what they have built and ways to grow. Protection strategies usually involve shoring up relationships with key referrers and ensuring that the practice brand is established and being supported in every department.

Growth presents an entirely new set of challenges-and opportunities. Some OICs are relying on organic growth; that is, they will execute those strategies that will add business through established processes, most often through the use of their outside practice representatives calling on current referrers to increase scan volume.

Others, however, are moving outside their original business model and marketing plans by adding a direct-to-patient program to help increase revenue. These practices actively pursue cash-producing, elective scans.

Not every OIC is qualified to go directly to patients. Those that cannot or should not make the direct appeal typically lack the infrastructure to support such a program. They may not only be lacking the proper practice brand, but may also lack the required internal marketing support, including a marketing plan, budget, and manager. All are necessary prior to jumping into patient-direct waters.

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Process Automation:The Key to Improved Financial Performance
By Patricia Kroken, FACMPE, CRA

The high procedural volumes associated with radiology provide both a challenge and an opportunity. The old days of handling paper persist to varying degrees, but organizations investing in technology to automate common processes have demonstrated an ability to improve productivity and profitability while decreasing associated costs. This is especially important as reimbursements continue a downward trend and payors continue to impose additional administrative requirements.

Automation has been highly successful in a number of key process areas. What are they, and why are they important?

Data Acquisition and Reconciliation

Radiology was one of the more progressive medical specialties in terms of downloading demographic information, although virtually every group will confirm that a certain portion of its business is still derived from paper documentation. Changes, however, have been appreciated in several key areas, including electronic report acquisition, optical character recognition/scanning, and reconciliation.

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PUBLISHER
Curtis Kauffman-Pickelle

EDITOR
Cheryl Proval

VP CLIENT SERVICES
Steve Smith

PRODUCTION COORDINATOR
Megan Runyon

TECHNICAL EDITOR
Kris Kyes

CONTRIBUTING WRITERS
Duane Sachs, Jerry Sokol,
Cathleen Biga, Ron Howrigon,
Jeffrey C. Weinreb,
Patricia Kroken

Another Plum for RadNet
RadNet, Los Angeles, has acquired two multimodality imaging centers from Rolling Oaks Radiology, Thousand Oaks, Calif, for $5.9 million and the assumption of approximately $5.9 million in debt. Both centers feature high-end imaging technology, including 3T MRI and 64-slice CT, and one site is a dedicated women's center. Rolling Oaks Radiology entered into a long-term contract with RadNet to provide reading services for the centers, which give RadNet a beachhead in the affluent Thousand Oaks/Westlake Village market.

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Small Copayments Reduce Mammogram Compliance
Researchers found that women are dramatically less likely to get annual mammograms if they are required to pay even minimal copayments. The researchers, who published their results in the New England Journal of Medicine, suggested that eliminating copayments for annual mammograms would make good clinical and economic sense.

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Tough Times Predicted for Hospitals
A new report from New York-based Moody's Investors Service suggests there may be trouble ahead for the nation's hospitals, with a stable outlook for 2008 giving way to less certainty in 2009 and 2010 if the economy continues to sour. Uncertainties include the outcome of the 2008 presidential election and the persistent scrutiny of the not-for-profit hospital industry, along with the rising numbers of uninsured and underinsured patients. The report cited a mergers-and-acquisitions trend at work among hospitals seeking economies of scale and clout with insurers.

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FDA Issues Device-fragment Warning
The Center for Devices and Radiological Health receives nearly 1,000 adverse-event reports each year related to unretrieved device fragments, according to a new advisory from the FDA. These have included more than 200 different medical devices and have involved numerous medical specialties. Adverse events reported include local tissue reaction, infection, perforation and obstruction of blood vessels, and death. During MRI procedures, magnetic fields may cause metallic fragments to migrate, and radiofrequency fields may cause them to heat, causing internal tissue damage and/or burns.

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FDA Gives Nod to Medtronic Stent
The FDA has approved a new drug-coated stent, the Endeavor from Medtronic, Minneapolis, as the third entrant in a US market dominated by Johnson & Johnson, Raritan, NJ, and Boston Scientific, Natick, Mass. The company, already a leader in bare-metal coronary stents, announced that it will begin shipping Endeavor immediately.

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CodeRyte Launches Data-analysis Tool
CodeRyte Inc, Bethesda, Md, released a clinical data-extraction solution called DataScout, which uses natural language processing technology to convert data within medical reports for improved reporting; Physician Quality Reporting Initiative (PQRI) analysis; decision, referral-pattern, and clinical-condition analysis; and in-depth clinical research. Users can quickly identify evolving medical terms, survey patient information for clinical trial inclusion or exclusion data, assign codes or values for PQRI quality indicators, or search for specific phrases used within medical reports.

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NightHawk CEO Grants $1.5 Million Gift to RSNA
Paul Berger, MD, CEO and founder of NightHawk Radiology, Coeur D'Alene, Id, has donated $1.5 million to the RSNA Research and Education Foundation's Derek Harwood-Nash Scholar Grant, the largest individual gift and first individual grant in foundation history. The gift is a tribute to internationally known Canadian radiologist Derek Harwood-Nash, MB, ChB, DSc, founder of the subspecialty of pediatric neuroradiology, who died suddenly in 1996.

Health Information Management Systems Society Annual Conference & Exhibition
Sponsored by HIMSS

February 24–28
Orlando, FL

Former Sen Bill Frist, AOL founder Steve Case, Google CEO Eric Schmidt, and author Steven Levitt are among keynote speakers at the annual meeting devoted to health care informatics.

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March

ACHE Congress on Healthcare Leadership
Sponsored by the American College of Healthcare Executives

March 10–13
Chicago

Networking and professional development are hallmarks of this meeting of health care leaders, with keynotes and sessions covering the spectrum of health care leadership, including ethics, quality, leadership, governance, safety, and reform.

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Imaging100: The Executive Forum for Freestanding Diagnostic Imaging

March 16–18
Fairmont Scottsdale Princess, Scottsdale, AZ

This event is a place for senior–level business executives to network, exchange ideas, and develop relationships with other leaders in the diagnostic imaging industry. The educational sessions will cover topics including private equity, managing tiered networks, strategic planning, government regulation updates and forecasts, cancer-center physician joint ventures, mergers and acquisitions, CEO/CIO roundtables, and many more.

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APRIL

Interventional Radiology Coding Seminar
Sponsored by the Society of Interventional Radiology and Affiliated Professional Services

April 21
Hilton Boston/Financial District, Boston

This seminar will be led by Walt Blackham, MS, RCC, chair of the RBMA coding committee, and the RBMA representative on the ACR Committee on Coding and Nomenclature, as well as a contributor to the Interventional Radiology Coding Users' Guide published by the Society of Interventional Radiology.

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The 5th Annual World Health Care Congress
Sponsored by World Congress Research

April 21–23
Marriott Wardman Park Hotel, Washington, DC

International gathering of health care executives addresses topics and trends driving the global health care industry, including evidence-based care, variability in care, and developing profitable clinics and hospitals.

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MAY

2008 Spring Conference
Sponsored by the Association for Quality Imaging

May 7–8
Washington, DC

The event begins with a day of legislative and regulatory updates and a tutorial on how to lobby Congress, featuring speakers from CMS, the Medicare Payment Advisory Commission, the Congressional Budget Office, OIG, the White House, and Wall Street. The second day will be spent on Capitol Hill in meetings arranged by AQI with attendees' members of Congress.

Register by calling (202) 266-2626

JULY

Beyond Strategies: Best Practices for Excellence in Outpatient Imaging
Sponsored by GE Healthcare Beyond Program

July 23–25
JW Marriott Pennsylvania Avenue, Washington, DC

Top–notch keynote speakers and seminar leaders will present a variety of topics on trends in health care consumerism, merger and acquisition strategy, and marketing/demand management. Keynote speakers include Mark McClellan, MD; election analyst Charlie Cook; and futurist Jeff Goldsmith.

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