THE BIG PICTURE

The Loneliest Number
By Curtis Kauffman-Pickelle

It has been said that the number one is the loneliest number, and it just may be that it is getting a whole lot lonelier. Illustrating this, the recently released 2007 Verispan Diagnostic Imaging Center Market Report features a section that depicts a dramatic change in the number of imaging centers describing themselves as being affiliated with chains, rather than operating as independent, solo organizations.

In 2003, 46% of the respondents to the survey identified themselves as being affiliated with chains; a mere four years later, that number had grown to a whopping 73%.

What, then, are the implications? Is the solo imaging center dead and gone forever? Are the chains eating up mom-and-pop centers in a Pac-Man frenzy? Can one only survive in the market by merging, affiliating, or joining up with a regional or national chain?

Although it is clear that the number of independents is declining, it is by no means clear that the ones that remain are at any serious market disadvantage simply because they remain independent. Many other factors converge to create success or failure.

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A Thorny Question: Who is Responsible for Transcription Costs?
By Cheryl Proval

Radiology practices and hospitals historically have operated under the assumption that the cost of transcription is part of the technical component, and therefore the responsibility of the hospital, or the entity that owns the technology. While there have been periodic attempts by hospitals to charge radiologists for transcription services in the past, radiologists, attorneys, and the ACR have successfully overcome them by raising the specter of anti-kickback-statute violations.

In response to a inquiry on the subject by a rural hospital, however, the HHS OIG recently issued an advisory opinion, OIG Advisory Opinion No. 07-19, that specifically states that transcription costs are included in the professional fee, according to W. Kenneth Davis, Jr, JD, partner in the law firm of Katten Muchin Rosenman LLP, Chicago. "This one scares me, folks," Davis told a gathering at the RBMA-sponsored Managing a Radiology Business from the Top: Physicians & Administrators on February 22, 2008, in San Francisco.

According to Davis, the OIG opinion was issued as a response to a rural Critical Access Hospital (CAH) that specifically asked whether it would violate the anti-kickback statute if it charged the radiology group for transcription services.

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.

"The OIG said, 'No, it's not going to constitute an anti-kickback violation.' Essentially, they said, 'Go forth and charge for transcription.'"

—W. Kenneth Davis Jr, JD

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Trends in Imaging Arrangements
By Joshua M. Kaye, Esq

Prior to 2007, medical practices that developed and used imaging facilities on an exclusive, full-time basis were not overly scrutinized by payors or regulators. In addition, physician practice arrangements that were properly structured to allow the practice to use the imaging facility on a part-time basis (such as block leasing) were also quite common. In fact, CMS had, on at least two occasions, suggested that shared imaging facilities were permissible. In 2001, concerning phase I of the Stark II law, CMS stated that the in-office exception protected shared imaging facilities if the physicians sharing that facility routinely provided their full range of services in the same building. About phase II, CMS wrote in 2004 that a shared imaging facility could be used if it satisfied the requirements for the in-office ancillary services exception in its supervision, location, and billing.

2007 saw increased regulatory scrutiny of financial arrangements with referring physicians, in part because health-care spending returned to prominence as a political issue. Particular attention was paid to physicians' ownership of surgical hospitals and to the participation of physicians in arrangements to provide pathology and imaging services. Phase III of the Stark law was published, but had little impact on shared imaging. The final CMS Physician Fee Schedule, however, prohibited IDTF sharing and contained an anti-markup rule. This measure took effect on January 1, 2008, and its implications for imaging arrangements are profound.

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Even When Wrong, the Customer Is Always Right
by Steve Smith

As marketing assumes a more prominent role in the evolution of imaging centers, perhaps the most important part of the marketing mix is good, old-fashioned customer service. After all, the very nature of the specialty is such that it does not lend itself to radiologist-patient interaction, so these crucial human interactions are delegated to people who often have no direct connection to the survival of the business.

Creating the positive patient experience is now more important than ever, not only to create the raving fan, but also to prevent the practice from becoming an afterthought—a place that is perceived as no better or worse than the facility down the street.

For Richard Katz, MD, a partner in East River Medical Imaging in New York City, the customer-service decisions at the practice are easy. That's because Katz has a family history of serving the public. Little did he know that, later on, his father's occupation as a merchant would serve Katz well as a private-practice radiologist.

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Mark Kleinschmidt: Brokering a Shared Vision

When NightHawk Radiology, Coeur d'Alene, Idaho, purchased the business infrastructure of St Paul Radiology in the summer of 2007, the entire industry took notice. In purchasing what is widely acknowledged to be one of radiology's best business operations, NightHawk also acquired one of its strongest leaders in Mark Kleinschmidt, St Paul's former CEO and recently named VP of sales for NightHawk. ImagingBiz.com caught up with Kleinschmidt to discover why this marriage was brokered and exactly what it has wrought.

ImagingBiz.com: With the acquisition of the St Paul Radiology business infrastructure by NightHawk Radiology Services and a subsequent deal in which CML Healthcare acquired ARS, you appear to have set a trend. Why are radiology business offices such attractive assets in this market?

Kleinschmidt: I believe that successful, efficient operators are always going to be attractive. In both cases that you mention, it's really a case of high-quality radiologists, as well as an efficient, well-run business office, that make the difference. I wouldn't say it's the back office alone, but really the combination of those two that makes the practices look worthwhile.

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Radiology Coding and Compliance for 2008
By Melody W. Mulaik, MSHS

Every year, radiology professionals who are responsible for ensuring the accuracy and compliance of coding and billing practices must do an internal assessment to ensure that their practices/organizations would withstand external scrutiny. In 2008, there continue to be many reimbursement, coding, and compliance challenges for radiology organizations. This article will address the key reimbursement and coding changes for 2008, as well as comment on the anticipated Advance Beneficiary Notice (ABN) schedule for future implementation.

Physician reimbursement: Under the Medicare Physician Fee Schedule, physicians, overall, have seen an increase of 0.5% over the 2007 conversion factor. When the practice-expense adjustment is taken into account, that number drops to -1.5% for interventional services and increases to 4.5% for PET/nuclear-medicine services. Unless Congress intervenes again, we will see the originally proposed 10.1% decrease go into effect on July 1, 2008. With the practice-expense adjustment, this will be an impact of -12.1% for interventional services and -6.1% for PET/nuclear medicine.

The Hospital Outpatient Prospective Payment System (HOPPS): 2008 has, unfortunately, brought us some of the greatest payment decreases ever experienced for radiology services. Even if you do not bill for facility services, it is important to understand the severity of these changes and how they may affect a hospital's ability to justify financially the purchase of new equipment and/or certain types of supplies. Remember, the following information relates to facilities billing under HOPPS and not to entities billing with a CMS-1500.

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Get on Board With Virtualized Servers
By Cat Vasko

As any PACS administrator can attest, the cost of advanced imaging technology is higher than the price of a new CT or PET scanner. As the number of DICOM images attained per scan increases exponentially, software and hardware alike have a hard time keeping up with the load; no matter how powerful your PACS, without the back-end server power necessary to keep it running, you might as well be reading from a light box. That's why tech-savvy hospitals are turning to a new solution that just might revolutionize the server room as we know it: virtualized server environments.

Scott Starkey, director of digital imaging for OhioHealth Information Services, Columbus, Ohio, is responsible for maintaining Synapse PACS (from Fujifilm Medical Systems USA Inc, Stamford, Conn) across five primary OhioHealth hospitals. "We're about 2,000 beds, total," he says.

"We have more than 120 radiologists reading at all five sites. From OhioHealth facilities, the radiologists read remotely for a dozen other central Ohio hospitals."

—Scott Starkey, director of digital imaging,
OhioHealth Information Services, Columbus

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The 3D Imaging Lab: In-house or Outsource?

Part I: As volumetric imaging plays an ever-growing role in the diagnosis and treatment of a wide range of vascular, neurological, and orthopedic disorders, radiology departments are increasingly being called on to provide referring physicians with 3D reconstructions. This begs the following question: What is the most cost-effective way to provide a 3D service? Part I of this series provides a snapshot of a health system that invested in a 3D lab and the difficulty of determining a return on investment (ROI).

Staying abreast with (or, better yet, staying ahead of) the imaging-technology curve clearly follows a clinical imperative. Better imaging tools—in this case, 3D postprocessed reconstructions—have an immediate payoff for patient care. When a surgeon can use 3D imaging to measure and plan a vascular procedure better, for instance, the clinical outcome may be enhanced. Both patient and surgeon will then be rewarded, but so will the institution that offers the imaging service.

This is so frequently true that hospitals and health networks often opt for imaging-technology upgrades long before the financial reasons become apparent. Marketing clout and patient satisfaction can override direct ROI considerations.

One example is the 3D-imaging lab set up by Spectrum Health in Grand Rapids, Mich. Spectrum Health, organized in 1997, comprises seven hospitals and is Western Michigan's largest not-for-profit health system. It had operating revenues in fiscal 2007 of about $2.3 billion, according to its Web site.

About four years ago, Spectrum committed to opening Western Michigan's first (and still only) full-time 3D-imaging lab. Demand for the lab came partly from clinicians and the radiology departments of various hospitals, but an equally important impetus was Spectrum's vision of itself as a provider.

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Being an Effective Leader in Turbulent Times
By Scott Ziemann, MBA

The world of outpatient imaging changed suddenly when Congress passed historic legislation known as Deficit Reduction Act (DRA) of 2005. Almost immediately, professional organizations began lobbying efforts to delay implementation of this legislation for two years so that companies would have time to prepare for this devastating event. Most radiologists and entrepreneurs in the industry thought that cuts of this magnitude were never going to happen. In the end, however, lobbying efforts failed, and these cuts were implemented.

This legislation made me recognize that what our profession needed was a new type of leadership to cope with the difficult and turbulent times ahead. As I began speaking with executives in other companies, I realized that our profession had very good managers who were focused on coping with situations that were going on in their practices. There were not a lot of people out there, however, who were initially able to cope with the change that our industry was facing that would have a negative impact on their businesses. This is the focus of leadership.

In order to be an effective and successful leader in today's outpatient imaging environment, you must develop several skills to carry with you in your leadership tool kit. Many people believe that leaders are born. This, however, could not be the further from the truth. Leaders are developed over time, with the proper skills and training. The following are some characteristics of a successful and effective leader.

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People in Radiology

Hazem H. Chehabi, MD, medical director of Newport Diagnostic Center, was named president of the American College of Nuclear Physicians (ACNP) at its annual meeting in Newport Beach, February 14-17, 2008.

Chehabi is board certified by the American Board of Nuclear Medicine and is a distinguished fellow of both the ACNP and the American College of Nuclear Medicine. He is an assistant clinical professor at the UC Irvine School of Medicine and a member of the Society of Nuclear Medicine.

Newport Diagnostic Center was founded in 1991 by Chehabi to provide the residents of Orange County with a state-of-the-art medical imaging center and radiological expertise.

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PUBLISHER
Curtis Kauffman-Pickelle

EDITOR
Cheryl Proval

VP CLIENT SERVICES
Steve Smith

PRODUCTION COORDINATOR
Megan Runyon

TECHNICAL EDITOR
Kris Kyes

WEB MASTER
Robert Stephens

CONTRIBUTING WRITERS
Joshua M. Kaye
Melody W. Mulaik, MSHS
Cat Vasko
Scott Ziemann, MBA

CTA Gets Reprieve from CMS
CMS backed off its attempt to curtail reimbursement for CTA, likely in response to a groundswell of criticism that found radiology and cardiology unlikely allies. However, CMS expressed concern that CTA was being used as an add-on to exercise stress testing and nuclear medicine studies and encouraged the specialty societies to quickly develop appropriateness guidance.

[CMS Notice]

UnitedHealthcare Deadline Delayed
UnitedHealthcare, Minnetonka, Minn, has extended the deadline for facility accreditation to the third quarter of 2008. The move was made in response to the insurer's data, which indicate that, overall, fewer than half of the health plan's imaging providers have completed the process to date. The previous deadline was March 1, 2008.

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What Should Be Done About Physician Payment?
With a negative 10.1% correction to physician reimbursement looming, these eight blog entries on the subject should prove provocative reading.

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Hospitals Put on Alert for Surprise HIPAA Audits
The US DHHS has contracted with the firm PricewaterhouseCoopers to conduct surprise HIPAA audits of hospitals this year. The first 10 targets will be hospitals for which CMS has received complaints, with investigators to focus on security risks associated with remote access to data and portable-storage concerns.

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NSF Suit Filed in Philadelphia
Zbigniew Marcinczyk, a Philadelphia man with pre-existing kidney disease, is the latest in a series of about 68 previous complainants who claim to have contracted nephrogenic systemic fibrosis from a gadolinium-based contrast agent. The case contends that the defendants failed to let patients and providers know that the agent in question was defective.

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MedPAC Recommends Bundling for Hospitals, Doctors
Following its recent report to Congress on strategies to improve quality and control health care costs, Medicare Payment Advisory Commission (MedPAC) members discussed proposals to bundle payments to hospitals and doctors for treatment as a way to reduce inefficiency and health care costs, according to the Kaiser Daily Health Policy Report. MedPAC recommends that Congress require CMS confidentially to report resource use around hospitalizations, and, after two years, to implement virtual bundling to reduce payments to hospitals and inpatient physicians with relatively high resource use.

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[MedPAC March Report]

Bayer to Buy Possis
Bayer AG, Leverkusen, Germany, will acquire Possis Medical, Coons Rapid, Minn, for $361 million. Bayer intends to combine the maker of the AngioJet System—used for thrombectomy of coronary arteries and bypass grafts, arteriovenous access conduits, and peripheral arteries—with its Medrad subsidiary to strengthen its position in the cardiovascular medical technology space.

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Analogic Buys Copley for $65.75 Million
Analogic, Peabody Mass, has entered into an agreement to acquire Copley Controls, Canton, Mass, a supplier of gradient amplifiers for MRI and precision motion-control systems. The purchase price is in addition to up to $1.8 million to reimburse Copley stockholders. Copley's revenues for 2007 are estimated to be $83 million.

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Carestream Adds Tabletop Imager
Carestream Health, Rochester, NY, has introduced the Kodak DryView 5800, a tabletop laser imaging system that prints grayscale images using the same technology employed in the company's high-volume DryView imaging systems, for use in imaging centers or for dedicated modality printing in radiology departments.

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APRIL

Building Better Radiology Marketing Programs
Sponsored by the RBMA

April 3–4
Sheraton Austin Hotel, Austin, TX

Two days of sessions will cover customer service, branding, positioning, metrics, and strategies for developing effective physician marketing liaisons.

[Register]

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

April 12
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.

[Register]

The Fifth Annual World Health Care Congress
Sponsored by World Congress Research

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

This 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.

[Register]

Magnetic Resonance Managers Society Conference
Sponsored by MRMS

April 26–30
The Sheraton Sand Key Resort, Clearwater Beach, FL

This education and networking event for administrators in MRI management area features sessions on MRI safety, current legal and regulatory issues facing MRI centers, coding, compliance and reimbursement, ACR requirements for MRI, and peer quality assurance.

[Register]

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]

SIIM 2008 Annual Meeting
Sponsored by the Society for Imaging Informatics in Medicine

May 15-18
Seattle

Educational sessions are designed for the imaging informatics needs of physicians, researchers, administrators, and imaging informatics professionals, and the program includes educational and scientific sessions, debates, and hands-on experience in the SIIM Learning Lab.

[Register]

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, PhD.

[Register]