THE BIG PICTURE

The Politics of Greed
By Curtis Kauffman-Pickelle

It has been said that all we need to focus on, in the daily battle for market share in the rough-and-tumble world of outpatient imaging, is a practice's unique value proposition. Indeed, I am perhaps the most vocal proponent of increasing the level of professionalism of today's sales/marketing staff in the outpatient imaging center, equipping them with branding principles that effectively separate the center or practice from its competition, differentiating its offerings from those of the vast landscape of competitors offering similar services, and maintaining a positive attitude about the practice's value.

What is difficult to control, however (and extremely difficult to train salespeople to penetrate), is the political referral that clearly falls within the category of an expected quid pro quo: I will send you my scans if you give me something in return.

Although only a minority engage in such practices, the outpatient imaging climate is affected—as are other businesses—by the attraction of risky and questionable financial incentives that permeate most, if not all, markets across the country. Some of these deals are in very gray areas, while some are blatantly illegal. Unfortunately, our profession is polluted, just as others are, by the dark attraction of greed, and stamping it out requires perseverance and deft maneuvering.

How, then, does one compete with greed? How does one compete with other providers who are willing to buy their referrals?

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CHAMP, Sustainable Growth Rate Reform, and Other Potential Payment-reduction Vehicles
By Cara Demmerle

Today's imaging market is substantially different from that of earlier years; payment is less secure, coverage for new technology is more difficult to obtain, and government and private oversight are increasing. After years of uninhibited growth and development, the imaging sector now faces unprecedented scrutiny that will probably change the way that imaging technologies are covered, paid for, and regulated.

While policymakers on both sides of the aisle have committed to health-reform goals, including quality improvement, sustainable growth, and empowering consumers, the federal and state budgetary forecasts have prompted focused efforts on managing cost and utilization for all health services, including—if not especially—imaging. With other health care sectors, such as physician services, facing significant Medicare payment cuts, there's yet another reason for the deepening scrutiny of imaging: as a source of savings to fund other provider sectors' demands for higher payment. Identifying offsets or cost savings is essential as legislators wrestle with an impending physician Medicare payment cliff, budgetary reconciliation processes, and rising entitlement spending. The federal budgetary environment increasingly requires every dollar of new spending to be offset by a reduction elsewhere.

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Stronger Financial Statements Earn Better Financing Options
By Max Reiboldt, CPA

Obtaining the most favorable financing depends on having the kinds of financial statements that lenders want to see. Before seeking funding for a de novo build, an upgrade to an existing imaging center, or new modality purchases, it is important to understand the commonly used types of financial statements, the kinds of financing typically considered by imaging centers and how they affect financial statements, and the key factors that impress lenders enough to make them offer the best financing options.

The balance sheet, the profit-and-loss statement, and the statement of cash flow are the common financial statements expected by lenders. Taken together, they give the lender an overview of the organization's strengths, weaknesses, and probable ability to repay a loan. Obtaining financing depends on presenting convincing financial statements, so great care should be taken to ensure their accuracy.

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Touchstone Medical Imaging: Putting People First
By Cheryl Proval

Touchstone Medical Imaging is a privately held provider of diagnostic imaging services headquartered in Brentwood, Tenn. Founded with two partners in 1991 by Christian C. "Pat" Rice, Jr, partner and CEO, Touchstone operates 17 imaging centers in seven states: Texas, Colorado, Tennessee, Maryland, Arkansas, Illinois, and Nebraska.

Prior to founding Touchstone, Rice was a partner with Deloitte & Touche Management Consulting in Stamford, Conn. He has served in various development and management positions in the health care industry, including that of CFO of the Medical College of Virginia. Rice agreed to share his management philosophy and thoughts on the outpatient imaging marketplace with the readers of ImagingBiz.com.

ImagingBiz.com: To what do you attribute Touchstone's continuing success in the outpatient arena, especially in light of the tough reimbursement marketplace after the Deficit Reduction Act (DRA)?

Rice: We showed a little bit of foresight in trying to get in front of DRA, rather than waiting for it to happen. Kevin Cross (a partner and COO) and I decided to operate as if DRA were going to take place in October of 2006. We had meetings with our corporate and regional people and got the whole team involved. It looked like DRA was coming, and if it didn't, it would be a bit of a bonus, so we went to all of our vendors and renegotiated contracts and made operational and personnel changes. We thought we covered 75% of the shortfall of the DRA through expense reductions, reallocation of resources, and other tactics. We are fortunate in that we are not in some of the higher Medicare utilization states, such as Florida and the Northeast, so our Medicare load is proportionate; it's not the majority of our business.

The other thing we did was continue with all of our growth plans: We added second magnets at a couple of our centers, and we expanded our offerings with additional modalities, so it was a two-pronged attack. We drove revenue at the same time that we reduced expenses. Fortunately, we have a very good team that was able to make these things happen.

"We say, 'Operations drive finance, finance doesn't drive operations.' Then, we say, 'People drive operations.' We have a good team of people who make it happen."

—Christian C. "Pat" Rice, CEO,
Touchstone Medical Imaging

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Determining Your Market's True Potential
By Timothy Stampp, MBA

In imaging today, volume is the name of the game: The only way to maintain your practice's financial viability is to keep your volume above a certain level. There's an upside to this highly leveraged business scenario, though. Once you reach a volume that represents a breakeven point in terms of fixed costs, every subsequent scan goes right to your bottom line.

No wonder so many imaging centers are trying to increase their volumes. The traditional inquiry we hear from practice leaders is, "I've done everything I can do to cut my costs, and now I'm ready to tackle the volume equation: Where do I start?" There's an inherent flaw in this question, however. Imaging centers should ask themselves, first, whether they can realistically increase volumes. A quantitative approach to determining your market's true potential is critical.

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Benchmarking the Cost of Processing Charges: Is Your Cost Too High?
By James A. Kieffer, MBA

Radiology practices create the largest number of new accounts per month of any specialty within a health care delivery system. On average, a practice reading 500,000 examinations per year would generate 35,000 new accounts per month. The billing issue that confronts every radiology practice is achieving a balance between processing costs and collection performance. This article will deal with assessing the cost side of the equation to determine whether what your practice pays to process charges is within reason.

The spectrum for processing radiology charges is covered by five options:

• internal operations with dedicated staff, employed by the practice, using an on-site billing system under a license agreement;
• internal operations using an Internet-based billing system, where all transaction data are maintained on a server located off the office premises;
• a centralized receivable department that handles the billing for the academic radiology practices and all other specialties within a medical school's practice plan;
• external operations, where all functions are handled by a vendor; or
• hybrid operations, where critical components of processing are subcontracted to vendors, but some of the easier follow-up requirements are retained in-house.

Receivable processing for radiology has some unique challenges that influence technology requirements. Foremost among these is the aforementioned large number of new accounts each month.

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Taking Charge of FFDM Workflow
By George Wiley

Radiographic mammography can be difficult to interpret, and radiologists who read mammograms rely on prior studies to guide them. Many women wisely comply with the recommendation to have this lifesaving study annually, so radiologists are often doing a difficult job within a tight timeline because they must review many mammograms, including the relevant prior studies. Going digital can be fairly traumatic under these circumstances.

It was trying enough for radiologists at Maryland's University Medical Center in Baltimore to attempt to dig in their heels when the hospital converted overnight from film to digital mammography six months ago, according to Reuben Mezrich, MD, PhD, FACR, professor and chair of the department of radiology at the University's School of Medicine. The radiologists argued that the task was difficult enough without the added burden of switching to a new technology that was achingly slow, compared with reading film, Mezrich adds.

He says that, at the time, he agreed with them, but he assured them that, with perseverance, it would get better. That has happened, he adds, although reading film is probably still faster than soft-copy interpretation.

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Creating a Smart—and Grand—Opening
By Steve Smith

Opening a new imaging center, or planning a grand reopening, involves details far beyond the technology and construction concerns, the most important of which may be the center's marketing plan.

After all, without patients, there is no business. Even if your marketing consists of just one invitation to one grand-opening party, that must be executed almost perfectly in order to succeed.

Today, a grand opening must live up to its billing. Thanks to increased competition and the need for a sharper accounting pencil, the grand opening needs to be an event that attracts both attention and referrals. In many cases, the grand opening is the start of the process of changing the referral patterns of some offices, so strategic thinking is in order.

Fred Gaschen is executive vice president of Radiological Associates of Sacramento, a diagnostic imaging enterprise with 17 locations in Northern California. Gaschen is a grand-opening veteran with unique input on the process, which starts long before the first bulldozer arrives.

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In-house vs Outsource for 3D:
A Questionnaire for Determining the Breakeven Point
By Robert Falk, MD

Part II: 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 II of this series offers a tool to determine which is best for your facility.

It's coming. In many hospitals, it has already arrived. We're talking about multidetector CT (MDCT), CT angiography, and advanced 3D imaging. This wonderful new technology offers the promise of evaluating disease processes, from atherosclerosis to cancer to trauma, more quickly, safely, and accurately than older techniques. CT angiography is already replacing diagnostic catheter angiography in many institutions. Everything from chest pain in the emergency room to brain perfusion in acute stroke to complex presurgical planning is now requiring some degree of advanced image processing. New applications for this technology are being developed every day. It is clear that advanced image processing has moved from luxury to necessity in the practice of medicine.

A hospital's adoption of sophisticated 3D imaging, however, entails several important steps, with many factors to consider in order to be successful. Foremost among these factors is, of course, the cost of developing a 3D lab. Now, with the ability to outsource your 3D postprocessing, it is important to consider whether outsourcing all or part of your 3D work makes financial sense.

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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
Bob Stephens

CONTRIBUTING WRITERS
Cara Demmerle
Max Reiboldt, CPA
Timothy Stampp, MBA
James A. Kieffer, MBA
George Wiley
Robert Falk, MD

CDI, RCW Merge Centers in Washington State
Center for Diagnostic Imaging, Minneapolis, Minn, and Radiology Consultants of Washington, Kirkland, Wash, have agreed to merge their imaging center operations in the Puget Sound area. While both organizations will continue to operate under their own brands, CDI’s three centers and RCW’s five centers will in effect merge to deliver sub-specialized reads to the Puget Sound communities of Bellevue, Everett, Federal Way, Kirkland, Lakewood, Mountlake Terrace, Renton and Seattle.

[CDI] [RCW]

Florida Rad to Fork Over $7 Mill in Fraud Case
Radiologist Fred Steinberg, MD, has reached an agreement with the Justice Department to pay the United States a $7 million fine to settle allegations of fraud and financial inducements for referrals. The government alleged that the radiologist and his related imaging centers and entities in Palm Beach County, Fla, billed Medicare for CT scans with and w/o contrast, but in reality performed the scans w/o contrast only. The suit was initially filed by a disgruntled neuroradiologist in a civil whistleblower suit.

[Read More]

Dartmouth Atlas: Cost of End-of-Life Care Varies Widely
Care for beneficiaries with chronic illnesses during the last two years of their lives accounts for about one third of all Medicare spending, but a study of the practices of five leading academic medical centers found that the cost of care for such patients varied from $93,842 at University of California, Los Angeles Medical Center to $53,432 at the Mayo Clinic.

[Read executive summary]

Hospitals Expand Charity-care Thresholds
Not-for-profit hospitals have at least a year before they must comply with stringent new parameters to report charity care and bad debt to the IRS, but many of them are already lowering the threshold at which patients may qualify for free care.

[Read More]

SF Paper Chronicles Insurers' Efforts to Curtail Imaging
A San Francisco daily newspaper looked at insurers' attempts to curtail unnecessary imaging, but also quoted Arl Van Moore, MD, ACR board chair, on the cost of insurers' preauthorization programs.

[Read More]

Vanderbilt Unveils Grand Plan to Bring Health Care to Mall
A breast center, an imaging center, and a pain-management clinic will be among the clinics shoppers will soon find at the 100 Oaks Mall, Nashville, Tenn. Vanderbilt University Medical Center opened a rehab clinic at the mall in February 2008 and plans to add a breast center and weight-loss, pain-management, medical-infusion, multiple-sclerosis, obstetrics, and dermatology clinics in a $48.9 million project that will occupy 440,000 square feet of space.

[Read More]

Bracco Completes E-Z-EM Merger
Bracco Diagnostics, Milan, Italy, has completed its $241-million merger with Lake Success, NY-based E-Z-EM. The two companies have a shared history in that E-Z-EM manufactures an oral contrast agent for Bracco, and Bracco distributes the E-Z-EM product line in Italy.

[Read More]

CTA Software Receives FDA Nod
The COR Analyzer from Rcadia, Haifa, Israel, performs automatic segmentation and tracking of the coronary-artery tree for coronary CT angiography (CTA) procedures without human intervention. The COR Analyzer system detects stenotic lesions in the major coronary arteries and automatically identifies patients without coronary-artery disease with a very high negative predictive value.

[Read More]

Philips to Acquire Cardiac IS
Royal Philips, Amsterdam, Netherlands, will acquire TOMCAT Systems, Ltd, Belfast, United Kingdom, which developed and markets an information system for the cardiac market. The TOMCAT Cardiac Information System collects and aggregates data relevant to the cardiac care of patients.

[Philips Healthcare]
[TOMCAT]

APRIL

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

RBMA 2008 Radiology Summit
Sponsored by the Radiology Business Management Association

May 4-7
Las Vegas Hilton

This annual summit provides a full range of educational and networking opportunities for executives and managers engaged in radiology practice management, as well as several preconference all-day intensives on sales training and using Six Sigma techniques to improve denial rates.

[Register]

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]

Process Improvement and Business Excellence in Healthcare
Sponsored by World Congress

July 30-August 1
Chicago

Hospitals, health systems, insurers, and medical practices will convene to discuss innovations in continuous quality improvement, including Lean, Six Sigma, Malcolm Baldridge, and other methodologies.

[Register]