The rapidly shifting landscape in U.S. healthcare delivery and payment is pushing more radiology practices to make necessary changes in order to survive. Many are being acquired outright by hospitals and integrated health systems, while others are banding together to compete not just locally, but nationally.
While there are some differences, the trend toward radiology consolidation mirrors the airline industry’s experience in its first century, said James V. Rawson, M.D., chairman of radiology at the Medical College of Georgia, Augusta, pointing out that X-rays were discovered less than 10 years before the Wright Brothers’ first airplane flight at Kitty Hawk, N.C. Although the progression from primitive one-person planes to transatlantic jetliners was initially chaotic, the process evolved into scheduled routes, elaborate infrastructure, government regulation and a few dominant companies.
“Nearly all of the early innovators are companies that don’t exist anymore,” said Dr. Rawson, a member of RSNA’s Physician Consortium for Performance Improvement, the RSNA Quality Improvement Committee and a recipient of the Academy of Radiology and Leadership Management (ARLM) Certificate of Achievement (see sidebar). “Most of them consolidated into larger airlines.”
Radiology has been slower to consolidate—the 20 largest practices currently only employ about six percent of the nation’s 25,000 radiologists—but Dr. Rawson advises those in private practice to brace themselves for mergers, acquisitions, alliances and employment by integrated health systems, as the nation slowly moves to medical reimbursement based on results rather than volume of services rendered. A different set of incentives will demand a new approach to providing all types of care, he stressed.
“Consolidation is not limited to radiologists or physicians in general,” he said. “Hospitals, group purchasing organizations and other stakeholders are all consolidating.”
The need for consistent care protocols and widespread access to imaging will motivate integrated health systems to acquire radiology practices, said Howard Chrisman, M.D., professor of radiology and surgery at Northwestern University's Feinberg School of Medicine in Chicago. Northwestern Medicine, with a flagship facility in downtown Chicago, recently acquired Lake Forest Hospital, about 40 miles to the north, along with its affiliated radiology practice, previously an independent corporation. Integrating that practice with the downtown facility was a challenge but ultimately essential in today’s environment, he said. The Lake Forest radiologists may not be required to teach or conduct research like those on the Northwestern faculty, but they must care for patients in the same way.
“From a system perspective, alignment is necessary to create a continuum of care, and on the diagnostic imaging side, you don’t want disparate quality and protocols,” Dr. Chrisman said. “Cost is increasingly important and needs to be standardized. The best way to do that is to have a single group of diagnostic radiologists.”
Integration can be laborious on a number of fronts, according to Blair Faber, administrator at the Northwestern Medical Faculty Foundation, who is charged with making all the pieces fit together after an acquisition. For example, cash flow to the healthcare system dries up for the first couple of months because the practice typically keeps receivables that have accumulated before the acquisition date. Therefore, the healthcare system that integrated them must float the salaries and other practice expenses until it has paid for services rendered after the acquisition.
“You’re flipping the billing system and contracts over to the new organization, trying to keep referring physicians from getting nervous and upsetting the established referral pattern, and hoping the radiologists won’t quit,” Faber said.
Radiology groups that remain independent of hospitals have another option: joining forces with one another, abetted by teleradiology technology that allows 24/7 access to images from any location. For example, the “supergroup” Strategic Radiology, LLC, is approaching the trend toward healthcare system acquisition by providing an increased level of integrated subspecialty services to its traditional clients. An alliance of 17 radiology practices across 15 states, the company employs about more than 1,200 radiologists.
“We believe that by aggregating our subspecialties in our collective practices and by setting up virtual subspecialty coverage across the country, our value will exceed that of what hospitals can achieve from a single radiology practice,” said Arl Van Moore, M.D., current chairman and CEO of Strategic Radiology and past-board chair and past-president of the American College of Radiology (ACR).
Dr. Moore’s practice joined Strategic Radiology five years ago to improve its quality and breadth of services and reduce operating costs including malpractice insurance, employee health insurance and purchases of supplies and equipment. Strategic Radiology maintains its own patient safety organization (PSO)—the only radiology-specific PSO in the country—and pools its quality data to develop and improve best practices.
Both models—large independent practices and healthcare system ownership—should be able to exist, Dr. Moore said. “If hospitals want to employ radiologists, that is their decision,” he said. “But we’re of the opinion that that practice of radiology is best understood by radiologists, and we’re in a good position to develop an increased level of value and maintain high quality by aggregating resources.”
Practices should examine how they can best fit into the new paradigm, Dr. Rawson advised. “Look at where you have core strengths and then look for gaps and how to fill them,” he said. “Maybe the emphasis on consolidation is misplaced. I think sometimes it’s easier to focus on ownership than on the more complicated question of how to improve outcomes and create value.”
Elizabeth Gardner is a Chicago-based freelance writer specializing in medical technology and health IT.
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