Hospitals across the country are under pressure to reduce costs and increase quality in an environment of decreasing reimbursement. While some factors, such as cuts to Medicare, may be outside hospitals' control, management of service lines presents at least one opportunity to increase savings and quality. For example, hospitals can work with their radiology departments to meet these goals. Scott Seidelmann, president and CEO of radiology services provider Radisphere, explains how an alternative approach to radiology that leverages a robust network of radiologists, a standards-based approach and data tracking can help hospitals drive down costs and boost volume and revenue.
Cost Drivers
Being aware of these four major cost drivers of radiology services can help a hospital identify opportunities for savings.
1. Subsidies. One of the key drivers of radiology costs to a hospital is subsidies to radiology groups — a revenue guarantee for providing services. Mr. Seidelmann says a shortage of radiologists has resulted in extremely high incomes for these physicians, making the service very costly for hospitals. If the hospital's radiology services do not generate sufficient revenue to meet radiologists' income levels, the hospital may need to pay a subsidy to make up the difference.
2. Preliminary reads. Preliminary reads by a nighthawk group that covers night and weekend shifts for a radiology group also contribute to the high cost of radiology services. Mr. Seidelmann says radiology practices typically hire outside companies for night and weekend shifts to ensure 24/7 coverage of emergency departments. The nighthawk group would make a preliminary read at roughly $30 dollars, but the service is nonreimbursable. "You just added a cost to the system that has no professional reimbursement to it," Mr. Seidelmann says. The next day, the hospital's radiology group would make a final read at an additional cost that is reimbursable.
3. Transcription. Hospitals also pay for transcription services to transcribe radiologists' dictation of studies. Although transcription may cost only $2 to $3 for each study, the hospitals' radiologists read thousands of studies a year, creating a significant annual cost in transcription fees.
4. Length of stay. Hospital length of stay, which may impact reimbursement, can be affected by radiology through turnaround time and overutilization. For example, Mr. Seidelmann says if an internist needs to see a CT scan result before discharging the patient, a long turnaround time can increase length of stay, creating a cost to the hospital. Similarly, a referring physician or radiologist who is ordering unnecessary scans can also delay discharge and raise costs.
Differentiators
In addition to costs, hospitals need to focus on what differentiates their radiology services from those offered at a neighboring hospital or imaging center. Mr. Seidelmann says the top differentiators are fast turnaround times, expertise by subspecialists and easy access to radiologists. Turnaround time can set a hospital apart by promising a referring physician final reports in a certain timeframe. Offering reads by subspecialists also differentiates a radiology service because it provides more accurate readings for a wide variety of patients and cases. Finally, providing physicians with easy access to radiologists for consultations or follow-up is attractive. These benefits can help hospitals increase volume and generate referrals for outpatient imaging, which is one of the most profitable services for community hospitals, according to Mr. Seidelmann.
An Alternative Model
While interested in making improvements, many community hospitals cannot afford to offer these differentiators because their resources are taxed managing the high costs of a traditional radiology group. This "antiquated" delivery model of radiology accounts for most of the cost drivers for hospitals, Mr. Seidelmann says. Traditionally, a radiology group has focused on providing the most services with the fewest number of radiologists to maximize profit-per-partner. They have no incentive to provide hospitals with additional services such as subspecialists, he says. "It's incredibly difficult for that traditional model to balance quality and productivity."
In contrast, alternative models in radiology delivery can lower hospitals' costs and help them differentiate their radiology services. Three key attributes to look for in an alternative model are a robust network of radiologists, a standards-based approach and the ability to track and analyze data.
1. Robust network of radiologists. Partnering with a large group of on-site and remote radiologists can help hospitals avoid paying stipends because the radiologists can share the case load. "A much larger group that has significant resources can spread work across numerous facilities," Mr. Seidelmann says. For example, Radisphere evaluates hospitals' volume to delegate a certain number of radiologists to work at the hospital and makes additional radiologists, including any necessary subspecialists, available remotely. "You may have five to 10 radiologists not in the facility but part of a network [and] reading for multiple facilities, which is how we make access to subspecialists economically feasible for community hospitals," Mr. Seidelmann says. The large network of radiologists also speeds turnaround time, which can help drive down costs and make the hospital competitive in the market. Additionally, a large group of radiologists can "eliminate the need for preliminary reads and non-reimbursable fees by staffing to provide final reads 24 hours a day," he says. This model also makes radiologists accessible to referring physicians through video or phone at any time. Finally, a group with subspecialists can also allow hospitals to market this feature to referring physicians to generate volume.
2. Standards-based approach. Radisphere takes a standards-based approach to radiology to ensure quality and efficiency. "Radiology, like the rest of healthcare, needs to be standards-driven," Mr. Seidelmann says. "The standards need to be tied to quality and efficiency – not just productivity. This ensures that radiology is evaluated on real contribution to patient care." Elements of a standards-based approach to radiology that directly tie to quality include standardized processes for peer review, concurrence review and critical findings management. With regard to standards that drive efficiency, Mr. Seidelmann suggests hospitals ask for commitments to specific turn-around times and consultation timeframes, such as guaranteeing a consult with a radiologist within 30 minutes of the request.
3. Data tracking. In addition, hospitals can use imaging insight, provided by the radiology group, to measure and track the quality of their radiology services to identify positive trends and areas for improvement. A single database of metrics including turnaround time and utilization allows hospitals to study trends and benchmark data against other organizations. For instance, Mr. Seidelmann says if data show that one physician is ordering twice the number of CTs as another, the findings allow for the hospital to consider discussing appropriateness criteria for imaging tests with that physician in a non-punitive manner.
Learn more about Radisphere.
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Cost Drivers
Being aware of these four major cost drivers of radiology services can help a hospital identify opportunities for savings.
1. Subsidies. One of the key drivers of radiology costs to a hospital is subsidies to radiology groups — a revenue guarantee for providing services. Mr. Seidelmann says a shortage of radiologists has resulted in extremely high incomes for these physicians, making the service very costly for hospitals. If the hospital's radiology services do not generate sufficient revenue to meet radiologists' income levels, the hospital may need to pay a subsidy to make up the difference.
2. Preliminary reads. Preliminary reads by a nighthawk group that covers night and weekend shifts for a radiology group also contribute to the high cost of radiology services. Mr. Seidelmann says radiology practices typically hire outside companies for night and weekend shifts to ensure 24/7 coverage of emergency departments. The nighthawk group would make a preliminary read at roughly $30 dollars, but the service is nonreimbursable. "You just added a cost to the system that has no professional reimbursement to it," Mr. Seidelmann says. The next day, the hospital's radiology group would make a final read at an additional cost that is reimbursable.
3. Transcription. Hospitals also pay for transcription services to transcribe radiologists' dictation of studies. Although transcription may cost only $2 to $3 for each study, the hospitals' radiologists read thousands of studies a year, creating a significant annual cost in transcription fees.
4. Length of stay. Hospital length of stay, which may impact reimbursement, can be affected by radiology through turnaround time and overutilization. For example, Mr. Seidelmann says if an internist needs to see a CT scan result before discharging the patient, a long turnaround time can increase length of stay, creating a cost to the hospital. Similarly, a referring physician or radiologist who is ordering unnecessary scans can also delay discharge and raise costs.
Differentiators
In addition to costs, hospitals need to focus on what differentiates their radiology services from those offered at a neighboring hospital or imaging center. Mr. Seidelmann says the top differentiators are fast turnaround times, expertise by subspecialists and easy access to radiologists. Turnaround time can set a hospital apart by promising a referring physician final reports in a certain timeframe. Offering reads by subspecialists also differentiates a radiology service because it provides more accurate readings for a wide variety of patients and cases. Finally, providing physicians with easy access to radiologists for consultations or follow-up is attractive. These benefits can help hospitals increase volume and generate referrals for outpatient imaging, which is one of the most profitable services for community hospitals, according to Mr. Seidelmann.
An Alternative Model
While interested in making improvements, many community hospitals cannot afford to offer these differentiators because their resources are taxed managing the high costs of a traditional radiology group. This "antiquated" delivery model of radiology accounts for most of the cost drivers for hospitals, Mr. Seidelmann says. Traditionally, a radiology group has focused on providing the most services with the fewest number of radiologists to maximize profit-per-partner. They have no incentive to provide hospitals with additional services such as subspecialists, he says. "It's incredibly difficult for that traditional model to balance quality and productivity."
In contrast, alternative models in radiology delivery can lower hospitals' costs and help them differentiate their radiology services. Three key attributes to look for in an alternative model are a robust network of radiologists, a standards-based approach and the ability to track and analyze data.
1. Robust network of radiologists. Partnering with a large group of on-site and remote radiologists can help hospitals avoid paying stipends because the radiologists can share the case load. "A much larger group that has significant resources can spread work across numerous facilities," Mr. Seidelmann says. For example, Radisphere evaluates hospitals' volume to delegate a certain number of radiologists to work at the hospital and makes additional radiologists, including any necessary subspecialists, available remotely. "You may have five to 10 radiologists not in the facility but part of a network [and] reading for multiple facilities, which is how we make access to subspecialists economically feasible for community hospitals," Mr. Seidelmann says. The large network of radiologists also speeds turnaround time, which can help drive down costs and make the hospital competitive in the market. Additionally, a large group of radiologists can "eliminate the need for preliminary reads and non-reimbursable fees by staffing to provide final reads 24 hours a day," he says. This model also makes radiologists accessible to referring physicians through video or phone at any time. Finally, a group with subspecialists can also allow hospitals to market this feature to referring physicians to generate volume.
2. Standards-based approach. Radisphere takes a standards-based approach to radiology to ensure quality and efficiency. "Radiology, like the rest of healthcare, needs to be standards-driven," Mr. Seidelmann says. "The standards need to be tied to quality and efficiency – not just productivity. This ensures that radiology is evaluated on real contribution to patient care." Elements of a standards-based approach to radiology that directly tie to quality include standardized processes for peer review, concurrence review and critical findings management. With regard to standards that drive efficiency, Mr. Seidelmann suggests hospitals ask for commitments to specific turn-around times and consultation timeframes, such as guaranteeing a consult with a radiologist within 30 minutes of the request.
3. Data tracking. In addition, hospitals can use imaging insight, provided by the radiology group, to measure and track the quality of their radiology services to identify positive trends and areas for improvement. A single database of metrics including turnaround time and utilization allows hospitals to study trends and benchmark data against other organizations. For instance, Mr. Seidelmann says if data show that one physician is ordering twice the number of CTs as another, the findings allow for the hospital to consider discussing appropriateness criteria for imaging tests with that physician in a non-punitive manner.
Learn more about Radisphere.
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