Radiology Partnership Agreements: Achieving Better Alignment Without Hiring the Physicians


While hospital employment of radiologists is less common than in other specialties, there is increasing reliance on this strategy to better align radiologists with health system priorities. Under an employed model, hospital leaders clearly have the leverage they seek to improve care coordination, drive performance improvement or eliminate competitive activities such as imaging center ownership by their radiology group. These potential benefits come at a significant cost though, with financial losses likely in the early years due productivity declines and expenses related to the acquisition and technical integration of the practice. Given the potential negative economic impact of physician employment, it can be advantageous for hospital leaders to focus instead on improving the terms of the existing professional services agreement.  

Determine what success will look like
When using the PSA as an instrument for change management, it is important to clearly establish the objectives of the negotiation. These should broadly include promotion of clinical practice that conforms to evidence, along with proactive performance measurement and improvement. Establishing a shared focus on competitive concerns should also be an important outcome. The first task in achieving these goals is to distill the needs into specific metrics that can be easily measured and reported. Once identified, the metrics can then be included in the agreement as a guide for minimum performance thresholds, to structure pay-for-performance incentives, or as a combination of both.     

Important quality and operational metrics to include are:

  • Interpretive accuracy measured through peer review (error rate)
  • Compliance with critical findings reporting policies (reporting time or percent compliance with reporting the diagnoses defined in the policy)
  • Interventional radiology outcomes (complication and mortality rates)
  • Report turnaround times by location of service  
  • Percentage of high-tech imaging studies interpreted by subspecialists

The requirements and/or goals for these areas may be formulated by evaluating past performance, benchmarking against external high performers and modeling the expected impact of quality improvement projects and technology upgrades scheduled to take place during the term of the agreement. For example, a hospital planning to eliminate transcription and implement voice recognition should factor in forecasted turnaround time improvements as a result of the change when defining the target in the agreement with its radiologists.    

Expect radiologists to lead as well as read
Business development activities are of equal concern to hospitals and radiology groups, and this should be reinforced in the contract. While it is in the self-interest of radiologists to help the hospital gain market share (increased volume is the most effective way to offset declining reimbursement), they can be reluctant to invest significant time in practice-building activities. As accountable care organizations proliferate, the pressure to prevent referral leakage will mount, necessitating involvement by the radiology group in marketing activities. To encourage a high level of engagement in the hospital's marketing programs, the PSA should incorporate performance standards around volume growth, physician satisfaction and patient satisfaction. Radiologists must own the relationship with referrers, and incentives should promote good habits in this arena.      

It should also be the purview of radiologists to educate and evaluate the performance of technologists, define safety policies and assist the department director in improving daily workflow. Similar to practice-building, these activities provide mutual benefit to the hospital and radiology group because improved operational efficiency boosts revenues for everyone. Likewise, increased focus on safety also reduces malpractice liability for both parties. Incorporating key operational and safety oversight requirements in the formal position description for the chairman of radiology is one way to address this contractually with the group.    

Use inclusion to achieve buy-in
To increase radiologist commitment to the achievement of hospital objectives, it is essential to give the radiologists a "seat at the table," enabling them to truly understand and buy into the overall business goals. This may be accomplished through inclusion in hospital committees and participation in discussions about strategic planning, system performance and payer strategy. The challenge is that many radiologists won't participate willingly in non-revenue producing activities, expecting compensation for time spent on administrative tasks and projects. This stance, while counter-productive, is understandable given recent declines in radiologist income. The problem may be resolved by simply requiring committee participation in the PSA, or in some circumstances it may behoove the hospital to meet the group halfway and provide compensation for time spent on non-clinical activities. While rankling to some administrators, the investment may be worth it, considering how unlikely a disenfranchised doctor is to fully support the mission.  

Address health IT needs in the negotiation
Making it easy to do things right serves all parties to the relationship well. The hospital and radiology group should collaborate to select and deploy technology that promotes efficiency and quality, evaluating potential solutions such as voice recognition, radiation dose monitoring or decision support software. It is not enough for the hospital to consult with the radiology group about what to buy; when making technology investments there must also be shared accountability for successful implementation. Decision support software is a case in point. Designed to provide feedback to referrers at the point of order, decision support software in its native form relies on a relatively static matrix of ordering scenarios created by the American College of Radiology in its ACR Appropriateness Criteria®.  

While this represents an excellent starting place, some hospitals have concluded that decision support technology isn't optimal when deployed in a plug-and-play fashion. To get the most out of the system — and avoid backlash from frustrated referring physicians — the content can be  configured further ("localized") to work differently for specialists addressing clinical scenarios not accounted for in the ACR criteria. These types of content changes are necessarily driven by the collaboration between radiologists and hospital clinicians, and implementation of decision support should only be undertaken with commitment from the radiologists to develop the right protocols, educate referrers about the system and manage any referrer concerns. Expectations for participation in any large technology projects should be defined in the PSA to ensure everyone is on the same page about what will be required from the group.         

Tie compensation to performance
Determining whether the hospital will continue to supplement the compensation of the group beyond what they bill insurers is another challenging element of the negotiation. Radiology groups have traditionally enjoyed supplemental financial support in the form of stipends, office space, transcription and PACS/RIS, all paid for the hospital. Many contracts have also included hospital payment for preliminary reads during off-hours. Attempts to eliminate stipends and transfer operational costs back to the group will invariably be met with resistance given the downward trajectory of radiologist salaries, although large-scale national radiology groups that eliminate these fees have provided hospitals with more leverage to tackle this issue. Another solution is to re-allocate these dollars to fund the incentive components in the contract; in this approach the group can "earn it back," but only by delivering the targeted level of performance. The resulting boost in efficiency and volume may ultimately be more lucrative for the hospital than elimination of fees and stipends.        
Carrots are one way to change performance, but sticks may also be necessary. For example, what if the hospital agrees to tie incentive compensation to successful implementation of voice recognition but members of the group nearing retirement decide the learning curve is not worth it and simply choose not to do it? Losing incentive compensation may not be enough motivation in a case like this, so the hospital could include a contract provision stipulating that failure to implement voice recognition will obligate the group to employ its own transcriptionists, alleviating the expense for the hospital.       

This example highlights an important final principle, which is that in the contracting process, the hospital should always include viable options to deal with non-performance besides the ultimate penalty, non-renewal of the contract. If failure to perform is pervasive, there is ample opportunity to change groups. When considering this solution, leaders must be realistic about the costs involved in terminating the group's contract, particularly when working it out is an option within reach. In addition to any implementation fees charged by the new group, hospital leaders should also count on costs for IT integration, personnel to manage the project and marketing expenses to promote the new group. When contracting with a large national radiology group, it will be necessary to credential 15-30 radiologists to support a distributed reading model; the resources needed for this should also be factored in. Many hospital leaders find that it is ultimately less disruptive and far more cost-effective to assign some financial penalties to the existing group and then focus together on how to achieve the desired level of performance.             

There is no question that negotiation of a comprehensive and highly effective professional services agreement for radiology is both time-consuming and challenging. Given the complexity of issues involved, leaders on both sides must approach the process with equal measures of determination and patience. There will inevitably be areas of disagreement, and those involved in mediating these conflicts should recognize and factor in the value that a strong, mutually beneficial radiology partnership creates in terms of market competitiveness. When done correctly, the rewards of the final agreement are tangible for both sides, enabling the hospital to achieve excellent alignment with their physicians and the radiology group to retain its independence.

Ms. Yates is the founder of Accountable Radiology Advisors, a consulting practice that specializes in advancing the delivery of radiology services.  n her previous role she served as the chief quality and risk officer for a national radiology group of more than 150 physicians. Ms. Yates is one of the country's leading experts on radiology peer review and is a frequent presenter on standardized performance assessment and the transformation from volume-based to value-based reimbursement in radiology. She can be reached via email at

More Articles on Radiology Agreements:

Assessing the Value of Radiologist Services with an Imaging Center Acquisition

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