What CEOs Need to Know about the Business of Diagnostic Imaging

2017-04-11
 

Imaging makes significant contributions to a health system’s success in many different areas, including but not limited to: revenue generation; patient satisfaction; costs for services (both within the imaging department and across the wider care team; e.g. Emergency Department wait times); population health management; and patient outcomes. However, imaging leaders are frequently not involved in broader health system strategic discussions and are not exposed to the key health system metrics and reimbursement details.

Lea Halim, Senior Consultant of the Imaging Performance Partnership, recently published an analysis of what CEOs need to know about imaging services in order to help explain why and how imaging leaders should be involved in strategic planning and decisions for the health system. Here are four key takeaways from her findings:

1. Imaging is a Larger Part of the Health System than Most Realize

70 to 75% of patients referred to a hospital received imaging services. Virtually every department in a hospital deals with imaging in some capacity. This means that when your health system invests in clinical services like oncology, there’s a need for imaging investments as well. Given the way imaging affects the rest of the health system, it makes sense to bring your imaging director to the table when determining your strategy.

2. Imaging Is a Major Contributor to Profit Margin – But it is in the Crosshairs

Imaging reimbursement is directly in the line of fire from two separate government initiatives. Medicare is cutting reimbursement for some services and has begun bundling other services together. Private payers have been following this approach as well. In addition, a Congressional mandate has CMS scheduled to move new outpatient facilities into the physician fee schedule. Outpatient services are a major growth avenue for imaging, so the effect of this change is likely to increase over time.

This reduction in reimbursement is challenging for health systems because imaging comprises over a third of hospitals’ profit margin. CEOs will need to anticipate a decline in imaging revenue, and work with imaging leaders to manage costs and preserve imaging’s contribution.

3. Imaging can be Critical for Managing Population Health

The move toward managing population health in an effort to control risks and costs has made imaging a target for utilization management. Health systems have marginalized imaging’s role in the organization by focusing on a reduction in unnecessary imaging exams.

However, imaging leaders have for years worked on improving the utilization of their assets and have been implementing clinical decision support systems to ensure appropriate use criteria is identified when imaging orders are placed. Therefore, imaging can have a large positive impact on a health system’s population health strategy.Imaging departments can take the next step by improving care coordination with effective screening programs and championing the development of enterprise imaging strategies and solutions.

4. Interventional Radiology is an Underappreciated Growth Opportunity

In a value-based care paradigm, procedures that can lead to better patient outcomes at a lower level of care utilization are particularly valuable. Interventional radiology procedures are imaging-guided and minimally invasive. As such, they tend to have fewer complications and a net reduction in health system utilization compared to surgical interventions.

It takes an investment of time and resources to develop an interventional radiology program. Such a program needs its own physical space, may require specialized equipment, and definitely requires radiologists who specialize in interventional radiology. Given the potential however, it may be an investment worth making.

As CEOs of health systems are increasingly called on to control costs, it’s crucial to fully understand imaging’s place as a major driver of revenue and how the effectiveness of imaging operations can lead to greater efficiencies for the whole health system.

To learn about the advantages of an enterprise-wide approach to imaging, read Beyond Imaging: Key Components for a Holistic Enterprise Imaging Strategy.

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