Hospitals, too, require DRA strategy
There’s no doubt that enactment of the Deficit Reduction Act of 2005 (DRA) in January this year has significantly impacted the business operations in the freestanding diagnostic imaging center market. Although hospital-based imaging practices may be enjoying a moment of schadenfreude at the upheaval in the outpatient center space, chances are that they are the next target for reimbursement reduction by the Centers for Medicare and Medicaid Services (CMS).
“Because hospitals charge and receive better [imaging] reimbursement than their freestanding competition, CMS and other mega payers have hospital reimbursement in their sights,” said Bob Maier.
Maier, president and chief executive officer of Brentwood, Tenn.-based consulting firm Regents Health Resources, delivered a presentation on strategies to minimize losses from the impact of the DRA at the American Healthcare Radiology Administrators (AHRA) annual conference in Orlando, Fla., on Tuesday morning.
He advised administrators of hospital imaging departments to not become complacent with the reimbursement status quo; but rather to take proactive steps now to put their business in order prior to forthcoming payer cuts. Maier outlined 11 steps that diagnostic imaging practices can take to minimize the impact of reimbursement reduction.
The first step is to educate and involve C-level (chief executive officer, chief financial officer, etc) executives in the institution as well as the facility’s marketing director and diagnostic imaging leaders about the potential impact of reimbursement cuts as well as suggested mitigation strategies. Maier emphasized that the importance of having executive champions on board a project.
“You will need their support and their resources,” he noted.
The next step Maier advocated is to conduct a department-wide assessment. This includes evaluating technology needs and budgets, re-bidding service contracts (where possible) and quantifying savings, evaluating staffing and productivity targets, and analyzing resource and capacity limitations.
Once the operational data has been collected, an administrator will need to conduct a strategic planning sessions with the department’s physicians on issues and strategies to consider and purse, Maier said.
If a facility has investments in independent diagnostic testing facilities (IDTFs) or joint venture structures in physician-owned diagnostic imaging centers it may be time to restructure the IDTFs, or consolidate the joint ventures, in order to increase market share, Maier suggested.
As part of a fiscal checkup on the department, he suggested that the imaging manager perform a financial analysis to identify the group’s cost per procedure as the fifth element in reimbursement cut preparation. This will provide data on which costs and revenues are out of alignment with industry standards, Maier told the AHRA attendees.
Good business practice also includes a market analysis by modality across the U.S. Postal Service zip codes serviced by the practice. This step will help the practice understand its market share by geographic service area as well as identify places for growth opportunity.
Surveying patients and referring physicians on an on-going basis (quarterly, bi-annually, or at least annually) provides the imaging department with feedback on its strengths and weaknesses from two of its most important customer bases.
Maier’s eighth step is to develop a marketing plan that promotes the strengths and service differentiators of an imaging group.
Once a manager has a thorough knowledge of their imaging department’s fiscal and service-level assets and vulnerabilities, the ninth step in preparation for revenue reduction is to assess competitors’ strengths and weaknesses. This provides the capability for one-on-one comparison across service lines and allows for strategic adjustments to be made, Maier said.
Consolidation is the advice Maier gave the audience for his penultimate step in loss-minimization strategies.
“Consider acquiring competitors imaging centers to expand your market share,” he counseled.
Lastly, he suggested that every hospital-based imaging service develop a medical imaging strategic plan in order to deal with oncoming revenue reductions from private and government payers.
“Take action now,” he warned, “or you will start losing market share to your competitors.”
“Because hospitals charge and receive better [imaging] reimbursement than their freestanding competition, CMS and other mega payers have hospital reimbursement in their sights,” said Bob Maier.
Maier, president and chief executive officer of Brentwood, Tenn.-based consulting firm Regents Health Resources, delivered a presentation on strategies to minimize losses from the impact of the DRA at the American Healthcare Radiology Administrators (AHRA) annual conference in Orlando, Fla., on Tuesday morning.
He advised administrators of hospital imaging departments to not become complacent with the reimbursement status quo; but rather to take proactive steps now to put their business in order prior to forthcoming payer cuts. Maier outlined 11 steps that diagnostic imaging practices can take to minimize the impact of reimbursement reduction.
The first step is to educate and involve C-level (chief executive officer, chief financial officer, etc) executives in the institution as well as the facility’s marketing director and diagnostic imaging leaders about the potential impact of reimbursement cuts as well as suggested mitigation strategies. Maier emphasized that the importance of having executive champions on board a project.
“You will need their support and their resources,” he noted.
The next step Maier advocated is to conduct a department-wide assessment. This includes evaluating technology needs and budgets, re-bidding service contracts (where possible) and quantifying savings, evaluating staffing and productivity targets, and analyzing resource and capacity limitations.
Once the operational data has been collected, an administrator will need to conduct a strategic planning sessions with the department’s physicians on issues and strategies to consider and purse, Maier said.
If a facility has investments in independent diagnostic testing facilities (IDTFs) or joint venture structures in physician-owned diagnostic imaging centers it may be time to restructure the IDTFs, or consolidate the joint ventures, in order to increase market share, Maier suggested.
As part of a fiscal checkup on the department, he suggested that the imaging manager perform a financial analysis to identify the group’s cost per procedure as the fifth element in reimbursement cut preparation. This will provide data on which costs and revenues are out of alignment with industry standards, Maier told the AHRA attendees.
Good business practice also includes a market analysis by modality across the U.S. Postal Service zip codes serviced by the practice. This step will help the practice understand its market share by geographic service area as well as identify places for growth opportunity.
Surveying patients and referring physicians on an on-going basis (quarterly, bi-annually, or at least annually) provides the imaging department with feedback on its strengths and weaknesses from two of its most important customer bases.
Maier’s eighth step is to develop a marketing plan that promotes the strengths and service differentiators of an imaging group.
Once a manager has a thorough knowledge of their imaging department’s fiscal and service-level assets and vulnerabilities, the ninth step in preparation for revenue reduction is to assess competitors’ strengths and weaknesses. This provides the capability for one-on-one comparison across service lines and allows for strategic adjustments to be made, Maier said.
Consolidation is the advice Maier gave the audience for his penultimate step in loss-minimization strategies.
“Consider acquiring competitors imaging centers to expand your market share,” he counseled.
Lastly, he suggested that every hospital-based imaging service develop a medical imaging strategic plan in order to deal with oncoming revenue reductions from private and government payers.
“Take action now,” he warned, “or you will start losing market share to your competitors.”