The coming year promises great challenges for medical imaging practitioners in the U.S., particularly in light of double-digit reimbursement cuts almost across the board for diagnostic imaging procedures performed on Medicare beneficiaries. What is already a competitive landscape for freestanding diagnostic imaging centers may become downright cutthroat as facilities fight for their fiscal survival.
With the new year fast approaching, imaging center administrators will want to revisit their operations from a strategic perspective, both to provide top-quality patient care and to establish their facilities as the preferred provider of imaging services to their referring physician base, according to Bob Maier, president and CEO of Brentwood, TN-based radiology services management firm Regents Health Resources.
Maier discussed his experience with critical success factors in diagnostic imaging with attendees at the 2006 Radiology Business Management Association (RBMA) fall educational conference in Phoenix.
"Being forearmed with knowledge avoids crisis management," he said.
Maier listed six strategic elements for medical imaging success:
- Operational assessment
- Market and competitor analysis
- Financial analysis and goals
- Customer service standards
- Service and product differentiation
- Marketing and communications plan
"Each of the strategic elements is made up of several critical success factors, without which the goals cannot be accomplished," Maier said. "These must be approved and committed to by your stakeholders if your plan is to be successful."
Operational assessment
An operational assessment is a process to scrutinize the fundamentals of the imaging center business. It consists of an evaluation of work flow, patient processes, reporting, facilities, and technology, Maier said. In addition, the three biggest elements for referrers -- scheduling, preregistration, and order entry -- should be carefully examined for ease of use and expediency.
"Some facilities conduct 'secret shopper' analysis of their locations," he noted.
Staffing is another important area for operational assessment. Maier recommended adding staff in areas that can make technologists more productive and increase daily throughput, such as a CT assistant to handle patient preparation. Eliminating or redeploying unnecessary staff as soon as possible makes good business sense, as does establishing protocols that eliminate exam room downtime while waiting on radiologists to review exams.
The technology operational assessment has five critical elements. Maier suggested an equipment capacity analysis to determine the cause for backlogs at a location or to spotlight the need for additional equipment. He advocates getting rid of equipment that is no longer productive, and adding only equipment that increases revenue or productivity. By meticulously examining its technology, a facility will be able to eliminate unnecessary service contracts. On a fiscal note, Maier advocated eliminating or refinancing technology debt to minimize overhead costs going forward.
The final pieces of an operational assessment consist of analyzing turnaround time, reporting, and sign-off. The assessment should enable an administrator to pinpoint bottlenecks in facility operations that inhibit growth or increase turnaround time. As each critical factor is uncovered during this process, a manager will want to develop a plan to correct and monitor any deficiencies, he said.
Market and competitor analysis
Knowing your market demographics, as well as the strengths and weaknesses of competitors, provides reference points for establishing strategic and tactical goals, Maier said.
Market demographics and growth forecasts for a region should be analyzed by ZIP code and modality placement, he suggested. This will enable a practice to understand its market share capture rate, and help identify target locations for marketing or new facilities.
Most important, a market and competitor analysis can provide a group with the knowledge of where referring physicians send their patients and why they send them there. This information can be used to define realistic goals for improving services and increasing market share, Maier noted.
Financial analysis and goals
Going after the money in an era of drastically decreased reimbursement is a business imperative. The first step is to conduct a financial analysis for each location by modality, so that you can understand what your unit cost per service is, Maier said.
A practice will also want to evaluate its financial management information system to ensure that it is capable of producing quality reports that aid in the group's decision-making.
"Develop 'what if' scenarios and financial models to consider the impact of reimbursement changes," Maier said. "What happens if your non-Medicare payors are going to discount their services? How much of that can you sustain before you start operating at a loss or a negative cash-flow situation?"
Asking these questions enables a group to understand which payors are going to have a material financial impact on the bottom line, according to Maier. Other factors that a practice should consider are its pricing strategy, such as how its pricing compares to that of its competitors, and what steps it can take to minimize its patients' out-of-pocket costs.
A well-run imaging center will know its net revenue and cost per procedure of its entire service line, Maier said. This enables management to set realistic and obtainable goals for improving financial performance.
Customer service standards
Perception is not necessarily reality, except when it comes to a practice's referring physicians and patients. Maier recommended that imaging managers conduct surveys and interviews of their referrers and the practice's patients to gain an understanding of their perceptions of the facility's services.
By conducting these surveys, administrators can discover patient and physician needs and dissatisfactions, as well as learn what their customers perceive as the group's strengths and weaknesses. It also enables the practice to build customer profiles of all its referrers to target services and strategies toward the appropriate referring physicians and patients, Maier said.
"Don't leave the radiologists out of the customer service standards," Maier said. "There should be established service standards for all staff and radiologists."
Service and product differentiation
"Service and product differentiation define those benefits of your center or practice which your competitors cannot easily duplicate, and provides a competitive advantage in your market," Maier said.
For example, a practice can tout its subspecialty radiologists, its two-hour report turnaround time, its technology capabilities such as Web-accessible images and reports, or its lower price point for out-of-pocket patient expenses, he noted.
The operational assessment and market and competitor analysis enable a group to understand its strengths and weaknesses, as well as those of its competitors. This, in turn, provides it with the competitive information necessary to bolster and market the practice's differentiators to its customers.
Marketing and communications
Once an imaging center has identified its target audience, including patients and nonreferring physicians, it has to develop and implement a marketing and communications plan.
"All of this (analysis) doesn't communicate appropriately unless you've got a marketing plan," Maier said. "You have to have a means of letting your customers know exactly what services you're providing, why your services are better, and what you're going to do to gain their business."
The stakeholders in the practice must come to agreement on what constitutes a realistic marketing budget, he said. Once this is accomplished, marketing platforms for reaching the prospective customer base -- patients, referring physicians, and payors -- need to be identified.
At a minimum, Maier recommended that a practice develop an educational and interactive Web site, and create effective collateral materials for all elements of its prospective customer base.
No matter how minor or major the goals identified through strategic analysis and assessment, their progress needs to be monitored, Maier said. He urged managers to create a strategic element dashboard to monitor and measure performance and progress of critical factors.
This dashboard should be checked daily, weekly, and monthly, and measurements and goals need to be clearly communicated to the staff and radiologists. Weekly progress meetings can identify, address, and correct areas of concern before they reach the crisis stage. They also provide the opportunity to recognize best practices and strategies in their earliest phase, enabling their rapid adoption across the business.
"Each of these six elements will contribute to your knowledge base as to how you operate your practice," Maier said. "They help create the goals you need to rally the troops to achieve a higher level of operational and financial success. They will become the standards by which you will measure progress."
By Jonathan S. Batchelor
AuntMinnie.com staff writer
December 8, 2006
Related Reading
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Billing analysis makes dollars and sense, November 17, 2006
Revenue cycle review helps imaging centers face challenges to come, August 25, 2006
Increase image reimbursement with a designated coder, August 7, 2006
DRA 2005 in practice: Where the rubber meets the road, April 27, 2006
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