Rising Silver, Petroleum Costs Impact Price of Film
Most ER Visits Incur Imaging Costs
Baylor Achieves ROI on VR in Less Than a Year
Rising Silver, Petroleum Costs Impact Price of Film
By Renee DiIulio
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Those still debating digital imaging might now be inspired to take the plunge. In mid-March, the Eastman Kodak Co’s Health Group, Rochester, NY, announced double-digit price increases on all of its medical-imaging films and related supplies. Because costs vary around the world, Kodak declined to release any specific figures.
The move is unrelated to Kodak’s announcement that the company has retained Goldman, Sachs & Co to explore strategic alternatives for the Health Group. Antonio M. Perez, Kodak’s chairman and CEO, said, “Although the Health Group shows strong organic growth in elements of its digital portfolio, such as digital capture solutions and health care information solutions, we have been observing for some time consolidation in this industry. Given our valuable assets and the changing market landscape, we feel that now is the time to investigate strategic alternatives.”
These alternatives are broad and could include a sale, though a company spokesperson noted that partnerships and joint ventures are possibilities as well. Essentially, Kodak is looking to increase sales; the corporate goal is to be among the top three in its markets. According to the spokesperson, the increase in film rates played no role in the decision.
The film price increases are related to the rising costs of raw materials, particularly petroleum and silver. According to Michael Barrett, VP and general manager of radiology systems worldwide for Kodak’s Health Group, the high price of oil affects both transportation and manufacturing costs. “Petroleum is a principal component of polyester…all film sits on a base of polyester,” he said.
Silver is similarly important. “For the better part of 100 years, [silver halide] has been the principal component in any film,” Barrett said. A limited supply, combined with rules for a new market as well as speculation, has caused the price of silver to climb. “For 20 years or more, silver was a boring commodity. It vacillated between four and five dollars an ounce,” Barrett noted. This year, its price has risen to more than $14 an ounce.
Film, however, is a small portion of the cost of an analog x-ray. “The majority of the cost is associated with labor,” Barrett said. Subsequently, he does not expect a proportional rise in the cost of x-rays to payors.
“A 10% increase in film would not mean a 10% increase in the cost of an x-ray,” Barrett said, but noted that where physicians can raise rates, such as in private practice, they will. In settings with preset schedules, new rates must be negotiated, according to Barrett.
However, reimbursement for radiographs leave very little, if any, margin. Customers still using film could decide to transition to digital systems. “[We have] customers who have not yet gone digital because the value proposition has not been good enough,” Barrett explained, adding that he expects the price changes “will cause that group to go filmless faster, primarily because they can avoid the raw material cost increases.”
With continued increases over time, fewer groups will continue to want to use film, creating upward pressure on film prices. As less film is used, profits will no longer cover the cost of maintaining film production facilities, and excess capacity will have to be restructured.
“Those still using film will see even more increases,” Barrett said, adding that it is not an evil plot on the part of manufacturers, who have found film profitable for years. “We wouldn’t mind selling film forever. We like film.” Unfortunately, as it becomes more expensive, radiology administrators are likely to find that they don’t.
Most ER Visits Incur Imaging Costs
Roughly 14.1% of US adults visited the emergency room for treatment in 2003, according to the Health and Human Services Agency for Healthcare Research and Quality Medical Expenditure Panel Survey (MEPS). This number is a concern for policymakers, who are looking out for cost as well as overuse and inappropriate use of the nation’s emergency rooms—particularly in cases where people have limited access to other ambulatory care. Other MEPS findings:
- 64% of ER visits required sonograms, x-rays, CT, MRI, laboratory work, or other special services, with an average expense of $637 per visit.
- 29% of ER visits did not require surgery, tests, or other special services, with an average expense of $302 per visit.
- 7% of ER visits involved surgery, with an average expense of $904 per visit.
- $29.3 billion was spent by private insurers, Medicare, Medicaid, patients, and other miscellaneous sources on emergency room care in 2003.
Source: MEPS Statistical Brief #111: Expenses for a Hospital Room Visit, 2003. January 2006. Available at: meps.ahrq.gov/papers/st111/stat111.pdf. Accessed May 18, 2006.
Baylor Achieves ROI on VR in Less Than a Year
Dana Hinesly
The ever-improving performance of voice recognition (VR) software prompted Baylor University Medical Center, Dallas, to adopt the technology. What confirmed the decision was the impressive and rapid return on investment (ROI) that the facility realized.
“We recouped our capital investment in less than a year, and our current monthly operating cost is about a fourth of what it was before,” said Jean Plummer, manager of radiology informatics at the Medical Center, where staff performs an average of 300,000 imaging examinations each year. Monthly operating costs include transcription services (both in-house and outsourced) as well as maintenance fees for vendor support for the VR system.
Baylor administrators began investigating vendors in 1997; although they decided against VR at the time, they were sufficiently intrigued to follow its development. In the interim, the facility wrestled with the decreasing availability of medical transcriptionists.
By 2001, 60% to 70% of the radiology transcription was being outsourced, at which time the organization decided that the radiology department would be the first area to begin using VR.
“We wanted to get those reports to the ordering physicians in a more timely fashion by decreasing both turnaround time and the amount of outsourcing required for transcription services,” Plummer said. “We also wanted to be able to reallocate our in-house transcriptionist to areas not yet using voice recognition.”
In the summer of 2003, a small outpatient imaging center was the first to convert, followed by the Medical Center in January 2004. Installation costs totaled less than $400,000, including all hardware, software, and implementation services.
Today, users are given the option to dictate, edit, and sign reports in one sitting, or they can dictate in a more traditional manner and forward the document to an editor. Baylor had 75 radiologists, residents, and fellows on staff when the conversion took place, some more eager than others to adopt the new technology. According to Plummer, the first on board were those with shorter reports.
“They were using a traditional dictation system before, which didn’t interface with any other system, so radiologists had to dictate all the patient demographics in addition to the body of the report,” she explained. Baylor’s VR solution is integrated with the picture archiving and communications system (PACS) and radiology information system (RIS), so when physicians open the image, it automatically provides patient information. “One radiologist who does strictly plain film diagnostics told me he spent more time dictating demographics than the body of the report,” Plummer recalled. “He said not having to dictate demographics saves him hours every day.”
Clinicians whose reports were more complicated did experience an initial increase in report time as they became accustomed to the new process; however, adoption continues to improve.
“We started out with about 60% of reports being done using the self-correct mode, and we are now at more than 80% self-correct,” Plummer said, adding that she credits the change, in part, to growing familiarity with the system, along with the use of templates and macros that allow physicians to drop in blocks of “prepared” text. These types of shortcuts eliminate the need to repeat boilerplate copy for each report, such as “normal” text for a standard examination.
Plummer also believes the adoption rate is due to increased demand from the referring physician community.
“Those images are out there, and they know it,” she said. “The paradigm used to be, ‘I sent my patient 3 days ago; where’s my report?’ It has become, ‘I’ve seen those images online for 30 minutes; where’s my report?’ There is an extreme amount of pressure to get those reports out very, very quickly—and we do that.”
Prior to installation, it took several days to deliver reports. Currently, 40% of the Medical Center’s reports are signed within 5 minutes of being dictated, and 80% are signed in less than 4 hours. The complete cycle time—from examination to report delivery—averages 4 to 5 hours.
In addition to financial rewards from VR, Plummer witnessed an improvement in the working conditions for Baylor’s radiologists. “It really makes the radiologists’ job a little cleaner, and they’re not getting all the interruptions they had before from people looking for reports,” she said. “Now, by the end of the day, everything that was done that day is reported and back out to the referring physicians, so [the radiologists] can go home and forget about work.”
Having demonstrated success in radiology, VR technology will be distributed throughout the organization eventually. It currently is in use in Baylor’s hyperbaric oxygen department, and meetings are taking place to determine the role it might play in the outpatient clinic.
