Equipment Maintenance Programs: A Transparent Alternative
AMGA Data Reveals Increased Compensation for Most Specialties
Practice Software Solution Offers EMR Efficiency in the Front Office

Equipment Maintenance Programs: A Transparent Alternative

As hospitals and freestanding imaging centers alike look for ways to cut costs, an alternative to contracting with original equipment manufacturers (OEMs) for maintenance has emerged. Some companies offer comprehensive equipment maintenance programs (EMPs) that are priced based on equipment type and rate of usage, offering a savings of as much as 20% over the total cost of working with OEMs.

“We have quite a few customers in the imaging segment, and they’re telling us that everyone’s looking for ways to control costs,” explains Tina Reese, business development manager at The Remi Group, Charlotte, NC, a company offering equipment maintenance insurance and solutions. “Before some folks learn about [EMPs], they skip over that line item when they’re looking at their operating expenses. They consider it a set cost. They don’t realize that they might be able to negotiate a lesser rate for the same service, administered in a different way.”

EMPs came up at the June 4–7 Annual Meeting of the Radiology Business Management Association (RBMA) as a way to save costs in light of the Medicare reimbursement cuts prescribed by the Deficit Reduction Act of 2005. But vendors are secretive about the amount they actually spend annually on equipment maintenance, offering customers very little sense of whether they are receiving sufficient return on their investment. “If you speak with OEMs, they will tell you, in most cases, that they are not making a lot of revenue off new equipment sales,” Reese says. “The majority of their revenue comes from service agreements. Otherwise, why would they offer comprehensive maintenance agreements? There’s a reason for that.”

The difference between an independent EMP and a vendor-offered comprehensive maintenance agreement, Reese explains, is that EMPs offer complete transparency. “Let’s say a physician group has an MRI from GE Healthcare,” she suggests. “GE still comes out and does the service. But what Remi does is handle the administrative side of it. We also keep track of all [of a facility’s] costs, so that at a future date, the facility can see exactly how much it has paid us to maintain that particular equipment. But they also can see how much we’ve paid out. What we’re doing is attacking that built-in profit margin of an OEM service agreement.”

Another key difference between an EMP and a multivendor service agreement is choice. “We allow the flexibility to use any vendor that the provider wants to service the equipment,” Reese explains. “With the multivendor agreements, the OEM is going to dictate who provides it. And the OEM also is not going to share with the health care provider how much it is actually spending to maintain the equipment. All the health care provider is going to know is how much it paid the OEM.”

Reese’s company insists that there is no degradation in maintenance quality from refusing to contract directly with an OEM. “[The OEM is] still going to get time and materials,” Reese says. “The OEM would love to have a service agreement, but if it is not going to have an agreement, at least it will be paid for every hour that it comes and works on that piece of equipment.”

The Remi Group bases its pricing on the types of equipment covered and how frequently each item is used. “We do an annual agreement for a set portfolio of equipment,” Reese explains. “And then, if a facility wants to add pieces of equipment at any time, it can. Or let’s say it’s a piece of equipment that the facility is going to transfer to a different location, or it has surpassed its useful life, and the facility doesn’t want to do maintenance on it. The facility just sends us the information, and we take it off the policy. And the facility can do that anytime, not just annually.”

EMP Providers

A final advantage to an EMP, Reese says, is that it can ease the transition to managing equipment maintenance in-house. “It’s an interim step for a lot of organizations between being fully dependent on an OEM and going self-insured, where they take all the risk themselves,” she notes. “This is the step in the middle, where the facility wants to wean off that program, but it doesn’t know what its costs are. Let’s say the facility has been paying an OEM $1.8 million for maintenance. Does it need $1.8 million in its reserves to be self-insured, or has it cost only $500,000 to maintain that equipment, so $500K is all the facility needs to reserve? Facilities can become the most educated consumers of those services.”

Cat Vasko is associate editor of Axis Imaging News. For more information, contact .

AMGA Data Reveals Increased Compensation for Most Specialties

A 2006 report from the American Medical Group Association (AMGA), Alexandria, Va, on physician compensation and productivity, based on 2005 survey data, reveals that pay is on the rise for 89% of specialties, including radiology. The report survey was sent to more than 2,600 medical groups, and responses were received from 218 groups representing close to 35,000 physicians. Data for radiology was based on responses from 63 groups representing 965 providers. Most responses (47) came from groups with more than 100 members. Overall, 83.9% (183) of responses came from multispecialty groups. Only 16.1% (35) of responses came from single specialty groups.

Gross Productivity (mean) Work RVUs (mean) Compensation-to-Productivity Ration (mean)
Diagnostic Radiology (Noninterventional) 2,094,775 7,843 24.4%
Diagnostic Radiology (Neurointerventional) 1,716,399 3,312 21.2%
Diagnostic Radiology (Interventional) 2,076,967 9,428 27.2%

Data from the American Medical Group Association Medical Group Compensation & Financial Survey 2006 Report Based on 2005 Data.

Productivity, which was calculated based on median work relative value units (RVUs), increased between 2.5% and 3.5% for most specialties; interventional radiology saw productivity increase 4.28%, while noninterventional decreased 1.41%. Interventional radiology’s pay raise almost matched its productivity increase, at 3.59%; noninterventional radiology, on the other hand, saw a 9.62% rise in compensation.

The average salary of an interventional radiologist in 2005 was $424,992, with the average salary of noninterventional radiologists trailing slightly at $400,000. (The highest-paid specialty was cardiac/thoracic surgery at $470,000.) According to data submitted, the salary of a noninterventional radiologist reflects an increase of 26.98% since 2002; interventional radiology increases were more modest, at 5.98% since 2002. Both subcategories of radiology also reported steep increases in charges over the past 3 years, with interventional showing a 26.75% increase and noninterventional a rise of 24.09%, suggesting that the productivity increases may have been underestimated.

The compensation-to-productivity ratio measures productivity in terms of total professional fees billed. The mean compensation-to-productivity ratio for noninterventional radiologists was 24.4%; the mean ratio for neurointerventional radiologists was 21.2%; and the figure for interventional radiologists was 27.2%.

Another interesting feature of the study was the average work RVU figure. Noninterventional radiologists were reimbursed $57.17 per RVU; neurointerventional radiologists received $48.71; and interventional radiologists made $56.24.

According to the AMGA, “The annual compensation of the physician is based on the current compensation rate plus any deferred compensation, tax deferred annuities, and any anticipated cash distributions during the next 12 months based on prior year performance, but excluding any payments under the normal retirement, pension, or profit-sharing plans.”

Practice Software Solution Offers EMR Efficiency in the Front Office

GE Healthcare, Waukesha, Wis, recently announced the launch of its Centricity Practice Solution, a software package encompassing an electronic medical record (EMR), a practice management platform, and an electronic data interchange system. The different electronic management solutions are designed to interface seamlessly, offering a centralized framework within which practices can manage clinical and financial data.

Southern Colorado Clinic, Pueblo, Colo, was a beta site for Centricity Practice Management and has just brought the Centricity EMR online. “We can do things with the billing system that we only dreamed of with our old system,” says Mark Potzler, MD, the clinic’s president. “The ability to get our payments back from most carriers within 9 days is just tremendous. We can track our accounts receivable to know where our money is and to make sure that if an error is being made somewhere, we know almost immediately. With our collections module, we’re now able to track who’s working on what in our billing department. All that has been a great advantage.”

Although Potzler hopes to see major time efficiencies once the EMR is fully integrated, he says the practice management component of the Centricity solution is already improving day-to-day operations at the clinic. “We have less people doing the same job,” he says. “Coordination is improved, and the ability to do more than one task is definitely improved. And our ability to track the person who is doing that task is improved also.”

Ray Martinez, director of IT initiatives at the clinic, is equally enthusiastic. “The Centricity product really pulls in and captures all of the data pockets within the office environment, including practice management, EMR, lab, PACS information, and more,” he says. “All of the outlying patient data is now going to be centralized. And for us, to grow into that situation is going to be key to our efficiency and, of course, to the services that we provide our patients.”

Potzler sees the solution as potentially very useful as carriers begin to move toward pay-per-performance stratification. “Part of the reason we bought the system is that we’re assuming that we’re going to be on a pay-per-performance system soon; everything we need to go back to the insurance company and show that we meet all of their criteria, we’ll have. We look forward to that. We’re also looking to get all our images into a PACS and interface with the lab. Hopefully, this will make things as seamless as possible.”

—C. Vasko