The key to success in outpatient imaging is the ability to win over referring physicians.

Chris Christenberry

One of the most memorable commercial taglines came in the 90s from automotive oil filter maker Purolator. The mechanic states, ?You can pay me now or you can pay me later!? If hospital CEOs would have heeded the 90s advice at the time, the outpatient market would have a much different landscape today.

The Purolator pitchman?s advice popped to mind as I recently spent time with a hospital CEO. The CEO reminisced about how his six hospitals and four imaging centers used to control the outpatient market. He guided me to his window and pointed out four competitive imaging centers, two competitive surgery centers, and a competitive cancer facility, all of which have slowly taken significant market share from his hospital. ?How?? I enquired. He explained that his hospital system became enamored with its size while competitors slipped into the market and ?sold? doctors on their benefits.

It appears that the hospital system had at one time everything going for it. The system owned six state-of-the-art hospital facilities surrounded by outpatient facilities feeding its hospitals. Times were good. Unfortunately, non-hospital-owned competitors brought radiology centers with improved patient response and new equipment. Competitive surgery centers offered referring doctors more control and revenue from their patients. Even the cancer center treated patients in a friendly environment backed by revolutionary equipment. Each competitor added was a successful campaign targeting referral physicians.

I asked the CEO, ?What should you have done to keep your outpatient advantage?? He explained that the hospitals had invested heavily in technology over the years. He mentioned how the hospitals tried to leverage their insurance carriers with exclusivity. He showed me some of the patient advertising touting the pristine reputation of service. He even explained the recent trend to ?purchase physician practices.? He confided to me that despite all these tactics, the competitors ?simply outmarketed us!?

The data confirms his observation. A paper by Levin et al, published in February 2009 by the Journal of the American College of Radiology, observes the tremendous growth of noninvasive radiology centers in the United States. In the years between 1996 and 2006, radiology moved predominantly from inpatient to outpatient. Outpatient facilities often offered better technology and improved patient satisfaction. While the study did look at self-referral trends by nonradiologists, it also warned that if hospitals want to maintain market share to outpatient facilities, ?they need to increase their capacity and market it actively to referring physicians.? Revealing is the recognition that outpatient success is due to its exceptional ability to convince decision makers?the referring physicians?to send patients.

Interestingly, my discussion with the CEO moved to marketing. He conceded that his best solution could be to use skilled relationship salespeople to convince referring physicians to use the hospital?s services. He explained how difficult it is to convince the board to say the word ?sales,? let alone build a sales team. He explained his difficulty in finding the right people, training the team, and gaining acceptance by his staff. Yet he seemed assured this was the answer.

The Purolator advertisement?s longevity was due to the wisdom of its message: Failure to make the proper decisions in the near term leads to costlier decisions in the long term.

It appears the CEO faces the challenges of building a sales force today without the revenue stream that once his hospital system enjoyed. Would it not have been wiser years ago to use the resources of almost every industry in the world and even his competitors? Would not the implementation of a professional sales force been more effective in combating the erosion of market share and precious outpatient revenue had the CEO simply executed a strategy similar to that of his competitors? The advertisement?s message rings true, ?You can pay me now or pay me later.?

Chris Christenberry has more than 25 years of experience in health care in both the United States and Europe. He is CEO and president of Atlantic Health Solutions, which provides operational, financial, and sales leadership for outpatient radiology and oncology facilities.