The radiologist shortage, the proliferation of RVUs, and even Wall Street say all systems are go for outsourced radiology.

For many, 2007 will be a watershed year in radiology. On the positive side, there continue to be enhancements in technology (hardware and software) to improve physician efficiency and productivity, thus facilitating the provision of high-quality care and service to our constituents. This perspective must be balanced against the triumvirate of reductions in reimbursement, rising costs, and the ever-present specter of a malpractice crisis. The consequences of the Deficit Reduction Act of 2005 (DRA) remain to be sorted out.

While freestanding imaging centers will bear the brunt of DRA-related reimbursement cuts, hospital-based radiology practices remain vulnerable to the vagaries and long-term trends of providing 24/7 coverage for inpatient imaging services and studies performed through the emergency department. The well-documented rise in the use of newer imaging modalities and the concomitant increase in radiologist RVUs pose problems for all involved. The expectation to provide timely diagnoses requires near instantaneous conveyance of results. The approach many practices employ involves the outsourcing of these studies for preliminary interpretation. This service has been embraced by referring physicians and radiologists, with a commensurate rise in the use of this service and a lower threshold for referrers when contemplating ordering studies off-hours. There is no indication that this trend will be reversed or even slowed. Many project double-digit growth evidenced by the expansion of the use of preliminary interpretations during conventional working hours for practices without sufficient on-site radiology resources. Businesses providing off-site interpretations are marketing final interpretations during working hours and off-hours. As a growth industry with favorable earnings, outsourced radiology’s access to capital—both public and private—is likely to fuel additional growth with yet unrealized implications at the practice level.

What does this mean for radiology practices and radiologists? The answer lies in a myriad of facility-specific factors. Hospital-based practices are beginning to realize that conventional opportunities based on long-standing assumptions about reimbursement and cash flow may no longer be valid. Recruitment and retention of radiologists continue to be problematic as salaries rise to a level that, for many, cannot be sustained. Hours of coverage, access to subspecialty expertise, and a rise in the number and the complexity of cases are placing inordinate strain on practices regardless of geography and venue.

The following financial and operational challenges must be met:

  1. Strike a balance between the migration of revenue from the practice to providers of these services and financial stability within the practice.
  2. Assess the true costs related to interpretation of a given study within a practice. Practices large and small may be unable to recruit or retain highly paid specialty radiologists. If the average cost of interpreting an MRI (or any study, for that matter) is less for outsourcing the study, it may make sense for practices to look to this option on either a temporary or permanent basis.
  3. Consider outsourcing of radiology services as an alternative to locum tenens options currently costing in excess of $2,000 per day when quality and/or productivity come into question.
  4. Create a more cogent strategy regarding the provision of these services when needed, and limit utilization for times when capacity permits the practice to provide services more quickly and in a more cost-efficient manner.
  5. Reevaluate the options available, exploring both internal and external means as a financially sound alternative.
  6. Assure that radiology partners contracted to provide preliminary reads and provide off-hours support remain friendly partners and not aggressive suitors in an ever-increasingly competitive market.

What form will the virtual radiologist take? Bringing the practice of off-hours reading in-house requires critical mass based on volume and a willingness of radiologists to share off-hour duties. Variations on this theme include recruiting a full-time physician, staggering hours of coverage, and providing additional compensation for those interested in covering evening and weekend shifts.

Formation of practice consortiums to provide the service is an idea that does not seem to have great promise based on alignment of incentives, politics of practices that may already compete for business, management, prioritization, and arbitration when problems arise.

Cooperative ventures based on a combination of in-house coverage and outsourcing of work are more promising. The ebb and flow of practice staffing, productivity, and unforeseen peaks and valleys of work suggest that this cooperative model may have a place in the future.

The seductive lure of off-hours interpretation of radiological studies will remain and, given recent trends, expand—although new models and services likely will make existing models less attractive and perhaps obsolete. What this means to the bottom line of practices will require careful assessment and scrutiny of the options available. The benefits that inure to the members of a practice will need to be balanced against the cost and potential vulnerability to which a practice exposes itself. Lifestyle adjustments, costs, and practice philosophy will continue to drive the market in the future.

As costs come under greater analysis, and as practices look beyond traditional revenue sources, ongoing self-assessment of the finances will pay dividends both short and long term. n

Howard B. Kessler, MD, is a practicing radiologist and a member of the Axis Imaging News Editorial Advisory Board. For more information, contact .