My college biology degree inspired a lifelong interest in evolutionary science and a theory that the same force that mold and change the population of any spedies are hard at work in the Philadelphia health care arena. The Philadelphia hospital and physician marketplace is currently under great stress, mainly due to forces out of our control. Like Darwin’s finches, we must evolve or be replaced.
Change occurs in populations continuously with some short bursts of accelerated evolution brought about by severe alterations in the environment. We are clearly in one of those periods of punctuated equilibrium due to the bankruptcy and earlier business practices of AHERF (Allegheny Health Education and Research Foundation), just two dominant insurers, consolidation of hospitals into larger systems, and increasing competition for imaging services.
AHERF caused referral pattern disruption by acquiring primary care practices and keepinjg dead and dying hospitals open in a grandiose plan to dominated the Philadelphia market. The former AHERF hospitals are now owned by Tenet, the first for-profit hospital management company in Philadelphia. This ecosystem disturbance has opened to competition previously secure and stable positions, forcing these radiologists into the open job market.
The second local problem is the presence of only two significant health insurers, which seem to compete with each other only in the race to decrease hospital and physisican payment. They mirror each other’s successful utilization programs, payment schemes, and hardball contract terms. By artificially stifling the ecosystem resources (payments for services) these insurers are limiting the creation of new radiology positions in private practices and forcing the academic practices to compete for outpatient imaging business.
The third local factor, probably caused by the first two, is the consolidation of private independent hospitals into larger systems. In 1980, there were six medical schools with their associated main teaching hospitals and every other hospital was independent. Now there are five medical schools and only a handful of independent hospitals not aligned in some cooperative, academic, financial structure with the five or six evolving health systems.
The final element is competition: for declining payments, for static or decreasing practice opportunities, and for outpatient imaging. This local competitive environment is the most signiciant challenge facing Philadelphia radiologists. Yet, as Darwin concluded, competition is where we have the greatest opportunity as individuals to prosper in a changed ecosystem.
What can we do as groups and individuals to survive? First, when faced with ecosystem disruption, individuals tend to coalesce into larger groups for protections and economies of scale. Second, to defend against increasingly strong predators, these larger groups must unite across practices, share information, respond to unilateral contract changes, and assemble legal talents to counter reduced, delayed, or denied payments for services. Last, we must compete both against each other and the forces that are causing the change. Know your referral doctors and their patients well and give them convenient, quality, efficient imaging services in the outpatient office setting. Since the medical schools that trained you have chosen to compete in your community by building full service outpatient imaging facilities, we must do the same.
We have access to capital, and we must use it. Locate an office and a credit line, negotiate a lease, hire a staff, order equipment, and take control. The local hospitals are under such severe financial pressure that their old partnerships with hospital-based radiologists will become extinct. You will be expected to take salaried positions, decreased professional payments, and shortened contracts.
Evolve like Darwin’s finches and avoid the fate of the Tyrannosauraus-rex. Evolution can be invigorating, even liberating of previously unknown skills.
William H. Hartz, MD is a member of the Decisions in Axis Imaging News editorial advisory board and Philadelphia radiology.