Few would dispute the need for the electronic retooling of radiology in specific and health care in general; even fewer know where the funds will come from to pay for this undertaking.

Now that radiology is in the medical information business, considerable work lies ahead in the electronic retooling of offices, departments, hospitals, and entire health care networks. This cost of bringing radiology into the Information Age is an investment above and beyond that necessary to maintain state-of-the-art — or even adequate — medical technology. This cost of equipping modern medicine with up-to-date information technology is an investment in efficiency without a direct return on investment.

The question, then, is who will pay for this massive undertaking?

Forget Wall Street. Speaker after speaker at the Health Care Forecast Conference, February 3-4, presented by the Health Care Management Program in the graduate School of Management, University of California, Irvine, painted a bleak future for health care organizations seeking sources of capital. “The next couple of years will be difficult to raise capital,” David Hunter, president, The Hunter Group, Bloomfield Hills, Mich, told an audience composed of largely California-based managed care executives. “We are heading into the Sahara in terms of getting people to lend money based on the old models.”

This is not necessarily a negative development. The volatile nature of the Wall Street/health care relationship was clearly elucidated by Uwe Reinhardt, PhD, in his description of the “Rise and Fall of Physician Practice Management,” in the January/February Health Affairs. Reinhardt’s discourse on the methodology of securities valuation, both theoretical and real world, underscores the negatively cumulative effects of growth for growth’s sake combined with the incredible pressure from the financial markets to produce such growth through accretive acquisitions. The average profit of a California managed care company last year was 2%. The average academic medical institution returns are no better and often worse. Neither Wall Street — nor the future retirees of America — can be expected to invest in such anemic returns.

One solution to this financial dilemma is to change the model, as have the departments of radiology at the University of Utah School of Medicine and Brigham and Women’s Hospital in Boston (see Outsourcing Radiology). In outsourcing radiology to the department’s physicians and administrators, those institutions have accomplished three important objectives: aligned the incentives of management and the department; empowered the department to positively reward desired behavior; and positioned the department to be more attractive to those requisite sources of retooling revenue.

Such an undertaking, however, is not an answer for every department. It requires a major time investment in finance and administration. Other than academic and luminary sites, how many hospitals in America have the administrative staff to invest in such an endeavor? Reports of radiology administrators being asked to run not just one department, but two and three, are not grossly exaggerated.

If it were not for the proliferation of web-based technology, the prognosis for health care’s retooling would be bleak indeed. But by harnessing the power of the Internet, institutions such as Brigham and Women’s Hospital discussed in our cover story are planning to provide all referring physicians access to medical images and reports by end of the year 2001. Ordering systems such as the one described by the team at Brigham and Women’s, as well as the one described by Dehn et al (see Appropriateness of Imaging Examinations), promise to not only pay for themselves by reducing the number of inappropriate imaging studies but also to improve patient care by ensuring that the correct studies are ordered.

Nonetheless, many health care institutions are struggling to survive, and these are good economic times. The challenge of equipping an institution for more appropriate ordering of diagnostic examinations, real-time imaging, and better access to information for patients and physicians could be perceived as in the interest of the public health. Perhaps it is also in the public interest to provide tax credits for those health care institutions, both for-profit and non-profit, that are striving to improve efficiency and quality of care by installing an information technology infrastructure that ultimately could yield improved patient outcomes.