One of the fastest growing trends in teleradiology is on-site services, bringing with it cost benefits to hospitals, but controversy, too.

When teleradiology first emerged, hospitals, imaging centers, and private practices outsourced radiology reads at night to supplement their daytime and vacationing radiology staff. This “nighthawk” service was a marriage of convenience that worked out well for all concerned. At first, the far-flung radiologists were primarily involved only with basic preliminary reads, leaving the final diagnosis to the regular staff. The teleradiology providers got the business while hospital and imaging center staff avoided becoming overextended.

More recently, however, teleradiology providers have become far more sophisticated, offering subspecialty expertise and final (not just preliminary) reads. One cost benefit to community hospitals became immediately clear. After the image is acquired and archived, the remainder of the systems needed to read the study, dictate, transcribe, edit, and then communicate the results can all be transferred to the responsibility of the party providing the professional reading services. This could have substantial cost savings. For example, it could mean the decommissioning of unused equipment, the cancellation of costly support contracts, and the reduction of capital expenditures for unneeded technology. Also, savings can be achieved through more economical handling of transcription fees and other incremental professional fees that hospitals would ordinarily pick up.

Yet, as imaging centers face increasing financial pressures, with many being gobbled up by hospitals, teleradiology companies are now seeking permanent contracts with hospitals. This has led to a new variation on the old model: On-site relationships where the teleradiology provider sends their radiologists directly to their clients’ institutions to conduct exams and do the reads. In some cases, teleradiology companies have become a hospital’s entire radiology department.

This newest service offering has also led to some controversy. According to Mike Lampron, CEO of Imaging on Call, Poughkeepsie, NY, “Teleradiology definitely provides a substantial cost savings by saving a hospital the need to hire new staff and the reality of declining reimbursements. For example, a full-time radiologist might cost $250,000 to $500,000 (without benefits) a year and they can read about 15,000 scans in that period. In contrast, a teleradiology provider can handle 20,000 to 30,000 scans for the same amount. This is the kind of math that moves the industry.”

Lampron estimates that the market is around 80% saturated from a nighttime perspective and that is why we see a natural movement into the daytime and on-site space from teleradiology vendors. “There is a progressive and unstoppable growth pattern,” said Lampron. “Globalization, technology, changes in regulations, demographic changes within the radiology work force, and economic pressures have all conspired to redraw the competitive landscape in radiology and EOTS (External Off Site Teleradiology Services) is poised to take advantage of the shifting winds. Currently, these winds are taking us into the daytime and on-site radiology marketplace.”

Most EOTS companies are looking for “aggressive growth” (+ 20% revenue year over year), Lampron explains. But just what will fuel this growth? According to Lampron, the answer is clear. ” EOTS will become more and more integrated to their bricks and mortar partners. Partnering with traditional groups and offering ?boots on the street’ and/or subspecialty final reads—without the traditional limitation of not being able to read certain studies that is inherent to hiring a full-time employee—is a growing trend. We are already seeing it, and yet you have to recognize the dangers that can come by letting the fox into your henhouse. So the question now is: How can you tell the difference between a true partner or a potential predator to your business?”

Clearly, Lampron is cautious when it comes to on-site relationships. “Frankly, we don’t want to threaten the profession. It’s important to perform due diligence in choosing a good partner. Customers are looking for a partnership, not a predatory relationship.

“Radiology is a small world,” Lampron added. “We don’t want to take the risk of putting radiologists out of work. There is the threat of big business coming in and not only squeezing out other radiologists, but compromising on the quality of health care as well. So we work with hospitals to form sound relationships. We do form on-site contracts with hospitals when asked, but we’re very careful in doing so.”

On the Other Hand

Clay Larson, senior vice president of Franklin and Seidelmann, one of the largest teleradiology providers in the country, has a different perspective. “We admit that we replace some radiologists in on-site relationships, but to the advantage of our clients,” said Larson. “We test all the radiologists we encounter with some becoming F&S employees. Yet, we don’t try to undercut local radiology groups on price alone. Our quality of care is a major contribution.

“Even if a local radiology group has a particular specialist on staff—which is rare—aside from the cost of their services, in a typical hospital environment, they usually cannot have enough work to keep sharp in that discipline,” said Larson. “In other words, the more relevant studies you read, the better you get. At F&S, we offer nationwide specialists who concentrate exclusively in specialized areas, with no need to generalize, and with no other local administrative distractions or interruptions. If more than 50% of scans are read off-site, we feel that this not only results in better quality interpretations, but lower costs.

“Teleradiology might be a loaded word because it limits our contribution to nighttime service, which is no longer the case,” said Larson. “And I feel the word ?predatory’ is also loaded. Some radiologist groups should be fearful because they feel they have no competitors, while hospitals feel they have no other options than to accept what they offer. In contrast, we are a business. F&S can demonstrate our commitment to quality with actual reports on turnaround times, 24/7 coverage, and quality. We provide reports that our clients can evaluate and compare with prior service. Regional groups are limited in their capabilities and global knowledge. This is our competitive advantage.”

Ohio-based Lima Memorial Health Systems believes it has established a good partnership with its teleradiology vendor, Franklin and Seidelmann. The hospital has contracted with F&S since July 2007 and has enjoyed a productive relationship ever since. Indeed, Lima’s entire radiology department consists of F&S radiologists. “We have two F&S radiologists physically on-site 8 to 5 with the rest of their resources available 24/7,” said Joy Brown, director of the radiology department at Lima. “They are our radiology department. We had a nighthawk service prior to 2007, but still didn’t have the 24/7 capabilities before we contracted with F&S. Our coverage is now complete. Other benefits include their specialty and subspecialty expertise.

“We pay a flat rate based on volume and type of scan,” said Brown. “Lima performs about 90,000 imaging exams a year, so we can budget accordingly. I think it’s more cost-effective than an in-house setup. In addition, now F&S radiologists do the final reads and final interpretations.” She applauds their service and quality as well. “They’re a great corporation to work with,” said Brown. “They’re very accessible ? a real roll up the sleeves operation ? team players all the way.”

Hospitals using on-site teleradiology services point to benefits such as quick reads and faster, more efficient communication with referring clinicians.

“Franklin and Seidelmann has gone above and beyond implementation and assisting whatever needs to happen in the radiology department,” said Brown. “The impact that F&S has had on our radiology department has been the decrease in turnaround time, which is a huge benefit for our patients, and being able to get our reports back to the referring physicians in a more timely manner,” said Brown.

Online Radiology (ONRAD) is another provider that actively promotes its on-site services. The company seeks to fill a demand, especially with rural hospitals that may not have a large population of radiologists residing in the area. In its promotional materials, the company promises hospitals it will “provide radiologists on-site to staff your department. Radiologists will all be licensed in your state, board certified, and members of our JCAHO-accredited medical staff, so you get the experience and quality.” According to ONRAD’s Web site, the company offers subspecialty radiologists with fellowships and certifications in neuroradiology, breast imaging, MSK, and more. Furthermore, ONRAD offers various fee models, so hospitals can choose from flexible options.

Teleradiology: Is it becoming a misnomer? “Tele” is derived from the Greek language, meaning “far off.” Yet teleradiology providers are closer to home than ever before. While there are definite benefits for hospitals, there is also the risk that the entire radiology department will be outsourced. Some say boundaries are important, and the goal is to have a well-defined role for your teleradiology provider and not become overdependent on the service.


James Markland is a contributing writer for Axis Imaging News.