Ideas in Hospital-Based Imaging

Utilization Management: An Insider’s View
GE Healthcare Debuts Service Model Optimization Strategy
The Battle for Coronary CTA Heats Up
Outpatient Imaging Centers Offer an Attractive Option for Patients

Utilization Management: An Insider’s View

By Cat Vasko

Curt Thorne
Elliot Menschik

With both the use of diagnostic imaging services and the cost of advanced medical imaging equipment ever escalating, utilization management (UM) has become an increasingly popular means by which to reduce costs. Approaches to UM vary widely, however, and tension between providers and payors is always a roadblock. For help parsing the thorny issues at hand, Axis Imaging News consulted Elliot Menschik, MD, PhD, president and CTO of Hx Technologies Inc, Philadelphia, and Curt Thorne, MBA, president and CEO of MedSolutions Inc, Franklin, Tenn. Both companies provide radiology management solutions with a focus on controlling costs.

The experts outline the utilization problem neatly. “High-tech imaging—which is MR, CT, nuclear medicine, cardiology, and PET—accounts for about 20% of the procedures, 60% of the dollars, and 75% of the growth in dollars,” Thorne explained. “Utilization has been going up at 20% a year or so. It has grown to the point that it occupies a noticeable position for payors of health care in the amount of resources consumed.”

Menschik added, “The average amount spent by a health plan on outpatient imaging can reach $20 per member per month. Many plans believe that as much as 30% of that is wasted, or up to $6 per member per month. If you’re a large health plan with a million members in a particular area, you’re talking about millions of dollars every month spent on services that are not advancing the patient’s care.

“The slice of the imaging pie that is not being used productively can be broken down into several categories,” Menschik continued. “One is inappropriate utilization, which is traditionally where most UM has focused. The other big categories are avoidable imaging, redundant imaging, and fraud. Believe it or not, quite a few claims in the public payor space have been found for patients who don’t exist, or procedures that have never been done.”

For MedSolutions, one way of dealing with this issue is prior authorization. “Technology needs to be used appropriately,” Thorne said. “Unnecessary testing generates costs in and of itself, and more importantly, unnecessary imaging is correlated with an increase in the false-positive rate for many conditions, which results in additional costs for a disease that doesn’t actually exist. But utilization management is not necessarily about reducing utilization per se. One of the things that we do—and we do reduce utilization this way—is when a CT is ordered for a condition where CT will not give you the answer, we say, ‘No, don’t do that; do the PET.’ It’s more expensive to do a PET, but we still save money that way, and from the way the patient experiences it, we ‘upgraded’ them to a more expensive test.”

To improve care and target waste beyond the reach of preauthorization, the team at Hx Technologies helps providers and payors build what Menschik calls “diagnostic imaging exchanges.” He explained, “It’s a Web-based network for electronically exchanging imaging results with each other across a community. That is what gives the ordering physician knowledge of results that are otherwise out of reach at another facility. It also can help avoid the redundant exam problem, which is quite significant for the payors. And when you make that network available to radiologists, it allows them to have access to prior imaging on the patient that enables a better interpretation and reduce recommendations for downstream exams that might not be required or may introduce delay.”

Menschik sees the tension between the providers and payors as a major barrier to more widespread utilization management. “The imaging providers’ livelihood depends on being paid in a timely way and getting the most value for their services,” he noted. “On the other hand, there’s typically some suspicion that some health plan initiatives will interfere with patient care and provider economics. I would suggest to imaging providers that they be open-minded, because there are opportunities to influence how the health plan works with them. The goal is to craft solutions that improve the quality of patient care and manage the cost of services without making either side feel as if they were cheated in the process.”

Thorne agreed. “There is a real live person at the end of this transaction,” he said, “and attending to the health care needs of that person is what it’s all about at the end of the day. If you do that best, you will get a better utilization management outcome.”

Cat Vasko is associate editor of  Axis Imaging News. For more information, contact .

GE Healthcare Debuts Service Model Optimization Strategy

By Cat Vasko

Last fall, GE Healthcare, Waukesha, Wis, deployed its new service model optimization strategy at Centennial Medical Center, a 112-bed community hospital in Frisco, Tex. Designed to leverage software tools and informatics systems into improved capital planning, cost savings, compliance, service quality, and staff satisfaction, the strategy already has helped Centennial achieve operational efficiencies, according to Bret Barczak, director of marketing at GE Healthcare. Axis Imaging News spoke with Barczak about the new service.

IE: What is GE Healthcare’s service model optimization strategy?

Barczak: With an optimized service model, we’re taking a view of one customer’s needs to service all of the facility’s assets and manage those assets over their life cycles. The GE perspective is that there’s a way to optimize that model.

IE: How does the program help customers?

Barczak: There are five critical elements. First, we help our customers contain costs as financial pressures continue to mount across the board. Managing their capital assets is one of those higher expenditure areas, so an optimized model is continuously looking at a hospital’s operating costs and how best to help the facility reduce or manage those costs.

Second, related to that is helping them improve their capital planning process: leveraging information about their assets, how their assets are being used, and the repair history. From a GE perspective, we can take information from the variety of assets we service and benchmark any given client, like Centennial Medical Center, against peers across the country. That helps facilities compare themselves to their peers—how they make decisions about managing end-of-life of certain assets, or whether to replace infusion pump A with infusion pump B.

The third element is helping customers master compliance. Obviously, preparation from a compliance standpoint is critical, and we do a lot of things to make sure our clients are well prepared to meet the standards of a governing organization like The Joint Commission.

Fourth is service quality. In an optimized service model, that almost goes without saying. And the last element is opportunities for staff. One of the things we look at is whether they have an in-house service program, and whether outsourcing that activity is a better model for them. We see again and again that this opens up many more career doors for their one-time hospital employees, who can move to a company with vast resources like GE Healthcare.

The Battle for Coronary CTA Heats Up

By Cat Vasko

At this year’s Radiology Summit in St. Louis, the Radiology Business Management Association (RBMA), Fairfax, Va, brought in David C. Levin, MD, professor emeritus of radiology at Thomas Jefferson University, Philadelphia, to talk about the ongoing turf war between radiologists and cardiologists. Who will win the battle for coronary CTA?

Levin described coronary angiography as “a classic example of how to lose a turf battle.” He noted that most advances in the field were made by radiologists—whose techniques are now used by cardiologists in every lab. So why did radiologists lose the business? In the end, Levin said, it comes down to research.

“Cardiologists did most of the research pertaining to imaging the coronary arteries,” he said, “and that, believe me, is very important in determining who’s going to dominate.”

What happens if radiologists allow the same thing to happen this time? “Just envision what may happen if we lose cardiac CT and MR to the cardiologists,” Levin said. “The neurologists will be next through the door, then the urologists, then everybody else. I’d like to see us doing more research,” he added, noting that cardiologists do much more cardiac research than radiologists, and most radiologist-initiated research is coming out of Europe, not the US.

Levin notes that radiologists have several competitive advantages over cardiologists. Radiologists know more about the physics and technology of CT and MRI, and they are trained to pick up incidental findings elsewhere in the chest. “Even the most aggressive cardiologist will acknowledge that he doesn’t have the training or experience to detect these non-cardiac findings,” he said.

Where overutilization is concerned, Levin added, cardiologists clearly have their hands in the proverbial cookie jar. Between 1998 and 2005, the rate of cardiologists performing nuclear myocardial perfusion imaging went up a full 53%, but there was no corresponding plummet on the radiology side—the rate of radiologists performing the same studies decreased, but only by 2%. “What’s obviously happening is cardiologists are getting into this business and self-referring,” Levin said.

But radiologists can get that business back, Levin said, and a great place to start is hospital departments. At any given hospital, if both the radiology and cardiology departments want a 64-slice CT for advanced cardiac imaging, it’s more economically feasible to give it to the radiologists, where it can be used for a variety of studies, not just CTA. “Administrators are more likely to put a 64-slice CT in the radiology department,” Levin said. “The reasons favoring radiologists are much more compelling than the reasons favoring cardiologists.”

What else should radiologists be doing? Teaching residents more about heart disease and cardiovascular imaging; performing more research on cardiac imaging; making a home for cardiac imaging in thoracic radiology; and improving their relationships with patients. “There is nothing quite as stimulating to a patient as having their radiologist say, relax, your arteries are clean,” Levin said. “That is great patient relations.”

Outpatient Imaging Centers Offer an Attractive Option for Patients

By Kris Kyes

Today’s radiology patients are looking to outpatient imaging centers to meet their service and access needs, according to W. Cannon King, vice president of business development at Outpatient Imaging Affiliates LLC, Nashville, Tenn. Patients at these facilities do not need to wait behind inpatients or emergency-department patients, and teaching or research commitments do not take precedence over outpatient imaging, King said during his presentation, “Recognizing the Need for an Outpatient Imaging Center and Pros and Cons of Joint Venture Models,” at the 34th Annual Meeting of the American Healthcare Radiology Administrators in Las Vegas, held July 30–August 3, 2006.

Industry Trends

Radiology is a $100-billion industry that accounts for as much as 8% of total health care spending, King said. Double-digit growth in CT, MRI, and PET/CT is being driven by population aging, better-informed patients, and product innovation, as well as by the proliferation of in-office imaging.

The shift from inpatient to outpatient imaging is ongoing, and King warned providers that if they lack an outpatient access point, they are limiting their ability to capture outpatient business. Not only is the size of the overall imaging pie increasing, but also the size of the slice belonging to independent imaging providers has grown from a sliver in 1980 to nearly half of the pie today.

Of course, outpatient imaging does have negative trends. The Deficit Reduction Act of 2005 reduced Medicare reimbursement to the amount payable to hospital outpatient imaging departments, and this downward reimbursement pressure also has been adopted by private payors. Some networks are closing, and large payors are turning to intermediaries to help them control imaging costs. Referrals also decrease as more physicians develop in-office services. Growth in procedural volume is being diluted by the increasing number of outpatient centers, so that each center or scanner is handling smaller volumes, despite an overall increase in outpatient imaging.

Market Analysis

For these reasons, many centers are barely surviving, according to King. Development of a new center requires not only careful analysis, but also the ability to position that center to take market share away from its competitors. This may be possible through the leveraging of existing payor agreements, for example.

Opportunities still exist, but cautious market analysis is necessary before proceeding. Demographic analysis should consider the growth and affluence of the center’s probable customer base, and competitive analysis must involve a complete understanding of all other imaging services and their weaknesses. King recommended trying to schedule an MRI examination at each competing facility in order to assess both customer service and the backlog that each center experiences; a wait of 7 to 10 days indicates that there is a good opportunity for a new facility to compete. Payor analysis should yield a precise idea of the levels of reimbursement that can be expected, both under and outside contracts.

Imaging Center Models

Even if market analysis indicates that success is likely, King explained, disadvantages are associated with each of the three main center models—hospital alone, hospital and radiology group joint venture, and joint venture with a third party offering specific expertise.

First, a hospital that builds its center alone assumes 100% of the risk of failure, and could be extending its capital and staff too far. Hospital culture could make it difficult to provide the high level of service required in the outpatient market; some preexisting payor agreements also could place the new facility at a disadvantage.

Second, a joint venture’s disadvantages include obtaining a new Medicare provider number, as well as negotiating new payor agreements and sharing governance with a radiology group that might lack sufficient experience. And third, the joint-venture plus third-party model requires the radiologists and hospital to share revenues and governance three ways.

Each model also has its advantages. The hospital that builds alone can recapture lost outpatient business and technical fees, enjoy 100% of the rewards, offer its radiologists incremental professional fees, and enhance its community service. The joint venture is able to provide employees with better incentives and share capital risks. And the joint venture with a third party can take advantage of management expertise to focus on customer service, revenue generation, and the alignment of incentives for all parties.

Although imaging centers operate in an uncertain climate, providers must evaluate their outpatient options. To do nothing, King stressed, is to allow outpatient business to flow off campus unchecked.

Kris Kyes is technical editor of  Axis Imaging News. For more information, contact .