Sometimes even the experts are wrong. At least that is what Kenneth Heithoff, MD, founder and chairman of Minneapolis-based Center for Diagnostic Imaging (CDI), has learned. In the early 1980s, Heithoff devised a strategy to create an outpatient imaging center that focused on the esoteric subspecialty of CT spine imaging. However, when he presented this idea to a number of health care gurus — both physicians and attorneys — they unanimously believed that his concept would fail, most likely because of the fast-changing world of health care financing and the emergence of managed care.
Now, 18 years later, CDI is going strong with nine centers located in four states (Minnesota, Wisconsin, Indiana, and Florida) and five more being scheduled to open by the end of the year. More than 82,000 procedures were performed in 1998, which was an 18% increase over the previous year. CDI’s full range of modalities include MRI (high-field and open), CT, diagnostic and therapeutic spinal injection procedures, ultrasound, nuclear medicine, mammography, fluoroscopy, and conventional radiography.
“Everyone thought I was crazy to set up an imaging center five miles from the closest hospital without any direct affiliation to a single hospital, and crazier still to specialize solely in spine CT,” Heithoff recalls.
Ultimately, CDI’s focus on subspecialization is one of the keys to the company’s success. Rare among private radiology practices, this subspecialty focus allows CDI’s radiologists to concentrate on one specific area of anatomy. As a result, referring physicians and their patients receive interpretations from highly experienced radiologists.
Following his initial subspecialty emphasis on spine imaging, Heithoff expanded the scope of CDI’s services by including partners widely recognized as experts in other fields such as musculoskeletal radiology, head and neck, TMJ (temporomandibular joint), spinal injection procedures, and neuroradiology.
“We are the only outpatient imaging company that has taken subspecialization this far,” Heithoff says. “And the concept is not foreign to physicians, largely because academic centers have successfully organized themselves around centers of excellence, and their radiology departments have always concentrated on body-part imaging.”
Heithoff found that by emphasizing subspecialization, he not only attracted a strong referring physician base of orthopedic surgeons, neurosurgeons, and neurologists, he also created an environment for radiologists that discouraged internal competition. “Since each of the radiologists has their own expertise within a specific subspecialty, they are essentially owners of that part of the business, as they derive the bulk of their professional income from that area,” Heithoff explains. “This has created an atmosphere that motivates and incentivizes, because radiologists realize that they can flourish based on their performance.”
CDI has hired a lead radiologist to head an expanded body practice and is planning to expand into cardiovascular imaging, including magnetic resonance angiography (MRA), prostate imaging, and possibly women’s health. According to Jim Deal, chief executive officer, CDI’s primary objective when considering new subspecialties is to develop partnerships with leading radiology groups who are experts in their field and share a strong commitment to high-quality patient care and superior customer service to referring physicians. “That’s what differentiates us from our competition,” Deal stresses. “Anyone can own the necessary scanning equipment, but not everyone has the strong subspecialty focus or dedication to service.”
Heithoff concurs that CDI’s strong reputation in the medical community has come about largely because of the clinical consultative partnerships CDI radiologists form with their referring physicians. The type of radiologist who is attracted to CDI wants a strong collaborative relationship with referring physicians. “Our radiologists don’t just sit back and read scans in a vacuum, they take a consultative role and make themselves very available to referring physicians,” Heithoff says.
It is this high degree of dialogue between the radiologist and the patient’s physician that keeps referring physicians sending their patients to CDI, even if it means bypassing five or six other centers that may be more conveniently located, Heithoff notes. In fact, the growing saturation of open MRI scanning facilities throughout the country has not impacted CDI’s patient volume in any significant manner. “Our referring physicians value the fact that we are clinically involved in their patients’ care and that we call them with our reports, and we are readily available for consults following any procedure,” Heithoff says.
With its state-of-the-art teleradiology hub-and-spokes network composed of ISDN and T1 lines connecting all radiologists with locations in five states, CDI has extended its radiology interpretation services for referring professionals in 13 states. The system enables full diagnostic capability of the image off the scanner, transmitting high-resolution, digital 12-bit data to the subspecialized physician best suited to interpret in a specific case, regardless of location. An average of 10,000 images are transmitted daily.
These teleradiology capabilities have also expanded the accessibility to subspecialist radiologists within a specific market. “Even if we have only one or two radiologists in a given market, we really have the resources of eight or 10, because of our teleradiology network,” Deal says. “We effectively have all subspecialty areas covered in all of our centers from day one.”
In addition to the obvious clinical and cost benefits of teleradiology, the system has also contributed to CDI’s knowledge base by broadening its subspecialty case load. According to Heithoff, the full extent of CDI’s teleradiology system has still not been realized, and the company’s management staff is currently exploring potential uses. “There is no reason we could not conduct a spine meeting every morning with interactive videoconferencing of the prior day’s 20 best cases,” Heithoff explains. “We could then share that information with senior radiology staff or they could lead discussions on topics to train fellows or new staff.”
Cooper Gundry, MD, chief medical officer, believes that what makes CDI stand out from its competition is its blend of business service excellence and a strong focus on subspecialties, coupled with a teleradiology network that helps leverage the subspecialization. “In order to be on the front lines with clinicians, we need to be able to work with them in a prospective way by answering their questions and staying informed and up-to-date on their specialties,” Gundry says. “This is accomplished by the exposure of our radiologists to such a high volume of scans through their local practices and the utilization of teleradiology, and also their participation in national meetings and collaborative research projects.”
FLEXIBLE BUSINESS PLAN
Because CDI is expanding rapidly into different markets with distinct needs, it uses a flexible approach when establishing centers in different regions. To accommodate different needs, CDI’s operations are carried out within three organizational categories. First is the professional practice, which includes partners, employees, and a limited number of independent contractors. In other instances, independent radiologists or groups work with CDI in nonemployee, nonpartnership arrangements.
“If we can bring in some of the country’s best subspecialists from strong academic centers — even if they don’t join our group — we are still able to take their expertise and leverage it through the training of our people,” Heithoff says.
The second area of the company is the imaging centers themselves. The ownership structures of the centers differ, as do the actual medical or managerial functions that CDI carries out at the centers. “We feel strongly that medicine is parochial and each market will differ based on the characteristics of that marketplace,” Heithoff says. Deal agrees that the local radiologists play an integral role in the development of a new market. “They know their market and referral sources better than we will ever know them, so it is essential that the joint venture is set up in a way that works for them,” Deal says.
The final organizational category of CDI is the professional management component, headed by an experienced management team that provides market development services to the medical practice and imaging center. “From the beginning, we have maintained a strong management team and an experienced board of directors chosen to direct business activity,” Heithoff says. “The management component is absolutely necessary in order to implement something of this magnitude.”
These three levels allow CDI maximum flexibility in responding to the needs of individual markets. The St Louis Park center, CDI’s largest site located a few miles west of Minneapolis, combines the three elements of management services, medical practice, and center ownership. Other centers, however, employ different combinations of CDI’s medical and management expertise. At its Milwaukee facility, CDI performs management services such as staffing, marketing, billing, and collections in a partnership with Froedtert Lutheran Memorial HospitalandMedical College of Wisconsin, Milwaukee.
In a different arrangement, at St Luke’s Hospital in Duluth, Minn, CDI serves as general partner and manager for the MRI center. Centers in St Cloud, Minn, Mendota Heights, Minn, and Orlando, Fla, utilize CDI radiologists within customized management and ownership arrangements. “Our ability to tailor the structure of our joint ventures with the local radiologists to meet the needs of the local communities, radiologists, and referral physicians has been crucial to our successful integration in each new market,” Heithoff stresses.
Since CDI’s growth strategy is dependent on joint venturing, Heithoff is quick to point out that in order to continue to affiliate with the best academic centers, hospitals, and radiology groups, the company wants these local entities to own a significant amount of their businesses, possibly as much as 49%. “We want these local individuals and groups to own as much as possible,” he says.
CDI has carefully selected new markets based on identifying stellar radiologists in those locations. CDI has also chosen markets that it believes it can dominate. Instead of going into markets that can support only one imaging center, CDI likes to enter those markets where three to five centers can coexist. “By having several centers in one market, we are able to leverage our reputation and overhead and develop a physician group large enough to subspecialize,” Deal says. “With that scenario, we are able to rely less on teleradiology and more on our own locally based radiologists,” he adds.
Much of this year’s growth has focused on expanding current locations. This year, CDI opened two new locations in existing markets and anticipates opening five more by year’s end. Beyond new centers, CDI also continues to focus on adding more subspecialties in an attempt to broaden its capabilities.
“In different regions of the country, we continue to receive positive feedback from physicians about our company,” Deal says. “Just like most physicians, radiologists are worried about their futures and are looking for ways to practice quality medicine in a financially optimal way.” As a result, Deal points out that many radiologists view CDI as a new and effective partner.
Another key to CDI’s success has been its utilization review program, which provides the appropriate benchmarking and monitoring of operations that ensure system-wide quality care. Despite having a big portion of its business in Minneapolis — known to have one of the country’s highest managed care penetration rates — CDI still has not been negatively affected by managed care, largely because in its markets, radiology providers have not been capitated. But this has not kept the company from developing a strong utilization review program that ensures appropriate levels of care.
Although CDI maintains a philosophy that supports referring physicians’ independence and decision-making authority, it also upholds the importance of appropriate scanning criteria. “We are able to ensure the responsible use of scanning primarily because our radiologists have such strong relationships with their referral sources,” Deal explains. “In this way, we have an indirect, but strong influence on the appropriate usage and volume of scans.”
According to Heithoff, CDI has been reluctant to utilize electronic appropriateness criteria due to the complexities and individualized nature of each case. Because every patient is different in terms of symptoms, Heithoff stresses the difficulties in using a standardized utilization review software program that does not recognize these subtle differences. He adds that a focus on subspecialization is the best strategy when making choices about scanning options. “The interactive dialogue that develops between the referring specialists and our skilled subspecialists is the best assurance in determining proper usage,” Heithoff believes. “The radiologist needs to understand what that specialist is looking for, must go on to illuminate that anatomy, and then must be able to discuss the results in the language of the referring physician.”
Since CDI’s founding, a strong focus has been placed on quality assurance. The company’s Continuous Quality Improvement program encourages all associates to constantly look for ways to improve quality, increase output, and decrease costs. Benchmarking and measuring systems indicate when such improvements occur, and monetary rewards are given to those individuals whose contributions help CDI achieve its organizational objectives. Gain-sharing cash bonuses allow CDI associates to earn up to 30% of their base pay as a result of quality and productivity improvements in every department. Quality assurance measures include overreads of up to 5% of films read by each radiologist annually.
Radiologists who contract with CDI also work under an incentive system that aligns their performance with CDI’s desired results as an organization. Radiologists’ compensation is incentive-driven and performance-based, rather than fixed, as is common in many group practices. This arrangement has developed tremendous clinical productivity as well as academic achievement. To keep a handle on performance, the company gathers a wide variety of data — from the time an examination is ordered, to patient registration, through the examination process, professional interpretation, and information delivery — by utilizing patient satisfaction questionnaires, internal data gathering systems, or other sources. For example, radiologists participated in blinded surgical correlation studies as a quality control measure for their interpretation skills, allowing CDI radiologists far more access to follow-up surgical reports than most radiologists. CDI also tracks to the minute the time elapsed from the completion of the patient’s examination to the delivery of the hard copy report to the referring physician.
As an enhancement to its quality program, CDI is developing a pilot study to analyze patient outcomes from an episode of care standpoint. Measurements are taken from the beginning of a patient’s episode of care through the outcome. “By measuring what happened over this period of time, we are hoping to demonstrate that our imaging services had a positive influence on the quality of care and the cost of that care,” Deal says.
According to Heithoff, the field of medicine has been relatively slow to apply methods that other industries consider ordinary tools for measuring and assuring quality. “These quality control systems are necessary now in a health care environment where quality results are demanded despite shrinking payment structures,” he says. Even though CDI is headquartered in a state heavily penetrated by managed care, Heithoff is quick to point out that Minnesota’s major employers and population at large have always recognized the importance of choice, as well as the patient/physician relationship.
“What is really happening now is that we are gradually moving away from managed care as a more informed consumer population is demanding choice in their health care decisions,” Heithoff says. “As medicine continues to become more consumer-driven and as HMOs and closed networks give way to more choice, an organization like CDI that commits to high-quality imaging and subspecialization should be the preferred choice for informed consumers and physicians.”
Carol Daus is a contributing writer for Decisions in Axis Imaging News.