“Out of the airplane and into the food chain,” quips Robert L. Bridges, MD, regarding new Alaskan arrivals. For those new residents who find the going too tough, he offers the local definition of “sourdough”: “Soured on Alaska and no dough to leave.”
It is not just the landscape and the weather that are rugged, the medical/business landscape can be rugged too. “It is difficult up here,” Bridges says. “It’s really been a closed shop. The private imaging groups are tightly held. If you want to come up here, you’ve got to work for them. It’s difficult to get on full time.”
That is why it took courage for Bridges, a radiologist and nuclear medicine specialist, and a group of four other partners who were not doctors but administrators and technicians to give up their jobs, mortgage their houses, and sell off their snowmobiles. They were raising capital in order to start Alaska’s first independent outpatient imaging facility. They called it the Alaska Open Imaging Center (AOIC)
|Staff at Alaska Open Imaging Center includes: (from left, back row) Darryl Roth, Sam Korsmo, Rex Greene, Teri Johnson, Jeff Kinion, Robert Bridges, MD, Scott Hansen; and (from left, front row) Julie Korsmo, Ramona Meers, Toni Holmes, Jules Osborne, Kathleen Southwick, Joanne Collier, Bill Johnson, Eric Carman.|
As soon as AOIC opened, the local hospitals struck back. Before they could give up their hospital jobs, some of AOIC’s partners were fired. Modalities that had been unaffordable were suddenly purchased by competitors to meet AOIC’s challenge. Competitors were even successful in getting CON (certificate of need) legislation rewritten to include independent diagnostic testing facilities, the category in which AOIC was placed by the state.
AOIC was started in the fall of 2001. In less than 3 years it went from having one employee to having almost 40. One center turned into two and then three. But AOIC still has a fight on its hands. “We are running in the black. We are getting paid a salary. We’re getting paid a little better than we were,” says Toni Holmes, RT (MRI), one of the founders, “but it’s going to be a little while before we really see the fruits of our labors.”
AOIC’s president and CEO, Jeff Kinion, puts it this way, “The vision that we have is we’re about on the 20-yard line and we still have 80 yards to go.” It may be a tough 80 yards.
But the AOIC partners are can-do types and self-assured. “We wanted to raise the bar on patient care,” says Holmes. “Well, we’ve raised it. I feel extremely optimistic.”
It was Kinion and service representative Samuel J. Korsmo who together laid out the vision of what AOIC would be if they could ever get it under way.
“Jeff and I called ourselves the parking lot gang, we sat out in our cars so many nights after work talking about what we would do if we could,” Korsmo says.
Kinion and Korsmo dreamed of an imaging center that would use the latest technology, moving digital images to radiologists’ workstations, with modern updated modalities that would run at high speeds. But at the center of their vision was the idea of putting the ultimate payor, the patient, on a pedestal. Patients would be treated as though their time was as valuable as the medical staff’s. Patients’ questions would be answered. They would be invited to talk with radiologists so they could understand the implications of what the radiologists were reporting.
Kinion is an RT with a BS degree in health care management. During the early discussions with Korsmo, Kinion was the radiology administrator for a hospital in Wasillaa city of about 70,000 that lies in the middle of the Mat-Su Valley (a contraction of the Matanuska and Susitna valleys that lie end to end) on the main highway to Anchorage, which is 43 miles to the south. Korsmo, who is now AOIC’s COO, was then a service engineer for a vendor.
Kinion and Korsmo shared a frustration with the level of health care that they encountered in their jobs. It was not bad, just complacent. “We saw day in and day out that hospitals don’t always make good decisions,” Kinion says. “In Alaska, some local hospitals had not replaced their CT scanners in 8 or 9 years. The doctors were desperately asking for new ones, but the hospitals had no reason to get them because there was no competition.”
What Korsmo calls his “angst” took a different shape: “I have seen over 100 hospitals, and to me it comes down to the desire to do the very best that you can.”
Korsmo says that maybe he more than the other founders was “the catalyst” for the creation of AOIC, simply because by servicing machines at so many facilities he had the broader view and could clearly see the need for a freestanding outpatient imaging center in Alaska.
One day in Anchorage, Korsmo ran into Toni Holmes who was running the MR department for a local hospital. He had known her in Texas years before. He brought her into the fold of the AOIC dreamers. Also brought in was Teri Johnson, RT(R)(M)(CT), CNMT, who was running the nuclear medicine department at the hospital where Kinion was working. Johnson, who is now AOIC’s chief clinical officer, was an easy convert to the cause. Like the others, she was dismayed by what she saw as a halfhearted effort on the part of many caregivers.
As the four kept ruminating together, a simple plan was hatched. They could start small, very small, and try to work up from there. “We had tried to get the hospital to purchase a bone densitometer,” Johnson says. “I had even offered to make room for it in my department, but they rejected it. We thought, Gee, that’s not a very expensive piece of equipment,’ so we bought one and put it in a small rented space. I don’t think we ever ran in the red. There wasn’t another one in the whole valley. We were it.”
Running the bone densitometry service gave the four partners a foothold with referring physicians, who kept asking the group why it did not offer other services. But the bone densitometry service, says Johnson, also cost Kinion his job. He was seen now as a competitor and let go. Thus, Kinion became the densitometry technician, which gave him the income to keep going and time to think about and plan an expansion of services. Kinion was not the only one to lose his job. Eventually, Korsmo was also dismissed for an alleged conflict of interest after his participation in AOIC became known.
A NEW FACE
One of the biggest hurdles in the early stages, says Kinion, was that there were no radiologists in the area who were contractually free to read for the partners even if they did manage to corral the financing to get other modalities.
“We thought about going to RSNA with belly-boards saying Radiologist Needed,'” Kinion says. Then, through someone Holmes knew, the group heard of a California radiologist who had grown up in Alaska and was looking for an opportunity to return. This turned out to be Bridges, who was indeed looking for opportunities back in his home state.
|Robert L. Bridges, MD, built the image management system that links AOIC’s three sites.|
Bridges had gone to medical school with the partial help of a federal program that provided funds to students in rural states. The idea was that the grateful students would return to practice in the states they came from. But Bridges’ career track led him to Southern California, where he completed his 2-year residency, continued on as an assistant professor at the University of California-Irvine School of Medicine, and became a partner in a large radiology group. His desire to pay back Alaska for helping him become a doctor never bore fruit even though he vacationed in the state for weeks at a time. He went so far as to install a VPN hookup with a DSL line from his house south of Anchorage so that he could read images from California while he vacationed.
When Bridges was introduced to Kinion and his partners, the whole AOIC venture came into view. It also seemed doable. “Once Bridges came on board, we went full tilt,” recalls Toni Holmes. “We pooled all our money and bought our first open MRI.” AOIC was officially born. The first center opened in Wasilla in October 2001.
Bridges brought more to the table than just the ability to do interpretations. He brought computer and networking expertise. He designed and put together the digital image transmission system that AOIC uses.
Bridges says he has always tried to stay ahead of the technological curve. “If you know what to create on your own, then you have that advantage,” he says. “If you wait for it to be made and sold, then you’re behind the power curve by several years.”
Bridges says the system at AOIC links all imaging modalities with the multiple workstations and servers at the three clinics. All images can be sent from clinic to clinic. The system deploys a combination of different vendors’ “VPN gear” and DICOM messagers with an open-source archive that employs hard disks and DVDs. “We didn’t use just one OEM,” he says.
According to CEO Kinion, AOIC technologically accomplished in Alaska “a whole bag full of firsts.”
“Right from the get-go, we were 100% digital. We were the first to burn images on CDs for patients. We had the first open MRI in the valley. We were the first to do CT cardiac scoring and CT virtual colonoscopy. We were the first to bring PET up here.”
AOIC also worked with a phone company to link the medical centerÂ at Kotzebue, a major native town north of the Arctic Circle (population 3,075), into its imaging network. The Kotzebue images are now being fed to AOIC’s radiologists in Anchorage via a satellite-linked T-1 network, cutting interpretation times for isolated Native Alaskan patients from days or weeks down to overnight, Kinion says.
Once it had the Wasilla MRI operating, AOIC began adding modalities there. It took 9 months to finance a multi-slice CT scanner. With that, Kinion says, AOIC began to offer “life scans” and virtual colonoscopy scans to self-paying patients, but when referring clinicians complained that their patients were being interfered with, the process was modified to include referring physicians. “That was too much,” Kinion says. AOIC completed the Wasilla center by adding a nuclear medicine scanner, a digital x-ray machine, an ultrasonography machine, and the bone densitometer.
A PREEMPTIVE STRIKE
Eager to expand before competitors beat them to it, AOIC took on the big city and opened a center in Anchorage in January 2003. That center contains an open MRI, a 16-slice CT scanner, an ultrasound machine, and what was, when the center opened, Alaska’s first PET.
AOIC’s technological onslaught did draw a quick response. A competing hospital in Anchorage installed its own PET and a PACS. The hospital in Wasilla upgraded its CT. The competition hurt AOIC. It had gone through complex scenarios to get its PET and to have the fluorine 18 deoxyglucose isotope injections for patients flown in daily from Seattle. This meant it had to market its PET against that of a long-established hospital with strong ties to referrers. “We probably average 12 to 15 PET scans per week,” Kinion says. “It’s enough to pay for the system. It’s not a huge profit center. It’s not as attractive as we thought it could be.”
Undaunted by countermoves from competitors, AOIC in September 2003 opened a third imaging center in Soldotna. Although it has a population of only 20,000, Soldotna is the commercial hub of the Kenai Peninsula, which doglegs into the Gulf of Alaska south of Anchorage. Soldotna itself is about 150 miles south of Anchorage. The Soldotna center has an open MRI and a bone densitometer, Kinion says.
AOIC’s rapid expansion had to be financed. The expansion also brought a flurry of installations and hirings and marketing thrusts that pulled the founding partners out of their old service roles and into new and challenging administrative and operational ones.
Kinion recaps AOIC’s financing by noting that the original company formed to offer bone densitometry included the four founders and was called Accurate Imaging and Management Inc (AIM). AIM, through which the original partners routed their contributions to start-up, now owns 40% of AOIC. Another 40% is owned by a company called Quantum Diagnostic Imaging (QDI). QDI is owned by investors that Bridges brought to the table when he became involved. Bridges is part owner of QDI. The remaining 20% of AOIC is owned by a small group of investors who purchased shares in a private offering that AOIC conducted. That offering raised $500,000 to open the Anchorage center, Kinion says.
With its expansion, AOIC hired many employees and contracted with two radiologists who came to Alaska specifically to read for it, Kinion says. Now one radiologist is assigned to each of the three centers. Bridges, the PET expert, was joined by James McGee, MD, also boarded in nuclear medicine; and Val Christensen, MD, dual boarded in radiology and family practice. They are currently recruiting a fourth radiologist. Kinion says AOIC in the beginning envisioned itself as a co-op with employee profit sharing. He says that did not work out because it was too difficult to add and dissolve shares as employees inevitably came and went. So, instead, AOIC started a retirement account for each employee and, according to Holmes, last year contributed 10% of salaries to those accounts.
The larger plan that Kinion says still has 80 yards to go foresaw AOIC becoming a trans-Alaskan company, with outpatient imaging centers in most if not all sizable cities. But that plan is on hold until the effects of the newly revised CON legislation can be gauged (see story, page 16). Because AOIC expanded rapidly, it still has unfilled capacity on some modalitiesincluding PETat its current centers, and it is working diligently to attract the business of referring physicians and the patients they bring.
“We are doing quite well,” says Holmes. “The competition is a little bit more fierce in Anchorage now that we’ve arrived. We believe that in time all our schedules will fill up.”
Korsmo says that AOIC is doing more than 15,000 studies per year in its three centers, but declined to be more specific than that. That figure comes into perspective when it is noted that 42% of Alaskans live in Anchorage and that the whole state has a population of about 700,000.
With so much at stake for its founders and employees, AOIC still tries to outdo the competition every way it can. Service excellence is more than a slogan, it defines AOIC’s self-image. The company now has 500 of Alaska’s 700 to 800 doctors in its referral base, Kinion says. “We don’t get all of their business, but it’s not like we have a pocketful of doctors supporting us.”
MRI specialist Toni Holmes typifies the attitude of AOIC when it comes to patient care. Holmes now spends much of her time as the company’s compliance officer. AOIC has already had its Wasilla MR accredited by the American College of Radiology, and Holmes is pursuing accreditation of all the modalities at all centers. She also makes sure the company operates in accord with federal and state regulations and oversees training programs for the technical staff. But quite often she dons her MR technologist’s jacket and looks after patients too.
“I have friends who are artists,” she says. “I make my art form the MRI and the pictures that I can get off the machine. I have the knack for getting good quality images, even from patients who are fearful.”
Homes says she will try to produce almost any study on the open MRIs. “When we started up in Wasilla, I got a call from Medicaid wanting to know if we could do a particular study. Nobody else in town could do it. It was a neurological study, and based on our study the decision would have to be made if the patient was to undergo brain surgery. We sent the images to the University of Washington in Seattle. They called us back and said, Great study, and she does not need brain surgery.’
“I’ll try anything once,” Holmes says. “We get patients who come to us because they know we will try. We do whatever it takes. We don’t say no.”
The AOIC people know that by opening their centers they awakened a sleeping giant in the form of established hospitals. And they know too well that they will prosper only to the extent that AOIC’s service outstrips the competition.
“It’s basically a shoot-out at the OK Corral. It’s not for the weak of heart,” Bridges says. “Our competitors are multi-billion-dollar entities. But we aren’t controlled from the outside (the lower 48 states). We really are Alaska. The referrers have been given a good choice. We have become a lever for empowerment for the medical profession here in the state.”
As for the daring of AOIC’s founders, Bridges adds, “We blew out the glass ceiling. This was not a company started by an elite group of doctors; this was people who otherwise would have been excluded from ownership. This is the classical Alaskan grubstake.”
THE CON GAME
Much has been written about the certificate of need (CON) requirements in many states that force providers to justify adding equipment, particularly imaging equipment, through compiling statistics that prove the new equipment is needed.
The rationale behind CON laws is that they will keep health care costs down by eliminating unneeded equipment that otherwise would have to be paid for in the form of higher fees or through unneeded procedures being performed.
But Jeff Kinion, CEO at AOIC, argues that just the opposite has happened. Because they restrict competition, CON laws have driven health care costs up, he argues.
“The CON regulations across the country have been dissolving,” he says. “CON doesn’t work. Restricting equipment doesn’t keep the cost downin fact, it’s just the opposite.”
But CON laws have always had the support of existing health care facilities that are trying to keep out competitors. Kinion says that is what has happened in Alaska to AOIC.
“We are classified as an independent diagnostic testing facility (IDTF),” he says. “When we started 3 years ago, IDTFs weren’t defined as medical facilities requiring CON approval by the state for big [equipment] expenditures.”
But Kinion says that all changed this year when lobbyists for Alaskan hospitals petitioned the legislaturesuccessfullyto amend the CON laws. AOIC must now get state approval for any expenditure over $500,000.
“We showed in testimony in the Senate that we are 25% cheaper than the hospitals, but the hospitals argued that soon we would have to charge more,” Kinion says.
From AOIC’s point of view, the CON amendment is the primary reason that AOIC’s expansion has been stopped in its tracks. Kinion says AOIC plans to fight the new law, but right now no one knows how the law will be applied. That forces AOIC to wait and see.
AOIC’s COO Samuel Korsmo says that AOIC probably will be the first to challenge the new legislation, which was passed in May. But another part of the same legislation calls for the establishment of a task force to study the whole issue.
“The part of the legislation that has not been implemented is the task force,” Korsmo says. “I’m still waiting for communication from the state whether we’re part of the task force. All they say is We’re working on it.’ We don’t want to expand until we see what they want to do.”
George Wiley is a contributing writer for Decisions in Axis Imaging News.