Operational Efficiency in Imaging Centers: Benchmarking as a Strategic Tool

John J. Cergnul, JD

Most imaging centers are under pressure to increase efficiency, but it can be difficult to know where (and how) to begin. By comparing itself to other imaging centers in several areas, it is possible for a facility to clarify both its shortcomings and its strengths. Of course, the center’s size, location, patient mix, payor mix, and other market factors will make its situation differ, to some degree, from that of its peers. Nonetheless, a key indicator that is far from typical should point out, at least, an area that needs to be evaluated more closely.

The first step in comparing an imaging center to others is acquisition of the most recent survey conducted by the Radiology Business Management Association (RBMA), Irvine, Calif ( www.rbma.org ). In order to make this tool as useful as possible, every imaging center should also be sure to participate in all future RBMA surveys. Then, the imaging center can gather its own figures and use them to determine where its efficiency-promoting efforts might be most useful.

EFFICIENT EQUIPMENT UTILIZATION

Equipment utilization is determined by calculating the number of procedures that have been conducted for each modality during a fiscal year and dividing the resulting total by the number of units in service for that modality. It is particularly important to keep the results separated for each modality because a favorable overall number of procedures per piece of equipment could hide drastic variations within a particular type of imaging. For example, a heavily booked MRI service could be compensating for an underused ultrasound service in terms of total procedural volume, but the center would not know this without figures broken down by modality. It is important to track these figures by year in order to find emerging patterns, such as a decline in the use of a particular modality. This not only serves as an indicator of resource utilization, but can help the center plan for growth and understand which heavily used modalities could benefit from expansion.

In its 2002 survey, the RBMA found that the median utilization per unit, per year for radiography/fluoroscopy was 3,108. For CT, this figure was 3,343, and for nuclear medicine, it was 1,087.

Annual technical relative value units (RVUs), per machine, per modality are calculated by adding together all billed technical Resource-Based Relative Value System (RBRVS) RVUs attributable to each modality and dividing the result by the number of units in service for that imaging modality. Again, it is important to measure by modality so that a low RVU number for one modality cannot hide an unusually high number for another. Technical RVUs are an indicator of revenue and relative return.

Sample 2002 RBMA survey results show a median number of RVUs per machine of 2,369 for mammography, 68,720 for MRI, and 5,780 for ultrasound.

TECHNOLOGIST LABOR UTILIZATION

Technologist utilization should also be evaluated by modality in order to determine which services and areas could benefit from efforts to improve efficiency. Each autumn, a nonfacility list of RBRVS RVUs is published in the Federal Register by the Centers for Medicare and Medicaid Services. All billed technical RVUs from this list should be compiled for each modality and then divided by the number of technologist full-time equivalents (FTEs) assigned to each modality. This yields annual technical RVUs per FTE technologist by modality, which facilitates intrapractice comparison.

A sample from the 2002 RBMA survey indicates wide variations by modality, with median per-technologist RVUs of 1,987 for mammography, 5,704 for dual-energy x-ray absorptiometry, and 23,802 for CT.

It can also be helpful to determine the annual number of procedures performed per FTE technologist by modality. This is determined by dividing the number of billed Current Procedural Terminology codes for a modality by the modality’s FTE technologists.

The RBMA survey showed an average of 3,029 annual billed codes per FTE in radiography and fluoroscopy, but only 1,517 annual billed codes per FTE for MRI.

EFFICIENT COST STRUCTURE

Philip J. Russell, MBA

Costs are analyzed in four main categories: salaries and benefits, supplies, equipment and occupancy, and general/administrative expenses. Taken together, these constitute the total technical expense, which should, in theory, be the same per RVU across modalities.

Salaries and benefits expenses per technical RVU are found by adding all wages, payroll taxes, and employee benefits paid for by the imaging center for employees involved in any aspect of facilitating and performing examinations (excluding any compensation for physicians’ interpretive services). This figure is divided by all billed technical RVUs. With only 16 practices reporting, the RBMA survey of 2002 found a median salary and benefit cost of $9.78 per RVU.

Supplies consist of film, contrast, drugs, and disposable items. Total costs for these are divided by all billed technical RVUs. Only three practices reported their figures in this area for the 2002 RBMA survey; the median cost, if no CT or MRI was performed at the facility, was $4.55 per RVU.

The large category of equipment and occupancy expenses includes the costs of leases, rents, amortized purchase prices, maintenance fees, repairs, cleaning, and utilities for all building space, imaging equipment, computers, and similar items. This total is divided by all billed technical RVUs.

Equipment and occupancy expenses per technical RVU were reported by 17 practices for the 2002 RBMA survey. The median cost, for equipment alone, was $5.15 per RVU.

General and administrative expenses include all costs not included in the other three categories (with the exception of compensation for interpretive services provided by physicians). These costs include billing, insurance, legal and accounting fees, and collection agent fees, among others. Again, this cost aspect is divided by all billed technical RVUs to arrive at a cost per RVU. With 17 practices reporting, the 2002 RBMA survey found a median cost of $4.78 per RVU and a per-procedure range of approximately $5 to $35.

When the costs of the preceding four categories are added together, the resulting sum is the total technical expense. This is then divided by all billed technical RVUs; it is not typically tracked and compared within the 30 to 40 relevant subcategories because the difficulty involved outweighs the value of the information gained.

With 17 practices reporting, the 2002 RBMA survey found a median total technical cost of $25.65 per RVU and an average cost of $49.65 per RVU.

CONCLUSION

Efficiency improvement is undoubtedly a powerful tool, but such efforts can be wasted if applied to areas and services within the imaging center that already perform at high levels of efficiency. Worse, efficiency can actually drop in such areas if they are subjected to time-consuming attempts to fix what is not broken. In order to understand where changes should be made, imaging centers need to look at their own cost and volume information by modality and RVU. They must also use benchmarking, through comparison with the median results of many other imaging centers, to pinpoint the areas in which efficiency improvement can be undertaken most effectively.

This article has been excerpted from Key Financial Indicators in Radiology Practice Management, which the authors presented at the 2003 Radiology Summit of the Radiology Business Management Association on June 8, 2004, in San Diego, Calif. Information about membership in the RBMA, and participation in surveys can be found at www.rbma.org.

John J. Cergnul, JD, CPA, is business manager at Radiology, Inc., South Bend, Ind.

Philip J. Russell, MBA, CMPE, is CEO, South Texas Radiology Group, PA, San Antonio, Texas.