|Gerald Warnock, MD
The standard imaging practice is based on a group model where the radiologists are also partners in the business. Not so at East Portland Imaging Center (EPIC), Oregon, a family of freestanding imaging clinics owned by radiologist and entrepreneur Gerald Warnock, MD. Warnock not only employs all his radiologists, he pays cash for his equipment, which always represents the most cutting-edge on the market. Is EPIC an enviable model that can translate to other practices as successfully, or is it an aberration owing its existence solely to the vision of the man at its helm?
“Not many radiologists want the day-to-day headache that practice ownership offers. Most doctors just want to practice medicine,” says Melanie Haymond, director of marketing at EPIC. “Occasionally, however, we see a radiologist who is really excited about the business aspect and not just the science, and Warnock is one of those people. He has an amazing sense of the way technology is evolving, and he knows how that is going to benefit EPIC.”
Warnock appears to have known what would best benefit his center from the very beginning, when he purchased it in 1964 as a mere two-room x-ray practice. Within 8 years, Warnock had expanded into zero mammography and moved to a bigger office. A decade after that, EPIC acquired the first non-hospital-based CT scanner in the state, and 2 years later, when MRI emerged as a powerful diagnostic tool for soft-tissue imaging, Warnock installed one of the first scanners in the Pacific Northwest. In fact, EPIC offered MRI for nearly a year before any of the local hospitals purchased scanners. Other firsts include: first facility accredited to perform stereotactic biopsies in the region; first clinic in the area to offer its patients digital mammography or a PET scan; as well as among the first to offer spiral and, subsequently, multislice CT.
“I watch carefully what is coming on the horizon,” Warnock says. “Generally, things that are highly valuable diagnostically also generate income.”
EPIC continues to be on the cusp in terms of both income-generating and diagnostic capabilities. Its four outpatient imaging facilities-EPIC Imaging/East, PC; EPIC Imaging/West Inc (owned jointly with other radiologists); Portland PET Center; and EPIC Imaging/ENT-collectively offer short bore MRI, spiral CT scanning, ultrasound with 3-D imaging capabilities, digital fluoroscopy, radiography with tomography, full-field digital and state-of-the-art conventional mammography equipment, DEXA bone densitometry, lateral cephalography equipment, and PACS for digital storage and soft-copy reading of examinations.
EPIC is filmless with the exception of three x-ray rooms, which feature digital fluoroscopy but a hard copy of radiographs. A new digital radiography (DR) system currently is being installed.
The ease of acquiring technology is enhanced by the fact that Warnock can afford to simply write a check for anything that is needed. Although he pays himself a salary similar to that of other senior radiologists, Warnock also reinvests nearly all the profits back into the business.
“Anyone who achieves reasonable profitability can do that,” Warnock demurs. “I have simply made it a priority to acquire state-of-the-art technology.”
And though Warnock makes his acquisition decisions based on what he believes will generate income for EPIC, he counsels patience, as sometimes those decisions take time to pay off.
“When I got the first MRI scanner, Medicare was not reimbursing for it at all,” Warnock says. “Since other insurance companies followed Medicare’s lead, we did a great many free scans. This really helped to introduce the new modality to referring physicians and kept the scanner busy. We had some lean times then, worrying how to pay for it, but our CT practice was quite successful and carried [the MRI scanner] in the early months.
“One thing I grossly misread was the public’s desire for open MRI scanners. An outside group opened in town with media advertising to the public and became an instant success. We responded with installation of a .35T magnet, which we have run for several years. The only patients scanned on this machine were those who requested it, which has averaged about 10 per day. There were times when our other scanners were full and this one would be idle.
“It was my desire to have a scanner with image quality comparable to high field units, so we did not have to triage patients. With the advent of the new high field open scanners, I was intent on acquiring one.”
Warnock visited four different sites worldwide looking at the newer scanners, and decided on the scanner most appropriate for EPIC’s purposes. He purchased one, with the option of purchasing a second one within 60 days.
EPIC’s Business Model
|Gerald Warnock, MD (left), and Bill Dunlop, center manager, confer over a report generated by the practice’s radiology information system.
A streamlined business office also helps EPIC compete in the competitive imaging marketplace. When center manager Bill Dunlap came on board 4 years ago, he split the scheduling and medical records departments and implemented a radiology information system (RIS). The RIS now interfaces scheduling with patient registration, examination work lists, radiologists’ notes, transcriptions, medical records, billing, marketing, and administrative functions.
“There is no question the system is much more accessible and much faster,” Dunlap says. “We also purchased a PACS, which provides us with capabilities of image enhancement, rapid retrieval, and long-term storage at a reduced price.”
All that equipment translates into four busy centers. There are eight full-time radiologists employed on the east side alone who read close to 400 examinations each day. Referrals come mostly from direct contact with physicians.
“We get a fair number of referrals from Kaiser because they also are understaffed in various departments: their surplus patients feed over into us,” Warnock says.? “In the Pacific Northwest, the technologist shortage problem is so acute that Oregon State University has two MRI scanners but can operate only one because it does not have the staff to run both. The university’s solution has been to hire a mobile service, because a mobile PET scanner can attract and keep employees.”
In keeping with its competitive nature, EPIC also is adding a second PET scanner to its West facility.
A key component of the EPIC business model is growth, and choosing where the growth will happen is critical. “Dr Warnock will always entertain opportunities for further growth,” Haymond notes. “Most of those propositions come from physician groups in the process of considering new buildings. We were just contacted by a group ready to break ground. His first and foremost consideration is geography. He wants to know where the patients will come from, the number of physician groups that may or may not refer to the new center, and who may be his direct line competitor in his area. He is always very cautious in making sure that any new business opportunity would not distract from our existing practices.
“I do the market analysis: utilization and size. Bill Dunlap does the pro forma, and Dr Warnock’s wisdom/intuition is the third part of the analysis. He has a real gut ability to look at new opportunities.”
EPIC’s employees are not only happy at the center, but technologists and radiologists regularly contact the center to inquire about employment opportunities.
“We have had no trouble attracting people. The word on the street is that this is a nice place to work,” Dunlap says. “Our family atmosphere helps, as does the fact that we pay top dollars for employees, and we offer the best benefit package in our area.”
“We’ve fared very well up to now as far as manpower,” Warnock adds. “We are good at attracting and holding most radiologists because we offer good working conditions and excellent equipment. Technologists like having good equipment so they can brag about what they have and others don’t. It is extremely rare that an employee resigns at EPIC.”
Dunlap says the fact that EPIC does not have layers of bureaucracy, hence decisions can be made and processed quickly, also contributes to employee satisfaction.
“For the most part there is a group discussion with radiologists about new technologies and the necessity of making them available to our patients,” Dunlap says. “But a sole proprietorship means that there is a board of directors of one, so decisions are made very quickly.”
Dunlap says Warnock typically looks at the acquisition cost, costs of siting the technology, equipment purchase, and how many procedures it would take to break even. Then he will often move toward new technology, even if it is initially at a loss, if he believes it will benefit the patients.
“In the long run, all the doctors really have to worry about is the patients,” he says.
Having the radiologists as employees is a plus for referring physicians as well, says Haymond.
“At EPIC, physicians have lots of opportunity to work with radiologists and technicians who are very experienced, and it does a lot to promote the physician’s practice when they can work closely and collegially with our staff,” Haymond says. “For the radiologist’s part, they can stay focused on their primary goal, which is providing patient care.”
Meeting patient and physician needs and never turning a patient away are, in fact, the tenets behind EPIC’s day-to-day operations.
“We make sure that patients are cared for according to their and their physician’s requests. That is unlike any practice I’ve ever been involved with,” says Haymond, who was a director of one of the local hospitals for 20 years before coming to EPIC. “It also is a key element of EPIC’s success. If a patient needs to be seen today, they will be. In a hospital, that is difficult to accomplish because of the challenges of limited technology. Hospitals also do not have that service mentality. At EPIC, service is a fundamental principle of how the center works on a daily basis.
“We understand the importance of providing service in terms of what the patient wants and what the physician wants,” Haymond continues. “For instance, if the patient has an MRI and the physician needs the report the same day, they will have it then. Or if the physician needs to talk directly to the technologist, then that must be an element of customer service that we provide.
“Providing outpatient imaging allows us to stay focused on the patient, and we don’t get caught in the layers that hospitals have to deal with,” Haymond concludes. “That is the right way in my mind to provide better services to patients.”
Another aspect of providing better service has been shifting EPIC’s marketing to focus on an increasingly health-savvy public.
“Consumers are really starting to drive referrals,” Haymond says. “There is a very sophisticated group of patients out there who have access to more resources.
“When I came to EPIC 4 years ago, we were doing direct physician mailings. However, as we became more aware of the numerous screening examinations available, we shifted to provide more consumer information,” Haymond says
EPIC has prepared several patient brochures that have been placed in physician offices, and the center has had some significant local TV coverage on the practice’s screening processes, including its CT screening for lung cancer.
“That screening is specific to patients with a long-term history of smoking, and it allows us to see definable cancers far earlier than on a chest x-ray,” Haymond says. “That screening method has not yet been recognized by major insurance companies, but we do have the research available to support its efficacy.”
Working With The Web
Keeping consumers educated is also the goal of EPIC’s redesigned Web site.
“We want our patients to know that we are focused on their care, so we do everything we can to provide information beforehand that will help them and make their experience easier,” Haymond says.
The site provides patients with a way to research any diagnostic procedure and better understand what they can anticipate before coming in to the center. The design also allows for online registration, and provides patients with a map to their particular clinic as well as details about the preparation necessary for their chosen procedure. The Web site likewise serves as a physician resource by providing more clinical information about what new technology is available.
“Our physicians are able to look up any report remotely with complete patient confidentiality,” Dunlap says. “Our competition has a hospital information system online, but there is no remote access for physicians.”
Keeping ahead of the competition in that manner continues to be a hallmark of EPIC’s success.
“The future of this business is increased productivity with increased diagnostic capabilities while managing costs. This model could be created elsewhere if the individual physician had the capital required to do so,” Dunlap says. “But Dr Warnock has an outstanding ability to recognize paradigm shifts in the correct direction.”
“EPIC would be a wonderful model, but it is not necessarily transferable,” Haymond agrees. “Warnock has wisdom and instinct that he can’t always teach. There also is an element of risk to EPIC that some people would not be willing to take. Warnock is a real maverick in that sense. He has worked very hard to develop relationships with the physician community that garner him great respect, and he has tremendous community support in his ability to provide imaging services.”
Warnock is a bit more pragmatic about his abilities, and as for his vision of what is next for EPIC, he is not revealing what he sees on the horizon.
“I like making decisions, and I have generally made the right ones,” Warnock says. “At this point, we are still in building acquisition mode. I am 67 years old and I don’t have an exit strategy thought out, so I don’t know what’s going to happen down the line.”
Elizabeth Finch is a contributing writer for Decisions in Axis Imaging News.