At the Helm

5 things CEOs need to know about imaging services

Welcome to the "CEOs Need to Know" series, where our top experts help hospital and health system CEOs understand the most pressing issues facing the members of their leadership teams.

In our sixth installment, Lea Halim, Senior Consultant of the Imaging Performance Partnership explains what CEOs really need to know about imaging services.

1. You underestimate the size, scope, and impact of your imaging services

Imaging interacts with almost every service line and department within the hospital, spanning the inpatient, outpatient, and emergency department settings. In fact, about 70-75% of patients referred to a hospital receive some form of imaging. Consequently, strategic investment in clinical service lines such as cardiovascular or oncology, require corresponding investments in imaging services as well.

Your to-do list:

  • Integrate imaging into broader outpatient strategic planning processes. For example, one of our member organizations has included the imaging director in the health system’s new urgent care strategy as outpatient imaging is vital to the success of outpatient clinics.

2. Imaging is a prime target for payment cuts—and your margin is on the line

Hospital-based imaging contributes about 35-37% of to the hospital’s overall profit margin. However, imaging reimbursement has a target on its back. Over the past several years, Medicare has repeatedly cut both professional and technical fees for imaging services—both by directly cutting some services and by bundling services together. Undoubtedly some private payers are following suit.

In addition to individual fee schedule changes, imaging is on the line to see revenue losses from payment equalization. To implement a 2015 Congressional mandate, CMS is proposing to move all outpatient facilities built or acquired after November 1, 2015, to the physician fee schedule by 2017. With outpatient services increasingly strategic for imaging growth, this is likely to have an impact that will only increase over time.

Your to-do list:

  • Include imaging leaders in conversations about outpatient expansion strategy in light of payment equalization.
  • Consult with imaging leaders to set realistic expectations for future imaging revenue.
  • Consider system-level initiatives to help manage imaging costs and preserve contribution margin.

3. Imaging volumes are particularly vulnerable to consumerism

Payers are actively steering patients away from hospital-based imaging to the lower-priced freestanding imaging centers. And as patients take on more financial responsibility for their health care, they are seeking providers that maximize the value of their health care dollar. Services such as outpatient imaging that are non-urgent, are thought to be more shoppable and therefore are more susceptible to consumer-like behavior. Differentiating on price, access, and patient experience is key for preserving imaging volumes—and protecting downstream utilization for the rest of the health system.

Your to-do list:

  • With the help of your imaging leaders, understand the level of price transparency and sensitivity in your market.
  • Invest in price-competitive imaging options (e.g. discounts, freestanding imaging centers etc.).
  • Understand imaging consumer preferences.

4. Imaging has been marginalized by population health—but can actually help bend the cost curve

As health systems’ shift to population health, imaging is often seen as low-hanging fruit for utilization management. This has meant a hit on imaging volumes, and in some cases has marginalized the role of imaging in the risk-bearing organization.

However, it is critical to recognize that imaging leaders can be key allies, not side observers, in managing population health. Imaging leaders have been leading the charge on utilization management for years and many are preparing to implement Medicare-mandated clinical decision support tools to ensure appropriate ordering of imaging. And beyond reducing utilization of unnecessary exams, imaging departments can help improve outcomes and care coordination for the entire patient population by implementing effective screening programs and by taking charge of enterprise-wide imaging IT.

Your to-do list:

  • Support imaging leaders in identifying and reducing low-value imaging utilization.
  • Position imaging leaders to participate in system-wide population health initiatives.

5. You’re not investing enough in interventional radiology

Interventional radiology procedures are minimally invasive, image-guided procedures used to support the treatment of a number of different conditions spanning cardiology, oncology, neurology and several other service lines. Given that many image-guided procedures are less invasive than traditional surgical procedures, IR procedures are shown to lead to better patient outcomes, fewer complications, and overall less acute-care utilization—advantages that are especially pertinent in a risk based environment.

Developing a robust IR program requires significant resources. Programs need to invest in IR equipment and clinical space, hire interventional radiologists, and track and report clinical quality data.

Your to-do list:  

  • Understand what interventional radiology services are ripe for growth in your market (and partner with relevant service lines to grow IR services).
  • Work with your radiology leaders to craft an IR growth strategy.

Next in what CEOs need to know

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Get your C-suite colleagues on the same page

Join our webconference on September 13 to hear Rob Lazerow, Managing Director of the Health Care Advisory Board talk with Lea about the often-neglected role of imaging in the health system.