How Can Radiologists Effectively Reduce Costs?

The U.S. wastes somewhere between $7.5-12 billion annually on medical imaging, according to a 2014 industry survey.1 The causes include defensive medicine, physician lack of familiarity in selecting the most appropriate test, and patient demand for imaging.

Providers all agree there is a demand to reduce such waste, especially given private insurance and Centers for Medicare and Medicare (CMS) pressure to practice more cost-effectively. New Medicare clinical support decision (CDS) requirements for appropriate clinical use are set to go into effect on January 1, 2020, and radiologists will want to help take control of imaging cost issues by then. This deadline will usher in new physician reimbursement standards under the Medicare Access and CHIP Reauthorization Act (MACRA). An ordering referring physician can earn half the points needed to qualify for MACRA process improvement activity payments by adhering to CDS standards.2  Radiologists with insight into these new CDA process improvement needs of referring physicians will likely become a preferred imaging resource.

A Need for Transformation

Radiologists are working to overcome barriers to change. The radiology field has often been sequestered within hospitals or clinics and operating without best practices; such past realities have made it difficult to reduce costs and utilization. But one promising trend is for radiology groups to get bigger through mergers and acquisitions. Such a strategy enables radiologists to spread the cost of information technology, management, quality assurance, reporting, data analytics, and compliance costs. Radiology Partners is the largest on-site practice in the U.S. with more than 900 physicians providing service to nearly 600 hospitals. There are many other examples of large and growing radiology practices. Such a large cohort of physicians allows data collection to help determine best practices to standardize treatment protocols. Analytics lends itself to population health management to reduce unnecessary imaging radiation dose and lowering costs.

Value-Based Delivery Strategies

Regardless of practice size, interpersonal skill also drive change. Dr. Kurt Shoppe with Radiology Associates in North Dallas, a 170-radiologist practice, views trust as a critical component on the journey to value-based delivery (VBD).This includes sustaining the confidence of referring physicians. Hospital administrators also need attention, as their view of quality may be different from the radiologists. VBD requires that compensation incentives align with outcomes for efficiency and quality. Access to imaging sub-specialists will drive lower utilization and reduce errors and call-backs.6 Also, radiologists who assume a leadership role in creating standard protocols to meet VBD metrics will be viewed as collaborative, forward-thinking, organizational leaders. Other strategies include selecting a single vendor enterprise system, committing to open networks to share information, thinking about big data and artificial intelligence, and being committed to the proposition of change.7

Imaging Cost Reduction Case Studies

Mayo Clinic radiologists reported in a 2017 Journal of the American College of Radiology article that they were able to reduce unnecessary exam steps and costs by 13 percent, staff time by 16 percent, and patient processing time by 17 percent by implementing a new business model.8 This business-management model, time-driven activity-based costing (TDABC),9 was adopted by Mayo to enable their radiologists to accurately measure costs for treating patients with magnetic resonance enterography (i.e., contrast imaging of the small intestine). In one adjustment that reassigned the duty of injecting the contrast from nurses to technologists, they team realized an overall time reduction of 17 percent, from 102 minutes to 85 minutes.

At the University of Utah School of Medicine, by tracking imaging workflow through the TBABC model, the team was able to tease out the cost of abdomen-pelvic computed tomography (CT) exams in different care settings, including the emergency department, inpatient, and outpatient.10 The process helped Utah leaders understand that the costs of the scan were much higher on inpatients than in the other two areas. Forty percent of inpatient costs were attributed to non-radiological personnel, so by replacing some of the duties performed by CT technologists or nurses with medical assistants, like cleaning the CT room, could reduce overall costs of CT without compromising quality.11

According to a Johns Hopkins study, it’s not so important what model is used to determine value in radiology. The team studied 80 cost-effective models and identified future clarification imperatives to properly calculate radiology costs. Regardless of the model used, the researchers determined that three criteria must be satisfied for it to be effective.12 First, all direct and indirect studies must be included. However, there was not a universal standard on what comprised costs. Second, the perspective of the user must be clearly identified (i.e., hospital administrator, radiologist). The final consideration to remember is the patient so a willingness-to-pay threshold must be included. The imaging portion of this equation has yet to be teased out because downstream disease management can be influenced by factors other than diagnosis.    


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