Joint venture evangelist only growing in zeal for the JV way
It’s been half a year since RadAnalytics last heard from Scott Luchs, MD, president of Ramapo Radiology Associates in New York State’s Hudson Valley. At that time, he had just presented at a webinar in which he extolled the advantages of radiology group joint ventures (JVs).
Luchs knows the topic well. He and Joseph L. Racanelli, MD, president of Radiologic Associates, also in the Hudson Valley region, have spent much of the past year leading the meshing of their groups to form the 37-radiologist joint venture Empire Health Support Services, LLC.
The JV is now online with a patient-friendly website, EmpireHSS.com, and Luchs sounds more convinced than ever that the JV option is a sure bet for independent groups wanting to maintain their independence through 2015 and beyond. He spoke with RadAnalytics at some length in March. Here are key excerpts from the conversation.
First, please quickly catch us up on your progress with the JV since last fall.
Luchs: Just like with any startup business, the trajectory is never straight up. There are always bumps along the way. However, all in all it has been incredibly exciting and incredibly successful. We are at the point now where we are recruiting member groups to join Empire and increase its size and scope.
I use the word recruit somewhat lightly, because a number of these groups heard about us and what we’re doing, and they have come to us. Everyone who has heard about this, whether it was through the webinar or just word-of-mouth, has been excited about the concept. We are in discussions with a number of group practices interested in joining Empire for the purpose of better positioning their practice with their hospitals and systems as well to take advantage of the expense savings opportunities we can bring them.
From a business start-up standpoint, it takes a while to get organized. The professionals at Integrated Radiology Partners (IRP), as well as our practice business leaders, have invested valuable time building this from the bottom up and making sure every step was appropriately taken. The guiding principal has been to enable Empire to succeed both in creating a well-run physician driven service enterprise designed to augment and reinforce the strategy of our hospitals as well as to recruit new forward-thinking groups to build scale and resources required to execute our strategy and fulfill our business plan.
And that’s where we are right now. The foundation is pretty much built. We are raring to go, and things are looking great.
Are the interested groups located within your geographic market area?
Luchs: Yes and no. We can all define the concept of region in our own way. Of the groups we are in discussions with, the majority are within our immediate geographic market as I have traditionally thought of our market in. The others are more up-state. Thinking ahead of how markets are now being defined, where large hospital systems are forming affiliations even across state lines, I would answer they are all in our geographic market – the state of New York. We are more than willing to speak with any practice that feels it might be able to benefit from what we have to offer and that might be able to add something to our growing joint venture, regardless where they might be located in the state.
How are you measuring your progress and your success?
Luchs: At this point, it’s too early for us to have any hard numbers or metrics. We’re still in the first phase of growth. The success that we are having so far has been measured by subjective criteria. What has spoken to us the loudest is that every hospital administration with whom we have spoken to let them know that the JV is the direction we’re taking—every single one of them—has been effusive in their praises of us for doing this.
It goes without saying that every radiology group we’ve spoken to has been very excited as well. Of course, no one is perfect. Metrics are hugely important, and analytics are a very big part of what we’re doing. The more groups you have, the more hard data you have, the more measurements you can make, the more, the better. But coupled with effusive encouragement from your hospital partners, their expressed willingness to do anything they can do to help us—right now, that’s as good as any hard metric that we can, and will, get.
What do you think explains the excitement within the hospitals over your JV?
Luchs: Radiology practices, as all medical practices really, have traditionally been inwardly focused on clinical care in the past. As such, they’ve been really reactive to external market influences and changes rather than proactive. Hospital administrations tend to be better at market analyses and have strategic long-term plans. Given the significant role radiology plays in patient care, those plans involve radiology practices like ours. To facilitate the outcomes and cost savings sought by the implementation of the new care and reimbursement model hospitals obviously have to have radiology as a strong partner and contributor.
For us, the way that we can help them—aside from being there for them whenever they need us, for whatever function—is to be a strong group. If we are a strong, well-positioned group, are growing and maintain a major presence in the market, we can afford to invest all the latest technologies. We can afford to attract the best talent. On the clinical side, we can offer wide subspecialty expertise and community-based after-hours coverage. And most importantly, we —, unlike the physicians in the big national companies, have “skin” in the local game. We have a strong economic incentive to see things work, and work well. In short, we can be a strong local group that can help the hospital carry out its strategic plan, whatever that might entail.
Our experience has shown us that hospitals want strong radiology leadership. It’s not so simple in today’s world of medicine, which is scary and highly regulated and filled with politics. We are committed to promoting that example. Both Dr. Racanelli and I are members of the executive committees at our hospital and officers of the medical staff of the hospital. We’ve had members of our groups on the board of directors of the hospital.
That’s really what the JV is all about. It lets you extend your leadership beyond the confines of your group and your market. You need to be, as I am, and as are the founding presidents of our joint venture—and other joint ventures that we know of around the country—physician leaders the CEO of our hospital systems come to when he or she has a question. You need to be somebody to whom the COO turns when he or she has a plan for growing this or that service and needs advice on the best way to implement it. We are creating an environment and presence that fosters this interaction.
The rapid growth and almost instant embrace of the JV model reflects how fast U.S. healthcare is changing, doesn’t it?
Luchs: It does. Certainly. In the past, radiology practices have typically been independent. Today, radiology practices are increasingly owned by hospitals, by large, private equity-backed national corporations or they are independent and seem to be struggling. So the groups like us that are independent and are interested in staying independent as financially viable practices, need to embrace this type of model. By forming these joint ventures it will allow us to remain independent, and support the needs of our hospitals as strategic partners. We do realize that our partners in this healthcare paradigm are the hospitals. Hospitals and doctors have historically never been partners. It’s more common that at some level, the professions have been more like foes. Things have and will continue to change dramatically. Today the hospitals are truly our partners, and we are truly their partners. They are the centers of collaborative healthcare in the community, and they will continue to be so for years to come, as together we function within ACO’s and other types of bundled care and reimbursement models. What we are doing by forming and growing these physician-led JVs will allow physicians like us to be the hospitals’ strong partner in this changing medical landscape for the foreseeable future. We are really excited about our future.