Cost Containment Ninja: Jessica Montgomery, MBA, SMIL

Flash back to the end of 2008 and the Deficit Reduction Act of 2005. At 14-site Scottsdale Medical Imaging (SMIL) in Arizona, word comes down from the board of directors to senior management: Our shareholders are concerned. We’ve got to do something to stem the financial bleeding.

Reflecting on that pivotal moment from the vantage point of 2015, Jessica Montgomery, MBA, SMIL’s chief operations officer, recalls that the directive came with one reassuring caveat: Sweeping staff cuts were off the table. “We saw places across the country laying people off, and our philosophy is that you implode your culture when you do that,” she says. “I’ve been here since 1998, and our culture has always been about taking care of not only the patient but also each other.”

How, then, did Montgomery manage to shave some 15% off payroll—cutting it from $17 million for 425 employees then to $15 million for 320 now—while maintaining morale and improving productivity?

First, by reviewing every job description, analyzing the time it takes to complete nearly every task, and setting goals to close the gaps between the total hours people work and their corresponding hourly output. Stated another way, it was down with human downtime. For front-desk and other support staff, this meant agreeing to time parameters for various daily duties. For the technologists, it meant recording work RVUs just as the radiologists had begun doing.

“We used the Medicare wRVUs, because I figured the ratio of time it takes for a radiologist to read the scan is about the same ratio of time it takes the technologist to perform it,” Montgomery explains. “We calculated each employee’s hours worked alongside the number of exams that went through the department and the total number of people on our staff. From that we came up with the math and the goals.”

Next came moving the technologists from single-site assignments to rotations between several sites within a reasonable radius of where they live. This facilitated coverage for vacations and sick days, for example, without a reliance on even slight overstaffing.

As might be expected in a time of change and heightened watchfulness, attrition happened. As people left, whether by their own choice or SMIL’s, Montgomery evaluated the capacity of the remaining staff to take on the former worker’s duties. “A lot of times we found that we could absorb the work,” she says. “As we were getting efficient,”—site by site and modality by modality—“we were reducing the size of the global staff.”

No expense left unexamined

Paring the staff to a leaner, highly efficient workforce has been the single biggest source of cost containment, says Montgomery. It’s far, however, from the only substantial source of savings. 

For example, when Montgomery inspected the general ledger in 2009, as the belt-tightening project was getting underway in earnest, she noticed film costs totaling nearly $350,000. This sum fairly leapt off the page, since SMIL had been digital since the early 2000s.

“It turned out that the technologists were just giving patients what they asked for when they requested their films,” Montgomery says. “We retrained the staff to give every patient a CD unless it’s noted in our database that a particular physician specifically wants film.” Otherwise it’s 10-cent CDs on the house for every patient, every time—to the tune of nearly a quarter-million dollars in savings.

Up next were service contracts, long a source of unrewarded spending. For the advanced-imaging equipment—MR, CT, nuclear medicine and PET—all purchasing would go to a single OEM, including platinum-level service contracts. “Time is money,” Montgomery says, adding that SMIL required 99% uptime on the big-ticket machines. For ultrasound and x-ray, Montgomery coaxed the other members of the management team to accept a little more risk.

It’s paying off. “We’re saving $176,000 a year just by saying, ‘You know what? If an ultrasound probe goes down, it’s $10,000 bucks. Let’s just replace it,” says Montgomery. “We could even have an ultrasound machine in a closet and just harvest the parts when we need them.”

A key move to manage the equipment for greatest cost-effectiveness has been working with a database called an equipment management tracking system (EMTS). “I had our programmers build it in-house and enter every piece of equipment, 186 pieces in all, along with contact info for who to call when something goes down,” Montgomery explains. All staff have been trained on the system, and, whenever someone enters or resolves a service request, an email automatically goes to management.

“The EMTS has been a phenomenal tool for making me and my radiologists feel comfortable with going uncovered on imaging equipment,” Montgomery says. “It allows us to always have a finger on the pulse of what’s up and what’s down.”

Morale matters 

People tend to resist change they don’t choose. When it comes to work, most prefer predictable daily routines. These realities sometimes made Montgomery decidedly unpopular as she spearheaded SMIL’s cost-containment project. The single plan that met with most resistance was the shift of technologists from a single-site staffing model to a global one.

Montgomery, a former technologist herself, empathized—but remained resolved. “When you get thrown into a different environment with different people, it can be nerve-wracking,” she says. “But we had to reduce that huge FTE count. There was a lot of noise for about three years, but eventually everybody got on board. They knew it was the right thing to do, and they saw the benefit. Now it’s just what we do.”

It helped that the demands of rotation were kept reasonable. Nobody is required to cover all 14 sites and, in fact, most are only asked to be available for the three or four nearest their ZIP code. “But there is the expectation that, if I need you and you have the skill set, I may ask you to cover for someone a little farther away from where you live,” Montgomery says.

“One of the big messages that I had to get out there was, ‘I know this might not be fun,’” she says. “I’ve been here at SMIL since 1998. I remember when everything was fun. I get it. But we’re all here. We may be having a little less fun, but the payoff is ensuring our future for the next 20 years.”

She credits the rest of the management team with prioritizing internal communications in order to secure buy-in throughout SMIL. The team includes the clinical director of operations, site managers and modality managers.

“We even got some positive feedback, where [technologists] told us they really liked working with different people” and at various sites, says  Montgomery. “That perspective gradually filtered throughout the organization.”

A healthy culture preserved

Some of the suggestions arising from that first review of the general ledger got no traction. For example, someone on the management team floated the idea of doing away with coffee machines in break-rooms. That would have saved money, all right. “But it also could have sent the signal that we must be going bankrupt”—or that management was willing to sacrifice SMIL’s caring culture, Montgomery says.

One move involved spending money to save it. A couple of years into the project, SMIL hired a process improvement engineer. Black-belt certified in Lean Six Sigma, this professional cost-cutter ferrets out wastefulness wherever it hides, and tells Montgomery how a process can be improved to cut the waste.

“Because she’s not in any one particular department, the staff views her as nonthreatening, kind of like Switzerland,” she says. “And having that kind of expertise has been huge for us. It’s paid us back on her salary 10-fold.

SMIL staff members are not living in a vacuum and are well aware of the economic climate, Montgomery adds. “Everyone has friends or family members who have lost a job or 401(k) matching or had to accept a pay cut,” she notes. “And because of our cost-containment efforts, we’ve been able to preserve a lot of those things for our staff—including modest bonuses and/or pay increases. It’s exciting to work for a medical practice where the doctors believe in the management enough to make these decisions and trust us to do it in a way that preserves our culture.”