Finding Benchmarks for Imaging’s Operating Costs
The operational management of medical imaging is obviously a significant expense, yet it has rarely been studied. In 1999, 55% of imaging costs were spent on compensation.¹ Today, compensation accounts for 65% of imaging costs.² Since salaries have remained in line with inflation rates, this means that staffing levels, overtime, and/or the use of agency personnel have increased 10%. A survey by AHRA: The Association for Medical Imaging Management found that for-profit imaging centers have a 10% higher productivity rate than nonprofit facilities.³ Understanding the reasons for these differences in efficiency calls for comparative data on operating costs.
Extensive searches of academic and public databases revealed, however, that benchmarks for operating costs in imaging have not been widely published. Therefore, a survey of AHRA members was undertaken, and more than 125 anonymously submitted their expense and procedural-volume data for 2007 for analysis.
Survey Results
Total expenses and total exam volume were the only figures collected. Datasets were discarded as outliers when costs were extremely high (for example, because radiologists’ salaries had been included) or extremely low (when normal costs such as maintenance had not been included).
The table shows 15 datasets chosen at regular intervals to show examples from 125 survey responses. Extrapolated to 5,000 hospitals and 6,000 imaging centers, these data correlate well with Blue Cross Blue Shield’s and Medicare’s reported total imaging expense for 2007.4 
Figure 1. Average cost per exam in four US regions. Source: AHRA: The Association for Medical Imaging Management. Costs varied by region (Figure 1), but that was expected. More surprising was the lack of variation in efficiency between high-volume and low-volume facilities. One would assume that a facility producing more than 200,000 exams per year operates more efficiently than a small, rural hospital performing less than 20,000 exams, but that assumption wasn’t substantiated by the data. The number of responses for each cost level (the response frequency) also exhibited an unusual pattern, with multiple spikes instead of one dominant, and therefore typical, cost per exam (Figure 2).
Figure 2. Number of survey respondents by cost per exam. Source: AHRA: The Association for Medical Imaging Management. At 100,000 exams per year, even a $10 exam-cost difference totals $1 million in either savings or waste. Without established guidelines, how can radiology managers know whether they are performing efficiently? Budgets are customarily built on the prior year’s actual expenses, not on an industry standard. If $60 were the accepted median cost per exam, for example, the management of a facility performing 100,000 exams would know that annual expenses should not exceed $6 million and could make appropriate changes. Personal Experience The idea of analyzing costs per exam came from my work at five hospitals in northern New Jersey, where 27 hospitals have closed since 1990. Hospital consolidations initially exposed a significant variation in operating costs, and having the unique opportunity to track imaging expenses at three different hospitals within the same year triggered my later research.
Table. Cost per Exam for 15 Survey Respondents. Source: AHRA: The Association for Medical Imaging Management. The first hospital had no union, hired new graduates, did not have experience-based pay rates, and had only two management positions. Technologists averaged five years’ employment. These factors favored efficiency: New technologists are highly productive, inexpensive, open to cross-training opportunities, and willing to cross-cover other duties. The cost per exam hovered around $50, as it had for 18 years. The second hospital had a highly experienced staff in a union environment, which restricted cross-training and cross-coverage. In addition, there was greater use of overtime and agency technologists. The cost per exam was initially $74; a year later, after eliminating agency-personnel use and reducing overtime to less than 3%, the cost per exam dropped to $64. Further reductions were obstructed by union contract regulations. The third hospital’s cost per exam was $82 due to three circumstances. First, each modality had its own supervisor, plus a senior technologist. Excessive management contributes to a higher cost per exam. Second, there were experience-based pay differences of as much as $20 per hour. Third, staffing levels were too high. The subsequent survey of 125 AHRA members indicates a median cost per exam ranging from $47 to $67, depending on region. Greater understanding of such variations and their causes will be important if we intend to make significant improvements in the way that we deliver medical imaging, and developing an economic benchmark by gathering operating-cost data nationwide will be crucial to that pursuit. Editor’s Note: A portion of this article was drawn from material that was previously published in the May/June 2008 issue of Radiology Management. Lynn McVey, RT, is a graduate student (focusing on imaging’s impact on health care reform) at the College of St Elizabeth, Convent Station, New Jersey, and director, department of imaging, Palisades Medical Center, North Bergen, New Jersey.
Figure 1. Average cost per exam in four US regions. Source: AHRA: The Association for Medical Imaging Management. Costs varied by region (Figure 1), but that was expected. More surprising was the lack of variation in efficiency between high-volume and low-volume facilities. One would assume that a facility producing more than 200,000 exams per year operates more efficiently than a small, rural hospital performing less than 20,000 exams, but that assumption wasn’t substantiated by the data. The number of responses for each cost level (the response frequency) also exhibited an unusual pattern, with multiple spikes instead of one dominant, and therefore typical, cost per exam (Figure 2).
Figure 2. Number of survey respondents by cost per exam. Source: AHRA: The Association for Medical Imaging Management. At 100,000 exams per year, even a $10 exam-cost difference totals $1 million in either savings or waste. Without established guidelines, how can radiology managers know whether they are performing efficiently? Budgets are customarily built on the prior year’s actual expenses, not on an industry standard. If $60 were the accepted median cost per exam, for example, the management of a facility performing 100,000 exams would know that annual expenses should not exceed $6 million and could make appropriate changes. Personal Experience The idea of analyzing costs per exam came from my work at five hospitals in northern New Jersey, where 27 hospitals have closed since 1990. Hospital consolidations initially exposed a significant variation in operating costs, and having the unique opportunity to track imaging expenses at three different hospitals within the same year triggered my later research.
Table. Cost per Exam for 15 Survey Respondents. Source: AHRA: The Association for Medical Imaging Management. The first hospital had no union, hired new graduates, did not have experience-based pay rates, and had only two management positions. Technologists averaged five years’ employment. These factors favored efficiency: New technologists are highly productive, inexpensive, open to cross-training opportunities, and willing to cross-cover other duties. The cost per exam hovered around $50, as it had for 18 years. The second hospital had a highly experienced staff in a union environment, which restricted cross-training and cross-coverage. In addition, there was greater use of overtime and agency technologists. The cost per exam was initially $74; a year later, after eliminating agency-personnel use and reducing overtime to less than 3%, the cost per exam dropped to $64. Further reductions were obstructed by union contract regulations. The third hospital’s cost per exam was $82 due to three circumstances. First, each modality had its own supervisor, plus a senior technologist. Excessive management contributes to a higher cost per exam. Second, there were experience-based pay differences of as much as $20 per hour. Third, staffing levels were too high. The subsequent survey of 125 AHRA members indicates a median cost per exam ranging from $47 to $67, depending on region. Greater understanding of such variations and their causes will be important if we intend to make significant improvements in the way that we deliver medical imaging, and developing an economic benchmark by gathering operating-cost data nationwide will be crucial to that pursuit. Editor’s Note: A portion of this article was drawn from material that was previously published in the May/June 2008 issue of Radiology Management. Lynn McVey, RT, is a graduate student (focusing on imaging’s impact on health care reform) at the College of St Elizabeth, Convent Station, New Jersey, and director, department of imaging, Palisades Medical Center, North Bergen, New Jersey.