Radiologist–Hospital Alignment: Destabilization, Discord, and Accord

In March 2010, Sutter Health announced plans to sever a contract, in place for nearly a century, with Radiological Associates of Sacramento in California. Under its terms, the group had served five Sutter Health hospitals in the region. The previous year, Mercy Health Partners suddenly let lapse an equally established handshake agreement that it had maintained with Consulting Radiologists Corp to cover four hospitals in the Toledo, Ohio, area; a corporate provider of imaging services was brought in as a replacement. In 2008, Florida Hospital in Orlando announced that it would not renew its contract with a radiology group that had served it for 40 years. The group’s radiologists were instead offered employment at the hospital; two-thirds of these physicians subsequently joined the institution’s ranks, and the group disbanded. These incidents represent just a few examples of meltdowns in long-standing relationships between radiologists and hospitals. The emergence of national teleradiology companies and the movement toward an accountable-care organization (ACO) model have brought to bear new options for hospitals, in outsourcing radiology coverage and in employing radiologists alike. Many radiology groups are grappling with how to remain independent while simultaneously meeting the needs of their clients. Richard Townley is president and CEO of AGI Healthcare Group, a consulting organization that assists health systems, hospitals, ancillary-service providers, and radiology groups in executing initiatives for cost reduction, productivity improvement, and revenue enhancement. He says, “The industry, as a whole, is struggling mightily with physician–hospital alignment as never before. Radiologists have one set of priorities, and hospitals—the big hammers looking for nails—have another. It is not an entirely pretty picture. ” Issues Spark Destabilization Several general issues appear to be sparking a destabilization of radiologist–hospital relationships. Cynthia Sherry, MD, FACR, chair of the department of radiology at Texas Health Presbyterian Hospital Dallas, believes that a lack of understanding about expectations and priorities heads this roster. She says that some radiologists do not fully comprehend the increasing importance of going the extra mile to satisfy the service expectations set by hospitals, administrators, and referring physicians. Rather, these radiologists continue to operate under the mindset that they are the only game in town—and, therefore, secure in their relationships with the hospitals that they serve. Similarly, younger practitioners, in particular, place great emphasis on the work–family balance and assign it a higher priority than fulfilling hospitals’ requirements—sparking tension that only widens the chasm. Sherry headed the 10-member ACR® task force on relationships between radiologists and hospitals (and other health-care organizations), which published its recommendations¹ for strengthening radiologist–hospital alliances in 2010. She says, “Replacing radiologists for hospital imaging services has, until fairly recently, been a challenge. Today, however, hospitals have so many sources for imaging services from which to choose that if one group is not up to par—for any reason—removing it and bringing in another is not a big deal.” Sherry adds that inadequate radiology-department leadership is a factor as well, with radiology departments, in many cases, being unable able to cultivate leaders who can effectively communicate with hospital administrators. Some are willing to make few, if any, concessions to hospitals and would rather dig in their heels than adopt a cooperative stance. Others have members who refuse to follow their leaders in allying themselves with the hospital on a given issue. The Flip Side There is a perception among radiologists that certain hospitals fail to respect the quality of the interpretation services they provide, viewing them, instead, as a commodity. Hospitals’ inability or refusal to subsidize radiologists’ salaries comes into play here as well. Timothy Stampp, MBA, serves as chief of corporate development at Medical Imaging Specialists (MIS), a consulting company for which radiology groups are half (or more) of the client base. “A considerable push behind the breakdown comes when hospitals want radiologists to work in their facilities and subsist on what they have collected from payors and patients—despite the added value of their services. Radiologists say that they cannot afford to do this, and hospitals respond that they cannot afford to pay,” he notes. Adding insult to injury, players on both sides face ongoing financial challenges—and address them in different ways, which might not prove advantageous to every party concerned. For example, Sherry says, a radiology group might (in its quest to procure new revenue sources) build its own imaging center—with a subsequent negative impact on the hospital’s bottom line. Battles over technology, too, can ensue when radiologists and other specialists are competing to use the same hospital-owned equipment. High Stakes Unsatisfied demands and desires notwithstanding, entities on both sides of the radiologist–hospital divide clearly have much to lose in situations where closer alignment is not achieved. As Stampp puts it, radiologists will be unable to battle heightened competition successfully—not only from teleradiology concerns, but also from other specialists who perform their own imaging and interventional procedures—unless they accede to at least a portion of hospitals’ demands. They risk having to operate in an environment where radiologists’ services are entirely commoditized and where contracts are almost always awarded to the lowest bidder. Hospitals would lose the value of radiologists who add elements of education and value to the imaging service line by looking for more effective ways to use resources and by promoting more appropriate use of imaging. When there is no give on hospitals’ part, the incentive for radiologists to do more than interpret studies can easily disappear—to the detriment of hospitals. Stampp points out that these risks remain the same, whether radiology groups adopt a contract model (which offers the advantage of physician autonomy, yet comes with no income guarantee) or go the hospital-employment route (which brings with it the security and stability of working with a larger organization and freedom from handling the administrative obligations of medical practice). Either way, he says, arriving at an optimal financial arrangement should go a long way toward pushing alignment in the right direction. A Long-standing Employed Model Thomas Nantais, FACHE, CEO of Henry Ford Medical Group (HFMG), Detroit, Michigan, knows this all too well. Part of the not-for-profit Henry Ford Health System, founded in 1915, HFMG is the third-largest group practice in the United States, with approximately 1,400 employed physicians representing more than 40 specialties. In 2011, Henry Ford Hospital was one of four recipients of the Malcolm Baldrige National Quality Award. “Our mantra is to focus on the patient first, and we believe that the best way to do that is through the captive model. As such, we have had employed physicians since day one and radiologists on staff since the 1930s, when technological advances began to ramp up,” Nantais says. HFMG uses a base-plus-productivity model wherein 85% of physicians’ compensation is salary and the remaining 15% is tied to productivity. Radiologists have assigned duties and are encouraged, under the system’s academic model, to engage in teaching and research activities. Compensation is probably at the mean, Nantais notes, adding that occasional retention bonuses sweeten the pot. The fact that performance is measured against quality, rather than output, minimizes turnover and forms a better basis for radiologist–hospital relationships because both sides feel that their priorities and concerns are being addressed, Nantais says. He reports that the hospital’s quality of care is 17% higher than average, and its costs are 20% lower. “When it isn’t about the money—and radiologists aren’t concerned that they have to push patients through the system—the caliber of care and the proper use of resource fall into place,” Nantais explains. “We may have some issues with recruitment in some radiology subspecialties, such as interventional radiology and neuroradiology, but it isn’t about the money. It has to do with the pool of physicians out there.” Even some hospitals that operate under a contract model have begun to negotiate contracts, in their quest to draw closer to physicians, that call for a base-plus-productivity payment arrangement. MIS advocates this approach, Stampp reports, because the combination of the two elements yields physicians a sense of stability, while fostering a culture that values effort and output. “They are left to concentrate on critical issues—quality of care and appropriate utilization—instead of the figures that are going to be on their next paychecks,” he observes. Moving Forward While compensation remains high on the list of issues that disturb physician–hospital relations, establishing more open lines of communication tops the list. MIS clients are urged to form operating committees composed of constituents from the hospital and radiology sides alike. With these committees in place, each physician provides input pertaining to quality control and improvement. Hospitals and physicians have a framework and vehicle for cooperative endeavors to minimize waste and optimize productivity, leading to better care for patients, reduced expenditures, and a healthier hospital bottom line. Committees operate in an environment of transparency, with economic and quality measures visible to all parties. It’s even more important for both sides to give at least a portion of what the other side needs, but is not currently getting. North County Radiology, a 23-physician imaging practice in Oceanside, California, serves—and maintains highly viable contract relationships with—three hospitals in San Diego County. Scott Raymond, CEO, credits the stability partly to his group’s level of involvement in hospital affairs. Radiologists affiliated with North County Radiology sit on the executive committees of all three hospitals and contribute input to myriad decisions pertaining to everything from equipment acquisition to patient care, safety, and performance measures. “There remain hospitals where the prevailing thought is that radiologists—employed, under contract, or without a formal contract—should not be entitled to a seat at the table,” Raymond says, “but practitioners want more of a stake.” Richard Collins, MD, president of Salem Radiology Consultants (SRC) in Oregon, agrees about that stake. Representatives of SRC (which serves two hospitals and an urgent-care center/clinic) actively participate on boards and committees, giving them the opportunity to demonstrate the value of radiology services to the institutions, as well as to emphasize the practice’s commitment to patient care. “We are fortunate in that the hospitals are very receptive to our playing a leadership role,” Collins observes. SRC does not maintain imaging contracts with the hospitals; the arrangement is informal. Collins says, however, that the extent to which these institutions enmesh the group in all aspects of operation has paved a clear path for a successful, low-friction arrangement and strong, symbiotic relationships. It’s just as significant that radiologists also seek enhanced service-exclusivity protection. In favor, Townley says, are exclusivity agreements stipulating that reading privileges will not be granted to physicians outside the specialty, as is currently a common practice. Some radiologists also hope for compensation for services provided to emergency departments and for similar unpaid work. Hospitals suffer from a largely unmet desire for fewer conflicts of interest—for example, for radiology groups to eschew competing (via follow-up referrals) with the institutions with which they partner. According to Sherry, there remain some radiologists who, for various reasons, are not agreeing to hospitals’ requests that they spend more time on-site during the day and provide some evening and weekend coverage. Hospitals’ needs for a higher level of subspecialty care and for consulting services for referring physicians also remain somewhat unmet. “While it is too early to know exactly how the ACO situation will play out, we are, unequivocally, at a really pivotal juncture,” Sherry concludes. “Radiologists need to assert themselves more and provide value, so as to move into positions of influence.” By the same token, hospitals should recognize the value that radiology brings to the table—in the way that professionals are compensated and in the way that they are given a louder voice, in the hospital’s ear. “All of us who are sitting around the table face increasing financial pressures and declining reimbursements, and everyone is affected. Improved relationships will not relieve these pressures entirely, but they will make for a far less bumpy radiology road ahead,” Sherry says. Julie Ritzer Ross is a contributing writer for Radiology Business Journal