A maxim in radiology, as we traverse this most uncertain health-care landscape, is that size matters. In fact, it matters a lot. Consolidation is accelerating among independent radiology groups—especially those that have, for years, deferred the tough decisions that might have given them some breathing room as more aggressive competitors encroached on their territory—and the result is the formation of megapractices that enjoy certain economies and benefits of scale.
As next-generation practices are being shaped in shareholder boardrooms around the country, it is interesting to note that each of the three basic options facing today’s radiology groups is replete with both high risk and uncertain reward. These options are:
• to remain fiercely independent;
• to merge with, acquire, or divest
to another practice; or
• to become employees of the hospital.
There is no doubt whatsoever that risk and the somewhat chaotic nature of today’s health-care system are the two hinges that open onto today’s practice of radiology. The seemingly obvious rewards associated with alignment are themselves risky, most especially as alignment relates to loss of autonomy, entrepreneurship, and control of one’s own destiny.
How you manage that risk, and how you bring a semblance of order out of the chaos, will be the key determinants of the successful longevity of the practice. This is true as it has never been before—even in what seemed (back in the day) to be very dark moments.
The Demographics Difference
The difference today is one of demographics. Most practices face an additional factor, in working through these survival issues, that might not have existed during previous market crises: the graying of the profession and the differences in vision among distinctly different generations of radiologists. Within the typical practice today, the younger partners are not necessarily the most aggressive in supporting independence. Security is a big issue, as is lifestyle. Sweat equity among the old-timers who built the practice might or might not be valued (or understood) within the context of the economic realities of the radiology 2.0 practice.
This brings us back to the issue of size. There is no question that the advantages inherent in practices of a certain size can and do go a long way in creating an environment in which the optimal balance among security, lifestyle, professional satisfaction, and compensation can exist. Today, it is most difficult, at best, to see a pathway to such an optimal balance with groups of, say, 10 partners or fewer. There just is not enough capability to compete for high-quality referrals with practices that have real depth on their benches—subspecialty coverage, modern IT, expert marketers, huge market footprints, and the like.
Basically, our mom-and-pop cottage industry has been transformed into one in which a very high degree of professionalism, a keen process, solid infrastructure and resources, and visionary leadership are the keys to success. In other words, radiology has truly become a business, and tomorrow’s practices will succeed (or fail) based on their ability to understand the nature and nuance of the modern business enterprise.
Within economic entities such as these, certain milestones mark points of maturation. All around us, businesses are consolidating into larger entities in order to gain economies. Eventually, many of them get too big to offer the type of customer service demanded by discriminating customers, and a new cycle begins: Boutiques that offer more individual service emerge. It is a cycle of business that we need to watch, and we must heed its implications for today’s practice of radiology.
The Beauty of Big
In this environment, bigger is better. How you get there—using which of the three options—will depend on the particular culture and demographic breakdown of the group. When you arrive, though, you need to start planning for the day when boutiques will compete with you at the margins, offering platinum levels of customer service, entrepreneurial nimbleness, and an ability to build lasting relationships.
Balancing the risk/reward scenario is the art of evolving and running a modern radiology practice. There is really no perfect solution, but it won’t work to hope that the current headwinds will pass by and you will remain unaffected; that is just not going to happen. The smart imaging executive is deconstructing the growth and survival options to find the ideal size and structure for a particular group—one that takes advantage of today’s market realities, partner demographics, and lifestyle demands, as well as the need to build a sustainable practice.
Independence can work, but it will not be as the same old practice that coasted along on the coattails of an ever-growing aggregate marketplace. If you choose this option, you will nevertheless need to build your practice into one that resembles a much larger, supersized group in every way.
The ideal, then, is to find a size that builds a culture of security while maintaining an attitude of service and individual attention to customers. Around this ideal, a business structure that reflects modern leadership and economic principles needs to be created and nurtured, so that everyone within the organization will rally around the mission. In this way, a radiology 2.0 practice can be built that will thrive in this very complex environment.
Curtis Kauffman-Pickelle is publisher of ImagingBiz.com and Radiology Business Journal, and is a 25-year veteran of the medical-imaging industry.