Two Hospitals, Two Paths: Case Studies in Hospital Outpatient Imaging

The outpatient imaging enterprises of Premiere Health Partners, Dayton, Ohio, and Robinson Memorial Hospital, Ravenna, Ohio, could not be more different. The three-hospital health system, for instance, opened 6 imaging centers within nine months and partnered with three radiology practices. The county hospital went solo, with one imaging center and sole ownership. Both, however, achieved their mission: volume is steadily building in the new freestanding as well as existing hospital-based outpatient imaging operations, successfully stemming the outflow of outpatient imaging studies to community-based imaging centers, while maintaining hospital-based reimbursement. A linchpin to both successes was choosing the right leadership, according to Craig Anderson, Sr, founder of Charis Healthcare LLC, Hudson, Ohio, a consulting company that was engaged to facilitate planning for both ventures. “If you are going to be successful, one of the keys is to not put these outpatient centers under department heads in your organization, but to go out and recruit best-in-class service delivery executives to manage these centers.” Premiere Health Partners Prior to accepting the CEO position at Vanguard Imaging Partners, Joseph Bryzynski performed the more abstract task of strategic planning and business development, first for Good Samaritan Hospital and then for Premiere Health Partners, a three-hospital health system resulting from the merger of Good Samaritan, Miami Valley Hospital, and Middletown Regional Hospital in the greater Dayton, Ohio area. “I was feet-on-the-ground, still responsible for activities specific to Good Sam, but we also started to talk about what it means to be a system,” Bryzynski explained. “Do we compete with each other? What service lines do we focus on? Outpatient imaging became one of the areas we felt Premiere needed to focus on, and I became the business development person within Premiere to spearhead that effort.” The hospitals had a sense of urgency in moving forward with the imaging project as it rightly recognized it could not compete on the basis of service with the many outpatient imaging centers appearing in their community. “The patients coming out of the trauma program, the emergency department, and the inpatient side always got first priority,” Bryzynski acknowledged. “Premiere basically decided, we are either going to be in the outpatient imaging business or not, and if we are, we are going to have to create a different model to be competitive in that industry.” Within an 18-month period, the three hospitals and 37 participating radiologists went through the entire organizational process to form a new entity, including operating, governance, and legal agreements, opening its first center in July 2005, and five subsequent centers, with a seventh planned to open next month. “Not only were we trying to build patient volume, but we had to build a company,” Bryzynski recalled. “This was not done as a department of the hospital. So policies, procedures, hiring of employees, payroll, an accounting system, a billing company, all of this was happening in parallel, while we were out developing our centers and picking which communities we were going into.” Vanguard first assessed the primary and secondary service areas for the three hospitals in Southwestern Ohio, eliminating sites that were closer than 10 miles to each hospital. They merged the market assessment tools the hospital had with the tools Charis had and ended up with a long list of communities ranked and prioritized based on competition, population growth, supporting physician base, and demographics. After defining the critical mass of centers as being six, Vanguard chose the top six communities and began looking for space to lease. All but one of the centers is multi-modality, including high-field open and closed MRI, CT, ultrasound, and X-ray. The company is currently struggling with the decision of whether or not to add mammography. “When we started this venture, it was before the days of digital mammography,” he noted. “So we’ve gone from a $67,000 capital expenditure to a $600,000 capital expenditure.” All of the major local financial institutions were approached for financing. “We basically have a partnership with one of the large financial institutions in the Dayton area,” Bryzynski said. “The hospitals and radiology groups put in their equity contributions to get us through the first year, year-and-a-half of our startup operations. But as far as build-outs of our centers, equipment purchases, and supplies, that is all being financed through the bank.” Culture: The Service Ethic Bryzynski knew, above all, that he had to set a new standard for retail-based care in the communities he served. “The thing I am most proud about, even more than the facilities and the equipment and how quickly we did the facility side of things, is the culture we have been able to put together in a nine-month period of time,” Bryzynski confessed. “It is just amazing to me. Right now we have 65 employees in Vanguard, and we will soon have more than 75 when we open our 7th center. We realized that in our market, in our part of the country, the population is not growing. Therefore, if we were going to grow Vanguard, we were going to be taking business from someone else, and the way we were going to do that is based on service.” Hiring criteria included a competitive spirit and a service orientation. To transform those personal qualities into an organizational culture, Vanguard implemented a robust training program that would help employees internalize the principals in a book referred by Anderson, Ken Blanchard’s Raving Fans. “The definition of a raving fan is pretty simple,” Bryzynski explained. “If you experience Vanguard, you are going to want to come back to Vanguard for any future imaging needs, and when you leave Vanguard you are going to be telling good stories about Vanguard to your friends, family physicians, and their office staff. So it’s almost like a word-of-mouth, win-the-clients-over—one physician, one patient at a time—marketing campaign. After four training sessions in nine months, Vanguard employees are talking the talk. “The language that they talk about in the book has been adopted by the employees, and we are delivering great, great service,” he said. Vanguard centers are scoring close to a 5 out of 5 on monthly patient and physician satisfaction surveys, Bryzynski reported A monthly newsletter called the Shield helps stoke the competitive fires by sharing raving fan stories. “There’s a healthy competition with the employees,” Bryzynski offered. “They almost compete with each other to have great raving fan stories. On the entrepreneurial side, they are just driven by volume. They know volume is the key to our success. We’ve got hospital-based reimbursement, and we’re all big boys and girls, so we are doing a great job of controlling expenses. Our success is totally dependant on what kind of volume we are going to be able to generate, and that spirit is inbred in all of the centers: they are constantly trying to break the weekly record, or the daily record, or the monthly record of MRIs or CTs, so it is that kind of healthy competition.” Another factor that drives the competitive spirit is the fact that all employees, whether they are field service representatives calling on physicians or the receptionist who greets incoming patients, have the opportunity to earn an incentive payment, primarily based on volume. “Now this year, there will not be any incentive payments because we are still in the start-up year where we are ramping up our volumes,” Bryzynski said. “But there will be incentive opportunities for all of the employees at Vanguard, not just the sales people, not just the managers. If you are a scheduler sitting at the front desk, you probably have as many contacts with the physician offices and patients as the people in the clinical area. I think they all know they have a very important role to play with the volume growth.” Radiologist Incentive Anyone who has tried to reach a consensus in one radiology practice has to marvel at the health system’s ability to engage three radiology practices in an enterprise that was up and running with seven imaging centers in 18 months, especially in a joint venture that offered a less than 50-50 split. “We started out like most joint ventures, in which the physicians were looking at a 50-50 type of deal,” Bryzynski began. “But we convinced them that if we got a higher percentage of ownership for the hospital, there was the likelihood that we could negotiate hospital-based reimbursement and the physicians are hopefully going to experience a much higher cash distribution at a lower ownership percentage than they would have had with a higher percentage, because of the difference in reimbursement rate. The majority control is with the hospital.” An improved ability to retain and recruit partners was an additional incentive for the practices. “It’s very competitive, supply and demand is not good for their specialty,” Bryzynski noted. “There was some turnover prior to Vanguard that was happening at all three groups. If you drill down to ask why someone could make more money in Cincinnati versus Dayton, in a lot of cases, it was because they had the ability to participate in some sort of joint venture to get passive income. Our radiologists did not have that opportunity before Vanguard.” Bryzynski acknowledged that Vanguard Imaging Partners is part of a larger ambulatory movement for the hospital. Prior to rolling out Vanguard, he developed what may be the largest ambulatory facility in the nation, Samaritan North Health Center, [city, state], opened in 1995, and helped facilitate an oncology joint venture between the health system, medical oncologists, radiation oncologists, and urologists. This fall, one of the hospitals will open another large ambulatory facility. “I think the hospital is recognizing that the world of the outpatient is growing, technology and managed care is driving things in that direction,” Bryzynski said. “In order to be competitive, they need to be competitive with the ambulatory model as well.” Robinson Imaging of Kent As the only hospital serving Portage County, Robinson Memorial Hospital, Ravenna, Ohio, has the entire county in northern Ohio to itself. But that was not the case on the outpatient-imaging front. Aware that entrepreneurs and physicians were introducing imaging equipment in the county, the hospital attempted several times without results to develop a joint venture with one of the three radiology groups that serviced the hospital. “In 2004, the hospital made a strategic decision to bid out radiology services, and we actually got one group to come in and run the professional component for radiology,” reported Rick Clough, who serves as VP of operations at Robinson Memorial Hospital, Ravenna, Ohio. “At that time, we dusted off our plans for outpatient imaging and decided to take another crack at it, to see if it still made sense. We also had at that time competition from other hospitals from the east looking at our service area as a potentially profitable part of town to come into, and they specifically were looking at outpatient imaging.” Clough, who four years ago traded the CFO position for the opportunity to immerse himself in operations, brought in Charis Healthcare for marketing and research support at the end of 2004, and presented a plan to the board in first quarter 2005. Final approval came in April, and space was reserved in a physician office building owned by the hospital. “We started construction in earnest in September 2005, opened the center January 31st of 2006, and it’s been very, very successful,” Clough said. Anderson concurs. “One of the reasons Kent Imaging is so interesting is that they built this best in class ambulatory care center and its volume grew significantly, but the hospital’s grew as well,” Anderson noted. “In fact, both entities had an increase in volume and growth, so the net revenue impact back into the system was significant.” Robinson Imaging of Kent [link to: http://www.robinsonimaging.org/index.html], located in the Kent Medical Arts Building in Ravenna, includes high-field open MRI, CT, ultrasound, general X-ray, DEXA, mammography, and PET. “We are the only center, hospital really, in northern Ohio with the exception of the Cleveland Clinic, that has a fixed PET, and it’s doing very well,” Clough said. The Robinson Brand Clough said the hospital considered the question of brand very carefully, and ultimately decided to use the hospital brand. “Because Robinson is the only hospital located in Portage County, we felt it was important to keep our name out there,” he said. “We branded the center as Robinson. We’ve done a lot of work on building our reputation.” In fact, last year Robinson received an award from the Jackson Organization, Laurel, Md, for the highest increase nationwide in market recognition, an honor that may have been aided by the hospital’s marketing campaign for its new imaging center. “In some markets there is a value of using the hospital’s brand and in some markets there’s not, and a lot of it has to do with competition,” Anderson explained. “If you are in a very competitive market and you are branded as part of the hospital, then entities aligned with the competing hospital will just naturally not use your service With Robinson Memorial, there is much less of a competitive environment, so there was a lot of value in leveraging the brand of the hospital.” Medicare reimbursement requirements were also considered, as the hospital wanted to retain hospital reimbursement. “If it’s off-site, people have to know that it is a department of the hospital,” Clough explained. Clough estimates that the facility is doing approximately 16,500 procedures a year, drawing primarily from surrounding Portage County, population 150,000. And while the growth rate at the hospital has slowed slightly, volumes continue to grow in both locations. “We’ve seen a little bit of a shift, but we’ve had growth,” Clough acknowledged. “Our growth at the hospital has continued to climb, but maybe not at the percentage we’ve seen in the past.” Market research performed in advance of building the center identified a significant amount of outpatient imaging leaving the county and going to Robinson’s competitors in the Akron market. “That was what we were trying to do: pull that business that was leaving back into Robinson’s mix,” Clough said. “And it did work. We did see a substantial increase in total exams last year.” Unlike Vanguard, the center is operated as a department of the hospital, with central scheduling through the hospital. “When a patient calls and says I want an MRI, we ask if they want it here at the hospital or do they want it at the imaging center at Kent,” Clough explained. “There’s about a 15 mile separation between the two.” However, Robinson knew that the outpatient imaging game would be won on service excellence, and the hospital took additional care in selecting service-oriented employees. “We posted the positions, and opened it up to new candidates and people from the hospital,” Clough said. “We brought in two thirds new and did take some from the hospital, and then back-filled the hospital positions.” Because the staff would be floating back and forth, Robinson did not choose to pay its outpatient staff differently than the hospital staff. And the hospital staff underwent the same customer service training as the outpatient center employees, resulting in some unexpected and welcome cross-fertilization. “When we went into the outpatient imaging center business, we knew we had to have more of a customer focus, and referring physician service from the staff,” Clough said. “So we did some intensive customer service training at the imaging center, but we have also done the same training at the hospital.” Charis’s Anderson was impressed with the results. “They took the best-in-class processes they learned in a non-hospital setting and brought them back in the hospital to improve the way they delivered care in the hospital,” he noted. And in bringing services closer to the patient, Robinson essentially is leveraging the outpatient experience on behalf of the hospital, Anderson said. “If your volume is good, then what you are doing is strengthening your feeder system back into the hospital for tertiary care.”