CYNTHIA S. SHERRY, MD CHERI L. CANON, MD
BUSINESS ESSENTIALS
An Introduction to “Business Essentials” The term burning platform refers to a popular business metaphor for circumstances demanding immediate and radical action in response to a dire threat. The metaphor involves a worker on an oil platform in the North Sea who is awakened one night by an explosion that ignites the rig, sending flames and burning oil across the platform. He fights his way through the flames and chaos to find himself at the edge of the burning platform, where the flames are relentlessly advancing. His only choices are to be engulfed by the flames for certain death or to jump off the platform and fall 100 feet into the cold sea. He realizes that even if he survives the plunge, he won’t survive exposure in the freezing water below without immediate rescue. He has no other options, so he takes the jump. He survives the 100-foot fall, is rescued promptly, and survives to relate his thinking: probable death was a better option than certain death. The point is that radical change occurs only when survival is threatened and instincts overcome complacency with the status quo. In other words, creating a sense of urgency is required when difficult decisions and changes must be made. Radiology professionals entering the job market today find themselves on a metaphorical burning platform. They must be prepared to make very difficult decisions that will affect their own future survival and how radiology is practiced in the years to come. The major fire accelerants are several, but one stands out: the impending transformation from a feefor-service, volume-based model of health care payment to a new, patientcentered, value-based approach. The goal of a value-based approach is to improve the overall quality of care while reducing health care expenditures. More than a trillion dollars is estimated to be at stake in this volumeto-value shift [1]. For radiology, the choice to remain on the burning platform is not a viable option and will inevitably lead to failure because it is 110
based on the premise that increasing productivity by improving efficiency through doing more in the same amount of time is the solution. This approach may serve as a stopgap measure in a fee-for-service environment; however, it will be a dismal failure in a value-based system. The decision to jump from the platform leads to the possibility of a new and promising, though different, future for our specialty. It won’t be easy, and success depends on producing a new breed of radiology leaders: leaders equipped with modern leadership knowledge and competencies to be effective, persuasive, and influential; leaders who stay abreast of the evolving complexities of reformed delivery and payment systems; leaders who understand profoundly how radiology fits into the big picture of health care and who give voice to the crucial role and value radiology professionals have in modern health care delivery. Radiology’s new breed of leaders must be engaged across ever widening spheres of influence, including small group practices, hospital departments, multiple-hospital health care systems, in organized medicine, and in local, state, and national political arenas. There are several new world realities that will challenge the next generation of radiology leaders. A few rise to the top and are discussed below, divided into 4 broad categories: hospitalization, corporatization, deprofessionalization, and demonetization. First, hospitalization: More than ever before, hospitals are aggregating into large systems that are capable of employing physician groups and teaming up with payers to control the market. For radiology, this means that we must weigh the relative risks and benefits of employment against aggregating ourselves into larger groups or conglomerations that can wield considerable clout when dealing with enlarging hospital systems and payer groups. Small, independent practices
will have very little leverage or security when negotiating with large hospital systems or payers. Second, corporatization: The growing prevalence of corporatized professional interpretations through teleradiology arrangements threatens the bedrock of independent radiology practice. Teleradiology corporations attract new radiologists by offering reasonable pay, reasonable work hours, and reduced night call, all features attractive to the radiology workforce. However, these companies are accountable to nonradiologist shareholders. Therefore, the profits and control move out of the hands of radiologist professionals and into the hands of nonradiologist owners or investors. The mission and vision of nonradiologist shareholders is focused heavily on the bottom line and less on value-based activities that serve patients or contribute to patient care teams, referring medical staff members, or hospitals. Although a strong bottom line is essential, the other value-based activities are equally important considerations for radiology professionals to thrive in a value-based system and to prevent further commoditization of our specialty. Third, deprofessionalization: Evolving trends in the medical professional ethic place a premium on work-life balance and reveal a growing disenchantment with the overall medical profession across specialties. Radiology is not immune to these trends. It is difficult in today’s demanding 24/7/365 market for traditional radiology groups to offer competitive employment packages that contain these desired benefits. Furthermore, commoditization erodes the relationships between radiologists and their patients and referring clinicians, widening the deprofessionalization chasm. Fourth, demonetization: Medical imaging has been subjected to significant reimbursement cuts multiple times over the past several years, beginning in 2006 with the
ª 2014 American College of Radiology 1546-1440/14/$36.00 http://dx.doi.org/10.1016/j.jacr.2013.11.004
Business Essentials 111
multiple-procedure payment reduction (MPPR) and progressing through the Deficit Reduction Act’s reimbursement caps, utilization rate changes, practice expense relative value unit reductions, a repeat MPPR within the Patient Protection and Affordable Care Act (PPACA), bundling of codes for combined procedures, multiple additional MPPRs on technical payments, a new professional payment MPPR, and a new medical device tax in PPACA. Furthermore, this year, the utilization rate is raised to 90% from 75%, estimated to garner another $800 million over 10 years from medical imaging. Our new leaders must be well trained and prepared to defend against new and deeper reductions and to work to recover some of these steep losses. This requires deep, effective engagement with the political process on many fronts. These are just a few of the looming changes in radiology’s tinderbox that make it imperative that new entrants to the radiology profession arrive equipped, at a minimum, with a strong foundation in basic radiology business, economics, and practice management. Imaging 3.0 [2] provides the scaffold on which radiology can shape its future. Imaging 3.0 describes how radiology and radiology professionals can provide an indispensible component of modern health care delivery. It is a responsibility of new radiology leaders to embrace these concepts and ensure a viable future for the specialty of radiology. The goal of this new JACR series, “Business Essentials,” is to provide fundamental information about radi-
ology economics, practice management, and leadership development that is not usually found in traditional radiology residency or fellowship programs or easily accessed by radiologists in practice. The content for “Business Essentials” is being developed by all-star faculty members to formally introduce radiology business concepts in a way that will help bridge the knowledge gap. The content will have broad application for all radiologists, regardless of stage of career or practice type. The goals of this 2-year selfassessment continuing medical education article series are to promote more awareness of the need for radiology business education and the value of leadership development and to prepare readers for more advanced-level participation in the ACR’s Radiology Leadership Institute or other radiology leadership programs. A few of the topics to be addressed in the series include the principles of economics, finance, marketing, and accounting; trends in fellowship training and the job market; health care reform and government relations; and professionalism in radiology. Additionally, the content will be designed in a way that meets the ACGME’s milestones for economics by addressing topics that include reimbursement mechanisms, types of payers, relative cost of procedures, components of costs and payments, measurements of productivity, and aspects of revenue cycles. American health care is a brave new world. Change in life generally occurs gradually, but the passage of PPACA represents a powerful inflection point, indicates that reform is coming more
dramatically, and offers the opportunity to make a positive impact on the future of health care for our patients and families. The key is to be prepared. Reading “Business Essentials” will be a good first step. TAKE-HOME POINTS
The implementation of PPACA is driving transformative change in health care delivery and finance that can be characterized as a fundamental transition from a volume-based, fee-for-service model to a patient-centered, valuebased model. The transformation is creating new, challenging business realities across health care that will require future physician leaders to be prepared with more effective leadership skills and competencies. This new JACR series, “Business Essentials,” will provide fundamental business educational content to help smooth the transition from training to practice and equip radiology professionals with foundational cornerstones and practice management tools for facing future business and leadership challenges. REFERENCES 1. Yong PL, Saunders RS, Olsen LA. The healthcare imperative: lowering costs and improving outcomes. Washington, District of Columbia: National Academies Press. 2. American College of Radiology. Imaging 3.0. Available at: http://www.acr.org/w/media/ ACR/Documents/PDF/Economics/Imaging3/ Imaging3.pdf. Accessed December 10, 2013.
Additional Resources JACR : A Necessary, Valuable Resource for Residents and Fellows C. Matthew Hawkins http://jacr.org/article/S1546-1440(13)00112-9/fulltext Time to Lead Frank James Lexa http://www.jacr.org/article/S1546-1440(13)00321-9/fulltext 2013 ACR Presidential Address: A Personal View on the Future of Radiology John A. Patti http://www.jacr.org/article/S1546-1440(13)00358-X/abstract Strategic Leadership: Setting Priorities Frank James Lexa http://www.jacr.org/article/S1546-1440(13)00122-1/fulltext
Cynthia S. Sherry, MD, is from Department of Radiology, Texas Health Presbyterian Hospital, Dallas, Texas. Cheri L. Canon, MD, University of Alabama at Birmingham, 619 South 19th Street, Birmingham, AL 35249-6830; e-mail: [email protected].
BUSINESS ESSENTIALS
An Introduction to “Business Essentials” The term burning platform refers to a popular business metaphor for circumstances demanding immediate and radical action in response to a dire threat. The metaphor involves a worker on an oil platform in the North Sea who is awakened one night by an explosion that ignites the rig, sending flames and burning oil across the platform. He fights his way through the flames and chaos to find himself at the edge of the burning platform, where the flames are relentlessly advancing. His only choices are to be engulfed by the flames for certain death or to jump off the platform and fall 100 feet into the cold sea. He realizes that even if he survives the plunge, he won’t survive exposure in the freezing water below without immediate rescue. He has no other options, so he takes the jump. He survives the 100-foot fall, is rescued promptly, and survives to relate his thinking: probable death was a better option than certain death. The point is that radical change occurs only when survival is threatened and instincts overcome complacency with the status quo. In other words, creating a sense of urgency is required when difficult decisions and changes must be made. Radiology professionals entering the job market today find themselves on a metaphorical burning platform. They must be prepared to make very difficult decisions that will affect their own future survival and how radiology is practiced in the years to come. The major fire accelerants are several, but one stands out: the impending transformation from a feefor-service, volume-based model of health care payment to a new, patientcentered, value-based approach. The goal of a value-based approach is to improve the overall quality of care while reducing health care expenditures. More than a trillion dollars is estimated to be at stake in this volumeto-value shift [1]. For radiology, the choice to remain on the burning platform is not a viable option and will inevitably lead to failure because it is 110
based on the premise that increasing productivity by improving efficiency through doing more in the same amount of time is the solution. This approach may serve as a stopgap measure in a fee-for-service environment; however, it will be a dismal failure in a value-based system. The decision to jump from the platform leads to the possibility of a new and promising, though different, future for our specialty. It won’t be easy, and success depends on producing a new breed of radiology leaders: leaders equipped with modern leadership knowledge and competencies to be effective, persuasive, and influential; leaders who stay abreast of the evolving complexities of reformed delivery and payment systems; leaders who understand profoundly how radiology fits into the big picture of health care and who give voice to the crucial role and value radiology professionals have in modern health care delivery. Radiology’s new breed of leaders must be engaged across ever widening spheres of influence, including small group practices, hospital departments, multiple-hospital health care systems, in organized medicine, and in local, state, and national political arenas. There are several new world realities that will challenge the next generation of radiology leaders. A few rise to the top and are discussed below, divided into 4 broad categories: hospitalization, corporatization, deprofessionalization, and demonetization. First, hospitalization: More than ever before, hospitals are aggregating into large systems that are capable of employing physician groups and teaming up with payers to control the market. For radiology, this means that we must weigh the relative risks and benefits of employment against aggregating ourselves into larger groups or conglomerations that can wield considerable clout when dealing with enlarging hospital systems and payer groups. Small, independent practices
will have very little leverage or security when negotiating with large hospital systems or payers. Second, corporatization: The growing prevalence of corporatized professional interpretations through teleradiology arrangements threatens the bedrock of independent radiology practice. Teleradiology corporations attract new radiologists by offering reasonable pay, reasonable work hours, and reduced night call, all features attractive to the radiology workforce. However, these companies are accountable to nonradiologist shareholders. Therefore, the profits and control move out of the hands of radiologist professionals and into the hands of nonradiologist owners or investors. The mission and vision of nonradiologist shareholders is focused heavily on the bottom line and less on value-based activities that serve patients or contribute to patient care teams, referring medical staff members, or hospitals. Although a strong bottom line is essential, the other value-based activities are equally important considerations for radiology professionals to thrive in a value-based system and to prevent further commoditization of our specialty. Third, deprofessionalization: Evolving trends in the medical professional ethic place a premium on work-life balance and reveal a growing disenchantment with the overall medical profession across specialties. Radiology is not immune to these trends. It is difficult in today’s demanding 24/7/365 market for traditional radiology groups to offer competitive employment packages that contain these desired benefits. Furthermore, commoditization erodes the relationships between radiologists and their patients and referring clinicians, widening the deprofessionalization chasm. Fourth, demonetization: Medical imaging has been subjected to significant reimbursement cuts multiple times over the past several years, beginning in 2006 with the
ª 2014 American College of Radiology 1546-1440/14/$36.00 http://dx.doi.org/10.1016/j.jacr.2013.11.004
Business Essentials 111
multiple-procedure payment reduction (MPPR) and progressing through the Deficit Reduction Act’s reimbursement caps, utilization rate changes, practice expense relative value unit reductions, a repeat MPPR within the Patient Protection and Affordable Care Act (PPACA), bundling of codes for combined procedures, multiple additional MPPRs on technical payments, a new professional payment MPPR, and a new medical device tax in PPACA. Furthermore, this year, the utilization rate is raised to 90% from 75%, estimated to garner another $800 million over 10 years from medical imaging. Our new leaders must be well trained and prepared to defend against new and deeper reductions and to work to recover some of these steep losses. This requires deep, effective engagement with the political process on many fronts. These are just a few of the looming changes in radiology’s tinderbox that make it imperative that new entrants to the radiology profession arrive equipped, at a minimum, with a strong foundation in basic radiology business, economics, and practice management. Imaging 3.0 [2] provides the scaffold on which radiology can shape its future. Imaging 3.0 describes how radiology and radiology professionals can provide an indispensible component of modern health care delivery. It is a responsibility of new radiology leaders to embrace these concepts and ensure a viable future for the specialty of radiology. The goal of this new JACR series, “Business Essentials,” is to provide fundamental information about radi-
ology economics, practice management, and leadership development that is not usually found in traditional radiology residency or fellowship programs or easily accessed by radiologists in practice. The content for “Business Essentials” is being developed by all-star faculty members to formally introduce radiology business concepts in a way that will help bridge the knowledge gap. The content will have broad application for all radiologists, regardless of stage of career or practice type. The goals of this 2-year selfassessment continuing medical education article series are to promote more awareness of the need for radiology business education and the value of leadership development and to prepare readers for more advanced-level participation in the ACR’s Radiology Leadership Institute or other radiology leadership programs. A few of the topics to be addressed in the series include the principles of economics, finance, marketing, and accounting; trends in fellowship training and the job market; health care reform and government relations; and professionalism in radiology. Additionally, the content will be designed in a way that meets the ACGME’s milestones for economics by addressing topics that include reimbursement mechanisms, types of payers, relative cost of procedures, components of costs and payments, measurements of productivity, and aspects of revenue cycles. American health care is a brave new world. Change in life generally occurs gradually, but the passage of PPACA represents a powerful inflection point, indicates that reform is coming more
dramatically, and offers the opportunity to make a positive impact on the future of health care for our patients and families. The key is to be prepared. Reading “Business Essentials” will be a good first step. TAKE-HOME POINTS
The implementation of PPACA is driving transformative change in health care delivery and finance that can be characterized as a fundamental transition from a volume-based, fee-for-service model to a patient-centered, valuebased model. The transformation is creating new, challenging business realities across health care that will require future physician leaders to be prepared with more effective leadership skills and competencies. This new JACR series, “Business Essentials,” will provide fundamental business educational content to help smooth the transition from training to practice and equip radiology professionals with foundational cornerstones and practice management tools for facing future business and leadership challenges. REFERENCES 1. Yong PL, Saunders RS, Olsen LA. The healthcare imperative: lowering costs and improving outcomes. Washington, District of Columbia: National Academies Press. 2. American College of Radiology. Imaging 3.0. Available at: http://www.acr.org/w/media/ ACR/Documents/PDF/Economics/Imaging3/ Imaging3.pdf. Accessed December 10, 2013.
Additional Resources JACR : A Necessary, Valuable Resource for Residents and Fellows C. Matthew Hawkins http://jacr.org/article/S1546-1440(13)00112-9/fulltext Time to Lead Frank James Lexa http://www.jacr.org/article/S1546-1440(13)00321-9/fulltext 2013 ACR Presidential Address: A Personal View on the Future of Radiology John A. Patti http://www.jacr.org/article/S1546-1440(13)00358-X/abstract Strategic Leadership: Setting Priorities Frank James Lexa http://www.jacr.org/article/S1546-1440(13)00122-1/fulltext
Cynthia S. Sherry, MD, is from Department of Radiology, Texas Health Presbyterian Hospital, Dallas, Texas. Cheri L. Canon, MD, University of Alabama at Birmingham, 619 South 19th Street, Birmingham, AL 35249-6830; e-mail: [email protected].
