Leveraging Collaboration and Analytics

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How to avoid sacrificing practice independence

Within the past 10 years, physician leaders and hospital executives have seen more consolidation in the healthcare industry than ever before. As the industry transitions to a value-based care model, efforts are underway byleaders across the board to reduce costs, improve results and increase hospital-physician alignment.

“As patient rolls lengthen and networks narrow, providers may need to adapt to this realignment of market forces,” said a recent report by Deloitte titled “2015 Health Care Providers Outlook United States.” “Smaller players (e.g., single hospitals, independent physician groups) may be in danger of exclusion from more narrow networks. In contrast, market-dominant players are likely to be immune from exclusion and can negotiate from a position of strength. Dominance comes partly from being big, and the need to be big is driving sector consolidation.”

Changes in regulation, technological innovation and financial pressures are all contributing to this push toward market consolidation–toward “being big” in order to survive.

In fact, PwC’s Health Research Institute listed consolidation as the number one issue the healthcare industry faces in 2016. Its report encourages practices to focus on “innovative forms of collaboration and consolidation” in order to not only survive but thrive in an increasingly competitive market.

“Smaller regional and niche players without well-defined strategies could quickly become targets,” the HRI report explains. “These systems should focus on products and service offerings considered best in class, and align with those providing complementary services to round out offerings.”

But terms like “alignment” and “consolidation” can include a multitude of possible business models for radiology groups to pursue. On one end of the spectrum lies traditional merger and acquisition (M&A) activity, while beyond that lie joint venture models, clinical integration networks (CINs), affiliations and collaborations as potential solutions to avoid sacrificing practices’ independence. The vastness of this spectrum proves there is no one way to align with hospitals and become a stronger market player.

Collaboration of Large Groups

Collaborations of large practices are becoming more popular in the specialty of radiology. An example is Strategic Radiology, a consortium of large radiology groups throughout the United States with its headquarters in Florida. Strategic Radiology strives to provide its network of nearly 1,300 radiologists shared access to data, clinical information and certain consolidated expenses in a collaboration-based model.

Although its goal is to deliver higher quality, cost-effective care, Strategic Radiology focuses on practices with 50 or more providers, essentially overlooking smaller regional players. Though collaboration provides the tools necessary to succeed in such a model, it is an exclusive model which has not focused on the independence and survival of smaller groups across the country.

Acquisition by Management Company

Single-specialty and multi-specialty national management companies are also on the move within the radiology market, as seen by MEDNAX’s acquisition of vRad in the spring of 2015. Another example is Radiology Partners (RadPartners), whose approach resembles the traditional M&A model of acquiring practices to join its expansive network of more than 100 locations.

Though it positions its services as “partnering” with radiology practices, RadPartners primarily acquires local groups and promises health systems greater stability. This corporate-sponsored management company has over 200 radiologists who share technology, quality data metrics and economies of scale in order to hope to succeed in the era of consolidation, yet simultaneously cede to this trend as they compromise their independence.

Small Group Collaboration Model

A new model of small group collaboration has emerged amidst increased M&A activity. In this model, radiology groups of various sizes located within a region or health system collaborate to pool resources and achieve economies of scale without sacrificing their clinical independence. This transforms the groups into stronger, more nimble organizations that allow for faster, more efficient decision-making in a rapidly evolving market.

This collaborative structure supports sustained autonomy despite increased pressures from hospitals, commercial payors and patients. The economies of scale achieved can help facilitate substantial cost savings regarding medical malpractice insurance and other group expenses.

In addition, radiology groups can pool resources such as data mining and analytics capabilities to improve efficiencies, cut costs and better prepare for industry-wide changes and reforms. One example is the Medicare Access & CHIP Reauthorization Act of 2015 (MACRA); as CMS moves its Merit-based Incentive Payment System (MIPS) and Alternative Payment Model (APM) initiative forward, groups can work together to generate the data submission capabilities and metrics necessary to evaluate the assumption of greater risk as these models come to fruition.

It is critical for radiology leaders to examine the emerging and evolving practice models and make an informed, strategic decision regarding their practice’s future. As the current regulatory environment fuels increased demands and pressure on radiology groups across the country, what is your plan to solidify your independence and ensure your success?

This column was made possible by a partnership between ADVANCE and RBMA. For more information on RBMA, call 888.224.7262 or visit www.RBMA.org.

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About Author

Keith Chew, MHA, CMPE, FRBMA

Managing director of strategic positioning and consulting services of Integrated Radiology Partners. Chew has more than 30 years of experience as a healthcare administrator and consultant. He leverages his expertise in strategic planning, new venture development and operational performance improvement to position practices for continued growth. A former senior strategic consultant for McKesson Corporation, Keith earned his Master of Health Services Administration from the University of Illinois. He was also awarded his Master of Science and Bachelor of Science from the University of Illinois. Keith has served as the president of the Radiology Business Management Association (RBMA) and the chairman of the Medical Group Management Association's (MGMA) Imaging Assembly. Keith is a noted author and speaker to healthcare professional associations.

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