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In-office imaging center investment

By Robert P. Oristaglio, D.O.

It has become increasingly apparent over the past several years that physicians have had to work harder with longer hours. Trying to maintain revenues while facing rising overhead has become a daunting task, especially for primary care physicians. There has been increased staff, HIPAA and OSHA regulations, higher malpractice premiums and falling reimbursements making the situation especially difficult. Staff and government regulations alone have added five to eight percent overhead per year over the past four years, while malpractice premiums have skyrocketed. Reimbursements have plummeted over 20 percent since 1998.

As a result, many physicians have recently been looking hard at ancillary services to enhance their practices. Modalities such as acupuncture, hypnosis, minor surgery -including dermatologic and plastic surgery – homeopathic treatments, and others have been considered or added. Some have even resorted to “boutique” medicine, limiting their practices to between 300 and 400 people, and charging them $2,00 to $3,000 apiece for unlimited access to care.

However, while all of the above may indeed add to the ability to generate additional revenues, in my experience, the greatest and most efficient way to enhance a practice, especially for primary care physicians, is through procedures and diagnostic testing. I am talking about creating an in-office imaging center.

Until now, this concept was foreign to most primary care doctors. As I have spoken around the country to my colleagues, virtually all have had the opinion that procedures were the purview of the specialist. They were too busy, were not properly trained and did not know how to go about establishing a center – were some of the rationalizations I heard. These rationalizations and common misconceptions have prevented those physicians from, not only keeping pace with the above changes in the medical marketplace, but also enjoying a financial and competitive edge.

As the former director, for thirteen years, of a comprehensive non-invasive cardiac, vascular, general ultrasound, and x-ray imaging center, I have witnessed first-hand how the center was able to improve the practice’s prestige, exposure, quality of care, continuity of care and patient convenience, while shortening the delay for indicated testing and time to diagnosis – and had the added benefit of substantially enhanced revenues.

The key is to maintain control of the practice’s patients. It is recognizing the at-risk individual and referring that person to your own diagnostic center while you are elsewhere, seeing patients and performing other procedures. Meanwhile, your patient is having a diagnostic test, with the results available and the follow-up visit shortly thereafter. You have now established a diagnosis and the need for the specialist rather than relinquishing that role to the specialist.

Most primary care physicians and certainly all internists have had three to four post-graduate years training in a hospital environment, learning how to handle very acute and complex medical and social problems and performing very sophisticated procedures. Then, come graduation time, they enter a primary care setting and give up all those procedures and responsibilities – and the resulting revenues – to the specialists, then wonder why there is such a disparity in their respective incomes.

It is no secret that the United States population is aging. In addition, there has been a steady increase in the incidence of obesity, diabetes, hypertension, cardiovascular disease, stroke and cancer. All of these pose substantial health risks. Meanwhile, the population, especially the baby-boomers, has recognized this and has become more involved in their health. They are seeking more information as well as diagnostic testing in their attempts to maintain their health and youth. Witness the explosion in the medical-spa industry and the mobile, for-cash diagnostic companies. In addition, the medical literature is replete with studies showing the benefits of early detection, prevention and treatment programs.

With the advances in today’s ultrasound technology and the established practice of outpatient services, it is now possible to have an imaging center with a comprehensive series of diagnostic tests available in a primary care office setting. Today’s ultrasound machines are affordable, fully digital, fast, accurate, non-invasive, portable and extremely versatile. There are over 30 different studies that can be performed, all of which have numerous indications, and which allow the physician to properly evaluate their patient, maintain control of their patient, and therefore lower the risk of losing their patient to a specialist. “Why keep coming back to my primary care physician when all he or she does is refer me to some specialist?”

The only questions are these: How feasible is this? How much room do I need? What personnel is required? How much will it cost to start? What are the risks? What kind of revenues are we talking about?

It is clearly feasible; that is why a physician should strongly consider a diagnostic center. In an office setting, the personnel and ancillary equipment are already in place: receptionist for intake and scheduling, phone lines, computers, fax, stationary, reception area and a slightly oversized exam room are all that is required, assuming stress-testing will be performed. Only a registered sonographer is needed and most sonographers are actively looking for additional work on a part-time basis, or even full-time if the proper outpatient opportunity presents itself. The equipment manufacturers are also a resource here and they have access to many sonographers.

Only one ultrasound machine, properly and maximally utilized, is needed to start, depending on the size of the initial group, as one machine can easily service the needs of up to 20 patients a day. There will be no up-front costs for the machine, which carries a two to five year service warranty, as all manufacturers have aggressive financing options available. There generally will be a very affordable monthly payment, starting when you begin to see the reimbursements.

The practice will need a consultant, however, especially if the lab is to be digital – as it should be in today’s environment – to help establish protocols and reporting formats, to counsel on indications and proper coding of procedures to maximize reimbursement and to credential the sonographer. The fee can range up to $25,000 depending upon the size of the group and the scope of services required.

The final questions revolve around the revenues, specialists and, of course, legal issues.

While reimbursements have also fallen for diagnostic procedures, in general, they remain substantial. An aggressive practice, practicing high quality, preventive medicine, with an eye towards early detection and performing indicated procedures could see its revenues increase by over $1,000,000, as have a few groups with whom I have worked. There have been 18 to 50 physicians or physician-extenders in these groups, averaging between 85 and 120 studies per week. Even the two- to three-physician practice could generate upwards of an additional $125,000 to $250,000 by averaging 10 to 20 procedures per week. A properly run center will average only 30 to 35 percent overhead, including interpretation fees, meaning 65 to 70 percent of the revenues fall to the bottom line.

Once word gets out that a practice will be performing its own diagnostic testing, look for the specialists to complain. You will be taking away their procedures and hence their revenues. First, there are no government regulations that prevent a primary care physician from performing indicated procedures on his/her patient in an office setting. Second, you are not properly credentialed to interpret those tests. True enough, however, there is nothing that prevents you from having an appropriately structured contract with a specialist to read your studies. The enlightened specialist will not only readily agree to that arrangement to maintain the association, but also recognize that his/her group will see a greater number of referrals for the invasive work and hospital consults on a more elective basis as the primary care physicians will be diagnosing patients in a preventive manner, before the catastrophic event occurs.

Finally, the legal issues – no discussion would be complete without some points made about them. There are government regulations on how the income generated is to be distributed and how a contractual relationship for interpretation services between the primary care practice and specialist should be structured. You need a good health care attorney who has kept up-to-date on the rapidly changing regulations, including HIPAA. However, once you make the decision to establish a diagnostic/imaging center, the above pieces of the puzzle can fall into place rapidly and when you see the results, you and your patients will be very happy you invested the time in your practice and their health.

Robert P. Oristaglio, D.O., is a Board Certified Internist and president of Doctor’s Diagnostics, a health care consulting firm in Allentown, Pa.

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