Don't skimp on better management in DRA era

Declining reimbursements in outpatient diagnostic imaging pose significant challenges for center operators across the county. What was once a fairly easy business to operate has in many ways become a challenge, especially during the past two years. Finding a good technologist was, and still is to a certain extent, a hardship for some radiology departments, but hiring a skilled manager is proving to be like finding a needle in a haystack.

The real issues lie in actually identifying both qualified and affordable radiology center management teams. In the wild cascade of events this industry has endured of late, reimbursement cuts have affected bottom line performance on average 15% to 25%. Attempts to successfully hire skilled managers, however, seem to be causing the most angst for radiologists and imaging companies. Operators find that costs associated with hiring these skilled professionals are skyrocketing in an industry where cutting expenses is the latest trend. While the higher salaries now being demanded by managers may be justified, it is still a tough pill to swallow.

The benefits of investing in a strong manager far outweigh the costs, however. Providers nationwide are busy attempting to recoup some of the losses brought on by the Deficit Reduction Act and compliance and payer initiatives, and these managers may be saviors in the long run.

Early on, DRA cost-cutting techniques involved reducing management workforces and spreading duties among radiologists, front office managers, and chief technologists. This approach failed miserably. Now many operators are scrambling to make sense of why their businesses continue to erode.

Realigning management functions seems to be an easy solution, but is actually one of the most dangerous reactions for struggling businesses. Many experts believe that applying cost-cutting measures through job elimination could be more harmful than beneficial. This may be why the U.S. economy is flailing and we are witnessing some of the highest levels of unemployment and inflation in decades.

MORE THAN A TITLE

Imaging operators have now learned that dishing out a few more hours to a chief technologist or front office worker and adding "Manager" to their business cards just wasn't the right formula. Dividing the administrator role is a disastrous remedy. Radiologists, technologists, and front office managers typically lack the skill set necessary for recouping monies lost due to the fallout of the DRA of 2005.

Job sharing is not the only problem. Many of today's outpatient imaging managers do not possess the qualifications required to maximize business operations. They must have an extensive arsenal of skills to navigate these turbulent times. Managers require a broad knowledge base to succeed-only then can they warrant higher pay and prove their value.

So what knowledge and skills are really necessary to successfully run an outpatient diagnostic imaging center?

• Accounting. Bring an understanding of profit and loss statements, balance sheets, income statements, and cash flow to the local business operation.
• Structured financing for equipment. Know how to refinance and finance new or used equipment without giving away the store. This is a growing need as financing has become more difficult to obtain. The ability to negotiate with vendors for the best deals is a skill that can save thousands of dollars in interest.
• Human resources. Be aware of the changes in HR laws and in the tightening of fines and penalties relating to policies and procedures that many states are now employing. Become familiar with local rules and regulations.
• Payer contracting and relations. Follow this rapidly changing area closely. Providers are fighting to become or stay privileged. Adding new contracts to increase business and understanding what it takes to achieve the highest reimbursement is a tricky task. Once a contract is secured, it is important to understand the language, decipher the details, and work to ensure its success.
• Workflow optimization. Maxi¬mize procedure throughput without sacrificing patient safety, service, or quality of care.
• IT and RIS/PACS. Become educated about technology and the recent push toward first-time purchases of RIS/PACS. Managers not only need to know what features the system must possess to improve operations; they also must understand data migration processes to ensure seamless transitions among parties.

• Presentations and business plans. Secure financing, which these days requires well-written strategic business plans and presentations before credit officers. These presentations could make the difference between losing a deal and saving a few points in interest fees.
• Cash-flow optimization through biweekly clean-claims processing. En¬sure that all departments are on board to collect copays and assess whether deductibles are met and authorizations complete.
• Sales and marketing. Market the center's services to referring physicians. Listen to customers and stand ready to respond to and correct any issues that may arise. That's how to win and sustain business.
• Compliance. Adapt to constantly changing Medicare and state regulations. Today's environment is significantly more regulated than in years past. Policies and procedures manuals, billing practices, safety rules, and employment-related issues such as overtime and flexible work schedules are just some of the areas in which managers should be up to speed.
• Vendor negotiations. Be willing to negotiate with fervor to save employers' money. The monies managers save can justify their position.
• Financial efficiencies. Challenge vendors to lower their prices and implement plans to reduce filming. Companies offer CD burners that can save thousands of dollars a year in film costs. It is critical to the bottom line performance that managers know of these types of opportunities.

A DYING BREED?

Prior to the DRA, finding or grooming a radiology administrator or center manager position was fairly easy, assuming employees were eager to learn, brought a keen understanding of customer service to the job, and garnered technical skills within their areas of expertise. It was also beneficial if these managers understood new technologies and could write a business plan for upgrading equipment and/or building a new center.

Many of the 8000+ outpatient imaging centers operating in the U.S. today are managed by former technicians who worked their way up to management positions. Many of them possess very little experience in accounting, billing, compliance, payer relations, workflow optimization, structured financing, or human resources. Yet these are necessary skill sets for success in today's management positions.

The best way for managers and radiologists to acquire more experience is to educate themselves. Classes for gaining and improving skills are frequently offered through trade associations such as the Radiology Business Management Association and the American Healthcare Radiology Administrators. Equipment vendors have also identified critical areas where industry professionals could benefit from further education, and they have made this a focus at conventions by offering classes there.

LOOK NO FURTHER

Many employees find it hard to be motivated while balancing two jobs and receiving only a slight pay increase. Doing double duty is a tall order, and very few are proficient in all the skills listed above.

Aside from employees running out and acquiring an MBA or MHA, and operators turning to part-time consultants and outside management teams, perhaps it is best to hire managers trained in this business who can help overcome the dips in revenue while tackling increased competition and embracing market consolidation as opportunities to enhance business. Those with the appropriate skills can quickly revamp operations and focus on the components necessary for reaching profitability.

But where are these folks? It has become extremely difficult to fill these positions. These management experts are fleeing the business due to high levels of stress and the greater pay offered by other healthcare industry sectors.

Operators should look in their own backyards for an eager and appropriate candidate and arrange a well-financed and strategically planned grooming program. Making the transition to a management position requires investment in accounting, billing, HR, and compliance classes for employees and close collaboration with radiology consultants proficient in these areas. This combination of consultant and continued education has proven very effective for many operators and helped speed potential managers' learning process.

We know that the thought of spending hundreds of thousands of dollars in a past-DRA environment is frightening to many, but perhaps it is even scarier not to make that investment. The right hire should ensure a smooth-sailing business--one with an increased revenue stream, significant earnings potential, and stronger profitability, all of which were enabled advantages by deploying the skills required for success in today's tumultuous imaging industry.

Mr. Renard is a diagnostic imaging and radiology industry consultant, with nearly 15 years of related experience, primarily in imaging center operations. He is a published author and industry speaker.