Surviving healthcare reform: Get lean, learn the insurance game

We know healthcare reform will change the rules, but what can radiologists do now to be proactive? This is the first article in a series that will examine how healthcare reform is likely to affect radiology practices and how they can prepare for drastic change.


So far, few radiology practices, and none that I know of, have expressed relief that healthcare reform finally passed so we can offer services in the new, “more fair,” world where everyone will have health insurance. We don’t like the new regulations it will bring because we don’t like the unknown, and to date, government “help” has not done us many favors. We know that advanced imaging procedures have become targets because spending has increased rapidly and attempts to control its growth have not been successful, no matter how much reimbursement has been cut.

The behemoth of healthcare reform promises one thing for sure: our lives will change, both as business owners and as providers of healthcare services. When you consider the impact of the Health Insurance Portability and Accountability Act (HIPAA), which was all of 16 pages when passed into law, the thought of seeing more than 2000 pages roll out of Washington is overwhelming. Rather than simply run screaming into the night, what can we do right now to prepare for the future?

Tighten down your business operation. In order to minimize the impact of further fee reductions and increasing overhead, the time to begin ferreting out revenue leakage and reducing business costs is now. It isn’t unusual to “find” $250,000 to $500,000, and sometimes $1 million in a larger practice, in revenue that is being lost due to ponderous, outdated billing processes. (The radiology practice is one of the few businesses in the country that can lose that much revenue and still be in business.)

While billing and collections represent one of the more fertile areas for process improvement, it isn’t the only one. Most imaging centers focused on reducing costs as the impact of the Deficit Reduction Act ravaged profitability, but the emphasis was usually on the large-scale, more obvious areas, such as renegotiating equipment leases and maintenance agreements. Those are obviously excellent targets, but the second round of activity should focus again on those simple processes, such as scheduling, registration, and the entry/transfer of billing information. If there is duplication of effort, it costs in terms of increased error rates (and denials) as well as increased time, which usually equates to more people and higher overhead. Errors made at the front end of the revenue cycle result in delayed (or denied) payment and then ripple through the entire billing/collections process as numerous other people work to correct the problems and resubmit claims.

The goal of this exercise is to drastically improve efficiency and lower the cost of doing business so the practice can successfully weather future revenue hits. As much as we are supposed to be jumping up and down in glee at the thought of all the newly insured patients, healthcare reform can work only if costs are reduced, and that means increased denials and/or rationing of services.

Become a student of insurance coverage. The rules are about to change and one of them will impact practices fairly quickly as employers. Health plans will continue to raise the cost of premiums; they must to accommodate the requirement to cover preexisting conditions and other criteria imposed by new regulations. Healthy subscribers have always paid for the sick ones and now there will be more sick ones. And there are numerous predictions that the “young and healthy” will continue to opt out and pay the fines, which are still cheaper than insurance premiums.

It’s time for all of us to learn more about health plan options, and your insurance broker will be a good source of knowledge. The “you can keep your insurance plan if you want to” promise has some serious catches and there are severe restrictions on grandfathered plans. As a small business, it is incumbent on owners to make prudent decisions because costs could potentially escalate-or members of the group could suddenly find themselves with very different coverage options. This is no longer an “automatic renewal at the last minute” exercise.

Again, the goal at this initial phase is to become as lean and efficient as possible, increasing the effectiveness of the infrastructure while reducing the cost of doing business. The strong and flexible business entity has the best chance of weathering future economic storms. So while we wait for the specifics of new operational realities and the threat of the unknown, it can be time well spent.


The next article will examine predictions about Accountable Care Organizations and other likely changes to the world of medical imaging, through not only healthcare reform, but related regulatory activity as well. Ms. Kroken is a consultant and principal in Healthcare Resource Providers. She can be reached by e-mail at pkroken@comcast.net.