The Hidden Cost of Importing Imaging Exams

Acknowledgements: I would like to sincerely thank Dr. Alex Towbin (@towbinaj), Ryan Fallon, and Jason Nagels (@jaynagels) for their time to review this information and provide valuable input.

Important Note: This article is in no way intended to dissuade organizations from sharing imaging exam data. As described within, there are many benefits to everyone, and sharing of imaging data should be consider a best practice. This article is intended to explore how vendors charge differently for storing imported imaging data in their systems.

The sharing of imaging exams across different enterprises has long been of value to patients and healthcare systems. From teleradiology, patient transfers, consults, treatment planning, to other scenarios, avoiding the repeat of an exam by sharing existing ones lowers costs, minimizes stress and frustration on the patient (and their family), and avoids any unnecessary radiation exposure.

As technology and reliable Internet has evolved, the norm of printing film, then exporting digital exams to portable media (CDs, DVDs, USB drives, etc.), has given way to cloud-based image sharing solutions. With these solutions acting as a secure broker among enterprises, imaging data can be easily moved from one organization to another. Patients can even upload their exam data using a webpage.

And while the managed movement of imaging data from one organization to another has become much easier and more common, the importation of the data to systems, like the PACS, at the destination enterprise often still requires some manual activity to get the exam data acquired at another enterprise to include all the unique data identifiers used at the destination enterprise.

The costs of the above activities are all well understood by imaging professionals, but there is another aspect that is less understood: Does the receiving imaging IT system vendor charge for imported exams?

Imaging Exam Acquisition Revenues and PACS Costs

In most jurisdictions (with private or public funded healthcare), a fee is paid by the payor for each imaging exam performed. This fee, commonly called the Technical Fee (or TechFee) in the U.S., is intended to compensate the health provider for the labor, equipment, consumables, facilities, IT systems, and other resources required to perform the exam and manage the resulting data. The TechFee amount will vary among different procedures and payors.

Note: A Professional Fee (ProFee) is also billed, but these funds may go to pay the Radiologist group, if they are not directly employed by the health system. So, even if an imported exam is read (for example, as an “over read”) and a ProFee bill generated, in some cases, the health system paying for the PACS does not receive any revenue (but do incur costs, as detailed below). Not to mention, ProFee billing for over reads can be unpopular among patients and referring physicians, as it increases overall cost of care.

It is common for PACS vendors to charge a software license for the use of the solution. The commercial model may vary between a licensed annual exam total allowed or a per use fee, but in most cases, the more exams that are acquired and stored by the organization, the more the vendor is paid. This is generally accepted as fair by both vendors and health system buyers.

Where there can be variability in vendor agreement terms is in deciding which exams are counted when determining compliance with the license terms or fees for usage. As the health system receives a TechFee for any exams they acquire, both vendor and health system provider are generally in agreement that these exams should count towards the software license.

But what about imported exams?

Some vendors treat all exams – acquired and imported – as equal and they are both included in the license compliance or usage calculations, even though the health system typically receives no compensation for imported exams. Some vendors may charge a lower fee for imported exams, while others include terms in the agreement that specify that only exams acquired by the health system, and not imported exams, are counted.

If multiple applications are involved – for example, a cloud-based image sharing solution, a local system for reconciling the imaging data with a local order, the PACS, and a Vendor Neutral Archive (VNA) – there may be the terms of solution’s software licenses to review and consider.

Do you Need to See the Images or Have the Images?

Before exploring how imaging IT vendors may count exams when determining system usage for software license calculations, let’s discuss some different ways in which imaging data are accessed and shared.

Image Viewer

Some enterprises provide a web-based image viewer, often as part of a referring physician or patient portal, to allow authorized users to see and navigate images and results. Cloud-based image sharing solutions also allow images temporarily stored to the solution to be viewed by authorized users. Similarly, Health Information Exchanges (HIEs) that support image data exchange usually also provide an image viewer to see the images. Common among all of these approaches is the ability to see and interact with the images without having to move the DICOM objects to the information-consuming enterprise, or having to reconcile the data to local identifiers or terms.

This is an efficient way to “browse” imaging data managed by an outside system and organization, but is often not efficient if advanced processing is required (if the image viewer lacks the features) or if the imaging data need to be closely compared to data stored in other systems (like the local PACS). While this method may suffice for some clinicians, Radiologists likely prefer the data to be presented in their primary system (linked to the local Patient ID and all other imaging records): the PACS.

Guest Studies

In some cases, the DICOM data is moved to the local PACS and stored temporarily. These data are available for viewing using all the PACS tools, but are not stored to the long-term archive. The system purges the data from the PACS cache based on any configured retention rules. These exams are often reconciled to local identifiers, like the local enterprise’s Patient ID, to make comparison in the system easy, but not all organizations will localize these data (see note below).

Many organizations will apply a specific labelling, such as a prefix or suffix character or string in the Study Description, to denote that the exam was acquired elsewhere. This can preempt any confusion if the acquisition protocol or image parameters are not consistent with the local policies. When used consistently, this method may also help identify the number of imported exams within an imaging IT system.

This approach is common where images are shared with an organization, through an image sharing solution or portable media, and the local PACS is the preferred viewer (due to its advanced tools and/or system familiarity). It is also used where Radiologists need to review the imaging data for scenarios like teleradiology or consults, but the patient is not being transferred or admitted to the local organization.

Archived Exams

Like Guest Studies above, these exams are received, stored, and (typically) reconciled to include local identifiers (for example, Patient ID and Accession Number) and terms (for example, an updated Study Description). They are archived to the PACS or VNA and made part of the local enterprise’s patient medical record.

This is common where the patient is going to be transferred to the local enterprise or will be getting diagnostic or clinical services, such as a follow-up imaging exam or surgery, and the enterprise wishes to retain these records for future reference.


  • Documented organizational policies and procedures that define when and how outside imaging exams are accessed and imported should provide guidance to staff and affiliates.
  • Determining whether an outside exam is beneficial or necessary to import requires significant knowledge. Often, a Radiologist is required to make this decision, but in some cases an experienced imaging analyst with deep Radiology knowledge, like a senior Technologist, may be able to make this determination in many cases.
  • For Guest Studies and Archived Exams, if the data are not reconciled to local identifiers, there are some risks that the outside identifiers match local ones, which can result in a potential patient risk (exam linked to wrong patient). It can also cause issues when searching for data (some demographic values as stored in the DICOM data need to be known), resulting in some clean-up activities during a data migration.

Exam Counting Methods

Many vendors run a query against the imaging IT system to collect a count of all imaging exams stored to the system over a period (for example, a year). They count each exam that has a unique Study Instance UID value (a required DICOM attribute). This method would include all stored exams, including imported exams.

Another method is to have the health system produce a report from their RIS that provides a count of all imaging exams performed by that enterprise. This list could exclude imported exams and would generally represent exams for which the health system received revenue in the form of TechFees. The vendor would have to trust the health provider’s report, but a sanity check against the imaging IT system’s database would suggest if the information were within reason.

How Much Difference Does this Make?

So, is this aspect worth looking into? Let’s look at some numbers.

Imagine a large healthcare enterprise that stores a total of 1 million imaging exams to their PACS each year. As an academic system with lots of affiliations, this enterprise has many patients in the area routinely referred for additional imaging and treatment.

Their vendor charges $1.50 per exam stored to the system.

If we assess different percentages of the total exam volume that is imported, we see that the cost to store imported exams could vary from $150K to $375K.

Example: Impact of Imported Exams on Imaging IT software license costs

Keep in mind that the health system has no TechFee revenues to offset these costs (though there may be other clinical or diagnostic services that the patient receives for which the health system can bill).

The Model Matters

In the above case, if the vendor licenses the software based on a total number of annual exams, as long as the total annual exams stored does not exceed the amount currently licensed, no additional software license needs to be purchased. If the vendor counts imported exams in the total, and image sharing increases, it may require the health system to purchase additional licenses (for example, to allow another 50K to 100K annual exams to be stored), even though they receive no revenue for the imported exams.

If the vendor licenses the imaging IT solution on a per-exam usage fee, and they count imported exams, the health system would have to pay the vendor for each exam imported (at whatever rate they specify in the agreement, which may be the same as an acquired exam, or at a lower rate).

Other Costs and the Cloud

Today, most healthcare providers procure and manage their own hardware (for example, servers, storage, and network equipment) and the solution vendor supplies the software, technical and professional services, along with ongoing support. So, in addition to any software license costs paid to the imaging IT vendor, the health system also must supply the hardware to store and manage the imported exams, and the labor to perform the importation. If a data migration is performed sometime in the future, the health system will have to pay for any imported exams that are included in the migration.

This is all in addition to any fees paid for an image-sharing solution.

The above details are important to consider if a cloud-based PACS solution is considered.

When a system is on-premises (for example, hosted in the health system’s data center), the vendor may be willing to acknowledge that the imported exams do not count towards the total exam volume when calculating the software license, but when they also provide all the hardware infrastructure, they will incur costs for all data stored. This may result in some fee being charged to the health system.

Sidenote: Enterprise Imaging

While beyond the focus of this article, many of the same questions should be posed when storing clinical images, also called Enterprise Imaging (EI) content, to the imaging IT system. Most of these data sets are not captured in response to an ordered service and have no billing associated with their capture or storage. If the imaging IT solution vendor counts these data sets (which may be one or more image, video, audio file, document, etc.) as an exam when determining software license compliance or system usage, costs (with no associated revenues) could be higher than expected.

Sidenote: Labor for Importing and Reconciling Exam Data

Another significant cost of image-sharing is the labor involved in reviewing, importing, and reconciling the imaging data to use local identifiers. This cost is not hidden, but is not measured by most enterprises, and these costs can be larger than many people understand. Industry vendors have worked on solutions to auto-generate the necessary order information to perform reconciliation automatically. New data standards, like HL7 FHIR® (, and APIs that support them developed and deployed in EHRs make this approach more feasible. Careful attention needs to be paid to how data elements like Study Description are applied in the reconciled data, as how procedures are labelled vary among enterprises. Inconsistent Study Description values can affect relevancy rules for pre-fetching and routing and may necessitate maintaining complex terminology mapping tables (if supported by the imaging IT solution). Series descriptions, which often affect features like display protocols, also vary among modalities and enterprises. Terminology normalization is a complex challenge involving many unmanaged data variables that some believe may be solved more effectively through the application of Artificial Intelligence (AI).

Tips for Minimizing Costs

The first step is understanding your current situation with the following factors to consider:

  • Do an inventory of acquired (check the RIS) and imported exams for each year for the past three years. Understand how many exams you are importing (with no offsetting revenue) and look for any trends. Are exam imports increasing year-over-year?
  • Read the agreement with your current vendor to understand the terms around how exams totals are counted. Understand whether they differentiate between acquired and imported exams. Understand whether Guest Studies (as described in this article) are counted, even though they are not archived.
  • If your imaging IT vendor does count imported exams when calculating the software license or usage, make sure you account for these costs when budgeting capital and operating budgets.
  • Understand the fees for any image-sharing solution you use. Does the vendor charge a different amount for exams that are viewed from the cloud, but not imported to the local PACS? Do they charge both the sender of the data and the receiver, or just one of the parties?
  • Review your policies and procedures for exam importation. Are they clear so that the necessary exams get imported, but ones that are not relevant are not?

If your organization is looking to replace an imaging IT system, like a PACS or Vendor Neutral Archive (VNA):

  • Ask the bidding vendors how they determine which exams are included in the count for software license calculations. If some do count imported exams and some do not, include an estimate of the additional costs for those that do in your Total Cost of Ownership (TCO) analysis.

In Conclusion

The purpose of this article is not to dissuade enterprises from sharing imaging exam data. As stated, there are many benefits of this activity to all stakeholders, most notably the patient. The purpose here is to explore variability in how imaging IT solution vendors count exams for software licensing, and how this can add up to represent significant costs, over time.

It would be unwise to select a new imaging IT solution simply based on whether they count imported exams toward the software license or not, but it should be considered in your cost projection calculations.

And it may be worthwhile to educate your imaging IT vendor partner on the economics of providing diagnostic imaging services and to align their compensation to reflect the scale of the enterprise’s revenues.

VNA and Enterprise Viewer Projects’ ROI

When I discuss industry trends with colleagues and clients, I find that we periodically touch on the topic of defining and realizing VNA and Enterprise Viewer (EV) projects’ return on investment (ROI). Our industry has made several attempts to develop an ROI calculator, which would typically encompass:

  • the benefits of consolidating IT infrastructure;
  • avoiding the cost of repeat exams due to the availability of a longitudinal patient imaging record;
  • and efficiency gains stemming from the optimized distribution and visualization of medical images.

Often these calculations are tied to a specific project and not easily reused.

During our involvement in various VNA and EV projects, we observed an interesting pattern that can bring an additional perspective on the ROI discussion.

By the end of 2010, the vast majority of U.S. hospitals had installed a PACS solution. The bulk of the deployments took place during the 2005-2010 period, and many of those are still in place, bolstered by many upgrades and technology-refresh cycles since their initial installations. During that period, both the hardware and storage components of a PACS solution were often procured directly from the PACS vendors. This procurement approach allowed the vendors to enjoy significant Service and Maintenance Agreement (SMA) revenues that would cover not only their solution components but also any included third-party hardware and storage.

Since that procurement wave, many things have changed:

  • PACS market maturity resulted in a commoditization of some of its functional areas
  • Hardware and storage costs have significantly dropped
  • Server virtualization became the preferred deployment methodology
  • Procurement of the infrastructure components has been steadily shifting from the Radiology department to the Enterprise/Corporate IT team

Also, PACS market saturation depreciated PACS vendors’ software license sales, resulting in SMA revenues becoming the key contributor to their top line.

All of these changes often created a tension between a hospital’s staff and its PACS vendor because the perceived value of the services delivered under the SMA contracts do not seem to warrant the high dollar cost. Besides tough negotiation tactics, a hospital has few practical tools at its disposal to change this dynamic. This is where well-thought-out VNA and EV projects may become extremely important in changing the negotiation power balance.

The technical and operational benefits of having a VNA take over a PACS Archive, EMR integration and sometimes even workflow components by the VNA and EV solutions are well documented and often result in the hospital’s reduced dependency on the existing PACS vendor.

Consequently, a hospital that implements VNA and EV solutions will be well-suited to renegotiate existing PACS SMA contracts to adequately reflect the provided service. The reduced SMA value can partially offset the cost of VNA and EV projects, thus contributing positively to the ROI calculation. Having said that, without a compelling event, such as an RFP to replace the existing PACS, the incumbent vendor will have little incentive to concede in the SMA renegotiations.

In order to successfully realize the above potential savings, it is important to understand what core functional areas of a PACS can be replaced by a VNA or an EV solution. Consider the following diagram:


Impact on Workflow or External Systems Replacement Complexity Industry Ability to Replace
Long-term Archiving and ILM This functionality is typically not exposed to external systems and has relatively simple orchestration workflows Low: Besides the need to keep the VNA copy of the study in sync with the one cached by the PACS, the archival and retrieval functionality is relatively straight-forward Current state-of-the-art VNA solutions offer proven methodologies to take over this functional area from the PACS
Routing, Pre-fetching and Relevancy This functional area may play an important role in orchestrating a departmental or an enterprise workflow Moderate: Relevancy detection can potentially increase the relative complexity of study routing and pre-fetching, which are typically quite straightforward due to their transactional nature The majority of the leading VNA solutions can adequately deliver this functionality, but their rule-definition flexibility coupled with their ability to express sophisticated relevancy rules (especially across multiple terminology domains), may vary
Acquisition and Quality Control (QC) Workflow Orchestration This functionality has a major impact on the acquisition and reading workflow with a large number of 3rd party systems integrations High: The large number of acquisition modalities will often have different associated configurations. Additionally, in large enterprises QC workflows could be very complex involving both automatic and manual activities. The effort to recreate all QC workflows, which were accumulated over the course of many years could be quite significant The VNA systems’ ability to provide this functionality represents one of the major product differentiation areas among current vendors
Image Distribution and EMR Integration An ability to provide access to images outside of the Radiology department is a critical component of a provider’s single patient record objective Low: The need to provide access to images within multiple applications (e.g. EMR, portal) or stand-alone impose some security and integration challenges. Besides the privacy and security considerations, the rest of the deployment and integration activities are relatively straight forward. Current state-of-the-art EV solutions offer proven methodologies to take over this functional area from PACS

Although this post is primarily focused on SMA-related costs, the reduction of the PACS functional scope will also decrease the corresponding Professional Services expenses.

Working on an Enterprise Imaging project? Leave us a comment with your thoughts, or contact us.

Article: The biggest problem in health care today

This article, inflammatory headline aside, is spot on.

In what other industry are consumers provided less information about the cost of a product or service until after purchase?

Price transparency is the first step in allowing consumers to choose. And choice means market forces drive down costs and force providers to focus on efficiency (or go broke trying).

For more reading on healthcare financials, including Radiology reimbursement, read my past blog posts here, here, here, and here.

Article – Imaging Shift to Hospital Outpatient Facilities Concerns Radiologists

Following my post on consumer choice in imaging services, in which I asked how do we use quality—and not just cost—to help consumers make choices, I found some observations in this article on the shift of imaging being done in imaging centers to outpatient facilities to be quite interesting.

For example…

“groups at imaging centers may struggle to upgrade or get new equipment, which could affect image quality and interpretation”

So, how do I, as an imaging consumer know which provider has modern, safe, calibrated equipment, operated by qualified and skilled operators when making my choice of where to get imaging done?

I don’t ask my dry cleaner about what equipment they use, or when it was last serviced, or how much experience the person in the back doing the work has. Nor to I ask these questions about my car wash.

I often make choices in dry cleaning and cash washing based on cost, but more so convenience.

But this is my health and it is my body going through that device, not my clothes or my car.

I wonder how many people will simply trust that a friendly receptionist, flowers and nice magazines in the waiting room at a facility near where I work means quality and safe imaging. If I have a good experience during my imaging appointment, but they miss important findings due to low quality images (or lack of sub-specialty knowledge/training), how will I know?

Unlike a spot that doesn’t come out of my shirt or a still dirty section of my car, the consequences can be severe.

Putting the Power of Choice in the Hands of Healthcare Consumers

As reported in this Healthcare Informatics article, The Health Care Cost Institute, a non-profit organization based in Washington D.C., is making data on healthcare costs from 40 million insure individuals available for use by consumers to help them understand pricing information for common health conditions and services.

As I have blogged about in the past, providing the consumer, referring physicians and employers with tools to help them make choices about where to get affordable and market competitive healthcare services will be a growing trend.

Of course, to measure the value of something based purely on the cost assumes the product or service is a commodity. In the world of medical imaging, this is not the case.

Should an imaging service provider that has 15 year old equipment, no radiation dose tracking or optimization program, no sub-specialized Radiologists, and no peer review program (for quality assurance and ongoing learning) be paid the same for a procedure as a service that has all of these things (and more)?

Unless there is some consideration of quality in calculating the value of the money spent on a service, like medical imaging, then prices will be driven down to a commodity level and there will be no funds available to invest in the tools and resources required to provide quality. The math of economics is pretty unemotional about this stuff.

The Healthcare Revenue Revolution Continues

I continue to study how healthcare payment reform will affect services like diagnostic imaging. I blogged about it here, and here.

If you are really keen on learning about this topic, I recommend that you follow some of the links provided. Lots of info to absorb.

Now, HHS—in what is being called an ‘historic’ announcement—is making major changes towards value-based reimbursement.

Also, the trends in Revenue Cycle Management (RCM) provide insights to how the financial management leaders see things changing. This article from Healthcare IT News, titled Revenue cycle headed for a ‘new world’, reinforces the trend towards provider consolidation and predicts that RCM will be increasingly outsourced. Worth a read.

One thought I have been musing…

Will value-based reimbursement accelerate the adoption of so called Enterprise Imaging capture and integration within the EMR (using a common platform for image management and viewing)?

Up until now, the ROI on enterprise imaging has been elusive, mostly because it is compared to fee-for-service imaging, like Radiology. However, once the reimbursement model changes, and the improved correlation of images and findings across diagnostic and clinical imaging proves to contribute positively to outcomes (as I expect that it will), the capture and integration of enterprise images within the patient record may be rapidly adopted.

Article – Insurers will have to change to survive

I have been very interested in the changes to how Radiology revenues will be affected during the shift from volume to value based reimbursement, along with changes to healthcare business models in general. I blogged about it here.

I have also been interested in how Radiology will have to change their behaviors in this new environment of transparency and empowered consumers. I blogged about that here.

In this article, a healthcare investment firm details how insurers will have to change in order to compete for mind share among consumers (with choice).

Another very interesting point they make is about wearables. I agree that they are only used by so called Innovators (from the Innovation Adoption Lifecycle model) today.

But what if insurance companies start offering incentives in the form of reduced policy premiums for people that use them (and share the data with the insurer perhaps). This is much like having a security system on your home lowers the cost of your theft insurance, or smoke detectors lowers your fire insurance premiums. This would create a boom in the mHealth sector, and would likely improve outcomes through early detection and correcting unhealthy behaviors.

I wonder: Will providers and insurers compete for who knows the patient best?

Providers have the EMR data (for encounters with their facility), and perhaps from an HIE (if they are part of one). Insurers have info from payment transactions spanning hospitals, clinics, pharmacies and others.

Where will the data from wearables go? If the insurers are buying (by lowering premiums), I will bet that they get it more often that the provider.

Will wearables and mHealth device vendors be savvy enough to provide it to both? Will consumer-controlled PHR vendors (or information aggregation and brokering tools) have an optimized method for getting data from all a patient’s devices and apps into EMR systems? Will the provider’s EMR or HIE be open enough to receive and store the wearable’s data without manual data entry (or copy-paste)?

Will patient’s be willing to share this personal info with providers and insurers? I will bet: yes.

If I thought the data would help my outcome, and I trusted my provider, I would share it.

If it was certain to lower my premiums, I would share the info with my insurer. If the insurer reserved the right to increase premiums based on info that my wearable provided (i.e. if I sit on the couch too long, my payment goes up), I might reconsider.

Will providers supply no cost (or subsidized) wearable and mHealth devices (or apps) to patients? Will insurers and providers share this cost?

So, how can wearables help in Radiology? Other than sending out reminders on where and when to show up for the exam, and what to do (e.g. eating, etc.) prior to the procedure.

Revenue Revolution in Radiology

I have been reading a lot recently about trends in healthcare and imaging around costs and revenues. There seems to be a perfect storm of changes in the market that will have a fundamental impact on diagnostic imaging service providers. I find this topic interesting because, unless you understand how the money is moving, you won’t understand why things are happening. Here is a summary of what I have discovered.

Medicare Reimbursement Cuts

This one is obvious. If you lower the amount of money paid for something, your revenues will go down (unless volume goes up proportionally). Here is an infographic from MITA on the cuts made since 2006.

Fewer Medical Imaging Exams being Ordered

Here is an article from MITA on the decline of the total number of CT exams being done in the U.S. Here is another one citing data published by the American College of Radiology (ACR). It states: “…physicians are calling for less, not more, imaging tests.” This shows a measurable reduction in the volume of exams performed in the U.S. And here is an article indicating a steady decrease in imaging studies being ordered for patients in the ED, following a steady increase up to 2007.

Image Sharing

The sharing of patients’ clinical records across facilities is a key part of Accountable Care, and is generally a good thing for patient care. So is sharing imaging records. With reliable options now available on the market, sites within a local referral area are rapidly launching or signing up to services to share images. The clinical benefits of comparing new imaging exams with priors are well understood, but this practice will often result in avoiding the need to perform a repeat exam. This benefits the patient (less radiation and anxiety and delay), and the operations of the receiving organization (less schedule disruption, less costs due to CD importation). The other impact, of course, is that the receiving organization loses some revenue from that avoided repeat exam. This will result in a reduction in volume of exams performed.

Adoption of Clinical Decision Support

Starting on January 1, 2017, imaging exams will require the use of Clinical Decision Support (CDS) to ensure that physicians are following Appropriate Use Criteria (AUC). In addition to clinical evidence, factors such as relative radiation level and cost of the exam are used to determine what is appropriate. All things being equal, the lower cost exam is likely to be recommended. The adoption of CDS may result in a reduction in volume of exams performed, or a recommendation to a lower cost (profit) exam.

Preauthorization Requirements

In some insurance plans, preauthorization is required before certain exam types can be ordered (even when CDS is used, in some cases). This may require a consultation with a radiologist or Radiology Benefits Management (RBM) company. Here is an article from 2011 on the use of preauthorization and CDS. The larger the burden on the ordering physician, the less likely they are to order the exam, which may result in a reduction in volume of exams performed, or a recommendation to a lower cost (profit) exam.

Patient Steerage

Last year, I did a blog post on an article on the trend of “patient steerage”. The original article is here. Essentially, patient steerage is when a payer incents a patient to use a provider that offers the imaging service at a lower cost. If a service provider is not price competitive, this will result in a reduction in volume of exams performed.

The Castlight Effect

This company received a lot of attention because of the size of its IPO, but it is also notable for what they actually do. As this article explains, they provide healthcare provider cost information for a range of healthcare services to employee health plans. The intent being that, given the choice, consumers will choose lower cost options. This is very likely to happen when the patient has a significant co-pay (e.g. 20%) and they will personally benefit from lower cost options. If a service provider is not price competitive, this will result in a reduction in volume of exams performed.

Wait, but what about Quality?

With all the talk about the shift of reimbursement from volume of procedures to quality or outcomes, I found this tweet on Castlight interesting… Castlight Tweet If we shift away from volume incentives/payment, reduce the prices paid (through policy or competition), but don’t recognize quality, the service of diagnostic imaging has been commoditized, and I don’t think that this will benefit patients, in the end.


I have heard a couple of opinions that believe that the strong trend of consolidation among healthcare providers will allow the largest of providers to dictate terms and pricing to payers. As it was explained to me, it works like this: The big, well-known healthcare provider, which has bought up many of the facilities in the area, tells the insurance payers, ‘If you don’t give me preferential pricing for my services, I won’t accept your insurance plan at my facilities’. If the healthcare provider is big enough and well respected, the insurance provider will have a tough time selling insurance plans to companies and individuals when the buyer learns that they can’t go to the big provider. This is called leverage. If this is true (and I think that it is), this will result in isolated areas of reimbursement stabilization or even increases. Here is an article talking about what the impact of provider consolidation means to private payers. It cites a steady increase in the number of physicians becoming employees of hospitals (vs. independent private practices)…

“…the number of doctors employed by hospitals increased to over 120,000 from 80,000 between 2003 and 2011. About 13 percent of all doctors are now employed directly by hospitals.”

A Necessary Change in Revenue Cycle Management Systems

Here is an article on the need for an overhaul of Revenue Cycle Management (RCM) systems in the U.S. It includes some stats on administration costs per transaction (compared to financial services transactions) and consolidation trends, as well as the value of analytics. Some excerpts…

“…the number of hospitals per integrated delivery system took a big jump last year from 6.4 to 7.1…”

“…the physicians who go into practice do not want to be entrepreneurs as much as they used to. When 52 or 53 percent of residents today become employees of integrated delivery systems, it tells you that the whole market has changed.”

Using Analytics to Maximize Revenues

Here is an article on using analytics and their reports to optimize financial operations.

So, what do you think?

P.S. Here is an interview that goes into the details of payer vs. provider, along with a case for more bundled payments. And here is a blog post that goes into more detail on bundled payments, including the shift from retrospective to prospective bundles.

P.P.S. Here is an article explaining the difference between charges and costs.

P.P.P.S. Here is a notice of rule changes proposed by CMS on the method by how physicians fees will be determined. “…we are updating our practice expense inputs for x-ray services to reflect that x-rays are currently done digitally rather than with analog film.”

P.P.P.P.S. Here is an article on a study on the disparity of costs for a Mammogram in the L.A. area. $60 to $254 for self-pay, with a bill of $694 to the insurance company for the same procedure elsewhere. 30% of Mammograms in the study were self-pay.

P.P.P.P.P.S Here is an article, with a nice infographic, on 5 common medical practice denials and remedies. Spoiler alert: Radiology made the Top 5 list of unexpected denials.

P.P.P.P.P.P.S Here is an infographic on the declining employment demand and income of Radiologists by a medical recruitment firm.

Report – Second Annual Practice Profitability Index: 2014 Edition

This report is well-written (in plain language) and is worth a read. While it does not specifically refer to medical imaging practices, the trends are consistent.

My clients are certainly facing similar challenges, especially declining (or changing) reimbursement, changes to adopt ICD-10, and “ripping and replacing” systems. The shift from independent private radiology practices is also shifting to very large groups (consolidation) or hospital employment.

Second Annual Practice Profitability Index - 2014 Edition

Blog – Who should pay Doctors?

I enjoyed reading this blog post. It provides some important context around the costs of a primary care practice and the extra, unpaid work they often have to complete in order to “do the right thing” for their patients.

Having gone from being an employee to a business owner/operator, I can attest to the added business and accounting skills one needs, along with the extra work that has to be done, to ensure that the operation is viable. I have been lucky enough to find many IT tools, and services providers, to minimize the effort to run my business, but I am not dealing with all the regulations and complexity of multiple payers’ policies that doctors are. How can healthcare IT let doctors get back to provide care?