By Keith Chew, MHA, CMPE, FRBMA, Senior Vice President
As the healthcare industry continues to see widespread consolidation in the forms of mergers, acquisitions, joint ventures and collaborations, it has become imperative for hospital-based radiology groups and outpatient imaging centers to consider their strategy for future growth in their market.
Between 2010 and 2013, the American College of Radiology (ACR) Commission on Human Resources’ annual workforce survey reported a 10 percent decrease in the number of U.S. radiology groups. In an interview with Radiology Today, the commission’s chairman, Edward Bluth, M.D., attributed part of this decrease to consolidation and part to radiologists leaving private practice to join a hospital or health system.
As radiologists combine or become acquired by larger industry players, it is crucial to consider the best path moving forward in this highly competitive landscape. Several business models have emerged over the past decade for practices and imaging centers to choose from, including large group networks, acquisition by management company and regional collaboration among noncompetitive groups.
Below are further details regarding these three models for radiology groups and imaging centers to consider as they plan for future growth and success:
Large group network
Large practice consolidation has become increasingly popular in the specialty of radiology. One example of this model is Strategic Radiology, a network of 1,300 radiologists across the United States with shared access to data, clinical information and certain economies of scale.
Although these types of networks aim to connect radiologists to provide high-quality, cost-effective care, they focus on larger groups with a minimum of 50 providers while looking to smaller, regional players only in affiliate status roles. It is a relatively exclusive model built to further bolster large radiology practices, simply selling services to smaller groups with fewer than 50 providers who offer local services on a smaller scale.
Management company acquisition
Over the past decade, single- and multi-specialty management companies have steadily acquired more and more physician practices, promising providers fewer administrative headaches and greater economies of scale. A report by consulting firm PricewaterhouseCoopers (PwC) titled “Q1 2015 U.S. health services deals insights” demonstrated how this trend shows no sign of slowing down; in fact, the volume of deals increased from 13 in Q1 2014 to 21 in Q1 2015, with 18 of the 21 deals announced involving physician practice management companies such as MEDNAX and IPC The Hospitalists Company.
While multi-specialty companies begin to add radiology to their service lines, such as MEDNAX’s acquisition of vRad in May 2015, single-specialty management companies such as Radiology Partners (RadPartners) continue to expand their network size through a traditional M&A model. Though RadPartners positions itself as “partnering” with radiology groups, it primarily acquires groups then promises health systems greater stability, while essentially removing or diluting radiology practices of their clinical and operational autonomy.
And while this may appear an attractive option for radiology groups seeking a partner to manage daily operations in an increasingly complex landscape, integrating into the management company often brings a host of challenges regarding workplace culture and the managing of expectations on both sides of the transaction.
Regional collaboration among likeminded groups
The emerging alternative to the two aforementioned models is a more collaborative approach, a true partnership between likeminded, noncompetitive radiology groups to pool resources and expand subspecialty access while remaining clinically and operationally autonomous.
Built to support sustained independence and growth in a dynamic market, the collaborative model provides groups the tools they need to survive and thrive in the age of value-based care by transforming practices and centers into more nimble organizations. This model can better help radiology groups prepare for a future of enterprise imaging designed to provide a unified patient view, equip them with economies of scale to offer greater purchasing power, and provide a more advanced analytics platform to collect the necessary metrics to accurately evaluate practice performance. For an overview of the benefits of this emerging model, please click here.
It has become critical for radiology groups and imaging centers to consider these emerging business models and determine which will best prepare them for future growth and long-term success without sacrificing their clinical independence. To learn more about the collaboration model and IRP’s suite of practice solutions, please contact us at ContactIRP@IntegratedRP.com.