Managing Risk in Service Line Startups

Introducing a new line of service can propel an imaging center to new levels of success, but the implementation process for a new service carries considerable risk. If the imaging center makes many errors during that process, the new service might not be viable.

Managing risk in a service-line startup requires looking before one leaps, so that “service is excellent from beginning to end,” according to Paul S. Schaefer, MD. He is president of Community Radiology, a Rockville, Md, Radiologix-affiliated group of 17 radiologists operating nine freestanding imaging centers in three counties near Washington, DC. He says, “Your new service has to be excellent because, in all likelihood, you are going to be competing against entrenched radiology providers having well established referral patterns. To have any hope of altering those referral patterns, the new service that you roll out must be efficient, professional, and convenient. If you go into a market and have suboptimal service in those facets, your risk will be high.”

PRELAUNCH VIABILITY CHECK

New services at Community Radiology include CT angiography/pulmonary angiography (made possible with a Siemens multislice scanner), dynamic breast MRI imaging, calcium scoring, 3-D volume rendering, and subspecialty readings and instant consultations based on picture archiving and communications system (PACS) technology. Before adding any of those services to its offer ings, the group compiled a pro forma plan for each.

“We wanted to know what our costs were going to be,” Schaefer says. “Once we calculated those, we needed to determine how many studies we would need to perform on each business day in order to offset our costs and yield a profit. We did not go forward with a service until we were confident that it could be operated in the black within a specified time frame.”

For Jim Stuppino, president and CEO of Vision Imaging, Leesport, Pa, the pro forma process includes an evaluation of the market’s composition, undertaken to help gauge whether the contemplated addition will be able to sustain itself. “We see whether there is a need in the community, or if there is already an abundance of providers doing a good job of meeting that need,” he says.

Good sources of such insight are the referring physicians in the area being considered for a new service. Stuppino notes that his group asks referrral sources directly whether they are interested in a contemplated service. “Sometimes, though, it is not necessary to ask,” he says. “If there is a need, we hear about it from the offices that we visit. They will say to us, When are you going to put in this modality?’ That’s our cue that we need to give serious and prompt consideration to adding it.”

Robert E. Schaaf, MD, managing part ner of Wake Radiology, Raleigh, NC, reports that if an imaging center is in a certificate-of-need (CON) state (as Wake Radiology is), then whether implementation of a proposed new service goes forward will be up to the regulatory agency involved. That, however, does not mean that the imaging center lacks the ability to make the case in its favor.

“Facilitating the CON process requires good preparation,” Schaaf says. “That entails being well informed about community needs, and about the extent to which those needs are unmet by current technologies and services in the area. Then, you must be thorough and accurate in your compilation of the supporting documentation submitted with your application. It helps to present evidence of strong backing for your proposed service, both from the community at large and from referring physicians.” Using those techniques, Schaaf’s group was able to convince the state to authorize acquisition of a series of Siemens MAGNETOM Avanto 1.5 T MRI systems, one of which will be deployed on a mobile platform.

IMPLEMENTATION STRATEGIES

After ascertaining the potential for a new service, the next step is to define its initial scope. Beginning operations too ambitiously might force the imaging center to invest far more resources in support of the new service than it can afford, and this, in turn, could cause the center to lack adequate cash, credit, or both. Nonetheless, too timid an opening for a new service can inhibit the ability of potential users to gain access to the scarce service, which could give competitors time to start from behind and overtake the first provider. “Picking the right level to start out at requires careful forethought,” Schaefer says. “You have to weigh your goals against your capabilities and the market realities. It is not an easy task.”

Once it has determined the need for a new service and the appropriate level at which to introduce it, the imaging center must make sure that its facility has the space and infrastructure needed to accommodate it. Stuppino avoided such problems by planning his facility with appreciably more room than he initially needed; later, when he was ready to bring new services into the center, a place for them was waiting.

Schaefer notes that it is inadvisable to rely on the imaging center’s own infrastructure assessments alone. Help in determining the facility’s infrastructure needs, and how to meet them, is both warranted and available. Schaefer took advantage of this in 2002, as he prepared to convert to filmless operation through the installation of a PACS. He says, “We asked our provider to perform an on-site analysis of our existing infrastructure and requested recommendations on what we needed to do to bring it up to where it needed to be.” Other advisors helped the group develop requests for proposal and sift through the responses in order to find the most promising infrastructure upgrade plans.

THE RIGHT COMBINATION

Sometimes, it is necessary to open an entirely new facility in order to support the added service properly. Joe Busch, MD, Battlefield Imaging, Fort Oglethorpe, Ga, notes that his group had to acquire a new facility for its newest venture, a radiation therapy service sited a few steps from a hospital’s cancer wing.

Similarly, Wake Radiology built a new facility for its radiation oncology services in 1999, but, in this instance, the center was constructed to permit pairing that service with imaging. “We combined the two because we that felt oncology and imaging were reuniting over three-dimensional treatment planning and intensity-modulated radiation therapy, which we had been providing since 1998,” Schaaf says. “We recognized that CT and MRI would be used more often by the radiation oncologists.”

Beyond the advantage of its location, Busch believes that superb administrative support forms a key ingredient in the success of Battlefield Imaging. “Having in place a top-drawer management team is every bit as crucial as having superior technology,” he says. Busch spent months pulling together administrators with the sharpest business and marketing skills. He did the same thing when hiring technologists. “We have the best of the best to go with our new services, which also are the best of the best,” he says.

The imaging center should never hesitate to draw on the support of its vendor when setting up a new service line. “The fact that I have such a good relationship with my vendor was a deciding factor in whether we would go ahead with my service-line expansions,” Stuppino says. “I knew that we would have access to excellent equipment, service, and advice (and that was worth its weight in gold).”

Rich Smith is a contributing writer for Decisions in Axis Imaging News.