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First Bend in the Health Care Cost Curve

Recent trends in radiology imaging portend a dramatic and rapid reduction in this segment of a hospital’s business plan. Even before capitated (or global) payments have come into full play, there has been a large reduction in the number of some types of imaging studies in hospitals.

Our Chief of Radiology summarizes our experience — common to other hospitals as well — and provides some of the reasons.

The biggest hit has been in CT, the modality we are most dependent on for revenue. We are about 10% down in CT cases from last year, due to a combination of patient and physician fears about radiation exposure, more prudent ordering of studies by physicians, leakage out of the medical center, and the introduction of physician incentive programs (to minimize the amount of imaging) by some insurers.

Also, and very surprising, we have not seen an upswing in ultrasound or MRI to match the CT volume drop. We have, however, seen an increase in the number of patients arriving with their scans on CD ROMS having been imaged at other lower priced vendors. We don’t bill for these interpretations even though we are frequently asked to reinterpret the studies for our clinicians, and BIDMC is paying to store these images on our PACS systems.

By the way, this occurred while our overall patient volume increased during the same period.

The result of these trends will be to reduce the number of radiologists working in hospitals, and there will also probably result in a reduction of salaries for this physician specialty.

Paul Levy is the President and CEO of Beth Israel Deaconess Medical Center in Boston. Paul recently became the focus of much media attention when he decided to publish infection rates at his hospital, despite the fact that under Massachusetts law he is not yet required to do so. For the past three years he has blogged about his experiences in an online journal, Running a Hospital, one of the few blogs we know of maintained by a senior hospital executive.

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AanmaShop EDHardysMichaelPKinSFLARick Recent comment authors
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Aanma
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I think that the stagnation in ultrasound and MRI with CT volume drop is very telling. I guess patients today want more value for the money they spent and would not settle for anything less. If there are some lower priced vendors that deliver, patients would obviously visit them and save money.

Shop EDHardys
Guest

I recently came across your blog and have been reading along. I thought I would post my first comment. I don’t know what to say except that I have enjoyed reading. Great blog. I will keep visiting this blog very often.

Michael
Guest

We need to fix, improve, and expand on the healthcare reforms, but the party in power wants to go in the opposite direction.

PKinSFLA
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PKinSFLA

My start as an imaging technologist began in 1993 when I first started X-Ray school. The hospitals I trained at all joked about how much money the Radiology dept pulled in profit yearly. The college instructors all were saddened about how the salary structure for the technologists was historically low since this was considered a woman’s job like teaching and nursing. When my wife was injured in a MVA and had a brain and C spine CT done via the ER, they tried to bill me 4K for the two scans. I called them up and said that I would… Read more »

Jeff Goldsmith
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Jeff Goldsmith

The health system has added about a million jobs since the beginning of 2007, even though demand for most of the health system’s product has been falling. Seems like management hasn’t gotten the memo. Those million jobs are being paid for out of the society’s negative cash flow, another form of stimulus with borrowed money. In the case of business spending, it’s coming out of peoples’ incomes as wages foregone, which is one reason why we’re continuing to have a recession.

Rick
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Rick

Paul’s observations about imaging at BIDMC would seem to put the lie to predictions that we will be facing a train wreck of a doctor shortage under healthcare reform. Looks like we are well on our way to a glut of radiologists.
The comment from “landlord services” about job growth in the medical field only reinforces my suspicions.

Healthcare Service
Guest

HCX is the leading technology enabler which uses its all-encompassing software solution for its hospital, partner and patient management.
Healthcare has become more and more data intensive and anyone that has the ability to analyze and drive intelligence from the data that they
accumulate has the advantage. This advantage can be translated into effective solutions that drive down costs.

landlord services
Guest

The health sector was one of the few areas of employment growth during the recession and the resumption of spraying, the creation of 96,000 new jobs in the first half of 2010, including11, 300 jobs in hospitals. Health care has created 228,700 jobs in 2009 and 618,700 jobs since the recession began in December 2007. During the past year, employment in health has increased an average of 20,000 jobs a month, the BLS figures show .

propensity
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propensity

Paul,
Are you making more money on the DRG cases and saving on the indigent cases who will not pay anyway?

Peter
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Peter

“it is growing reality in bending the cost curve.”
Especially when the cost curve (ours not theirs) has been dictated by providers in a trapped local market. Look what happened to North American car companies when they had a captured domestic market that they thought they could sell overpriced crap to forever. Now if we could just ship large numbers of Medicaid/Medicare patients to India.

Wellescent Health Blog
Guest

It would also be interesting to note how much of the imaging analysis is being shipped overseas to countries like India where large numbers of doctors are available to perform this work. As soon as any work involves a significant information component, we are likely to see it being shipped to these lower cost centers in a manner not dissimilar to a call centers. While not good for onshore jobs, it is growing reality in bending the cost curve.

Anon
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Anon

“there will also probably result in a reduction of salaries for this physician specialty”
Good news! Offer your radiologists a 30% cut in pay or they can find a new job and you can hire a new group at a 30% discount. Better yet, send ALL your images to India or Australia, not just the overnight ones.
Perhaps you were not aware that Radiology is a “lifestyle” speciality (see Dr. Wachter’s post above yours) where the big money is expected and they all leave at 5 PM.

Peter
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Peter

“more prudent ordering of studies by physicians,” “introduction of physician incentive programs (to minimize the amount of imaging) by some insurers.” “The result of these trends will be to reduce the number of radiologists working in hospitals, and there will also probably result in a reduction of salaries for this physician specialty.” Does this worry you Paul? Do you plan on getting this billing/revenue loss replaced from other areas? “We don’t bill for these interpretations even though we are frequently asked to reinterpret the studies for our clinicians, and BIDMC is paying to store these images on our PACS systems.’… Read more »

Jeff Goldsmith
Guest
Jeff Goldsmith

I’m picking this up from a lot of other parts of the country. If it’s not just a blip, it’s a really big deal, and portends dramatic deterioration in hospital operating performance. According to our friends at the Advisory Board, imaging contributed $24 billion to hospital profits in 2007, fully triple the next most profitable service (cardiology). We shouldn’t forget that patients have been delaying elective healthcare because they cannot afford the copays, and that four million people who used to have insurance lost it during the recession. The economy is certainly playing a supporting role in this downturn. It… Read more »