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How policy, payment models, and a pandemic are reshaping outpatient imaging

EI Connection: What is happening with the outpatient imaging market, and specifically with hospital-owned imaging centers?  

Gurgel: The diagnostic imaging market is undergoing many changes related to reimbursement, regulations, the COVID-19 pandemic, and an influx of capital from private equity buyers. Volumes are expected to continue to shift to non-hospital settings, which will likely drive increased interest in joint venture activity between hospitals and radiology groups 

One trend that Fujifilm has witnessed is a shift toward hospital owned outpatient imaging ventures through HOPPS centers (Hospital Outpatient Prospective Payment System). Numerous Fujifilm customers have joined this trend, including Westchester Medical Center and Washington Health, the latter of which operates four outpatient centers.  

First, imaging services have long been moving from the inpatient to the outpatient setting. Now, due to new payer pressures and patient preferences, there is even more urgency to place these outpatient services in freestanding facilities.   

For patients, outpatient services are less costly and more convenient with easier access and locations closer to their homes.  For hospitals, overhead and fixed costs are greater within a hospital, making a dedicated outpatient imaging center more efficient both financially and operationally. Moreover, scanners in the hospital may be tied up for considerable periods with challenging inpatient procedures.  

RadNet’s CEO Howard Berger has offered insights regarding the outpatient trend, noting, “Recently, hospitals have focused on COVID-19 and other very acute patients. This will continue for some time. The vast majority of outpatient business that historically has been performed within the hospitals prior to COVID-19 has shifted to ambulatory providers such as RadNet. This means that patients and referring physicians will become accustomed to using outpatient providers, and we don’t believe this business will be recaptured by a hospital for some period of time. Ambulatory patients will likely feel more comfortable and safer being directed into freestanding alternatives to hospitals.”  

EI Connection: What about independent imaging providers? What kind of shifts are we seeing there?  

Gurgel: In addition to hospital outpatient centers, we’re also seeing changes among the three types of independent imaging providers: Imaging centers, radiology groups, and urgent care centers.   

More and more independent radiology practices are considering external investment in their practice. As reimbursement continues to shift and decrease, many practices are looking to raise capital and accelerate growth strategies. For example, RAYUS Radiology with more than150 imaging centers, has set a very aggressive growth strategy. Earlier this year, RAYUS chose Fujifilm’s Synapse EIS workflow management solution because they know Fujifilm is well-positioned to support an organization of RAYUS’s size, national scale and long-term growth plans in the outpatient market. 

Ever since the Affordable Care Act, private equity activity involving hospitals and contract-based specialty practices began to increase significantly. Today, imaging continues to be a critical component to improving the overall quality of care, along with care coordination, utilization management, and big data. As reimbursement continues to shift from volume to value, hospital consolidation progresses, and technology and infrastructure needs increase, more and more independent radiology groups are determining that they need to partner in order to prosper.  

As for urgent care, data suggests that patients are turning to urgent care clinics as an alternative to expensive and long wait times for ED visits.  As part of the desire for quality care with lower costs, urgent care centers are increasingly providing patient’s imaging needs. According to a report by the Urgent Care Association, digital radiography (DR) is the most utilized imaging service in the responding urgent care centers, at nearly 71 percent.  DR offers high quality imaging with fast patient turn-around times, matching the urgent care center’s mission.  From this, we can see why there is a trend for more investment in imaging in urgent care centers. 

EI Connection: How do you see the outpatient market changing in the next 3-5 years? 

Gurgel: Cost and convenience will drive demand for Independent Diagnostic Testing Facilities (IDTFs).  An IDTF is a type of provider that offers diagnostic services and is independent of a physician’s office or hospital. Price transparency regulations (No Surprise Act, CMS) require providers to make it easier for consumers to ascertain comparative price information. These regulations, coupled with high deductible health plans in which consumers are incentivized to price shop for healthcare services, should create an environment in which IDTFs continue to gain market share. Convenience is also a factor driving consumer behavior as visiting an IDTF for a scan is preferable to navigating a hospital campus.  

The COVID-19 is another factor accelerating the shift from hospital-based outpatient imaging. The pandemic set the stage for doing procedures that would normally be done within the hospital setting in an ambulatory environment instead as patients and healthcare workers sought to avoid contagions.   

EI Connection: What are the pain points and priorities for hospital-owned imaging centers? 

Gurgel: Outpatient imaging centers require different business strategies compared with hospital-based operations, and that’s challenging for large institutions.  Unlike other ambulatory facilities, imaging centers rely upon expensive, technologically advanced equipment and other physicians who refer patients. This dependence creates a unique set of relationships among the hospitals, radiologists, referring physicians, and individual consumers in a community, particularly when some of the physicians have financial interests in the success of a freestanding center.   

EI Connection: Will more acute providers look to outsource reading and increase teleradiology use?   

Gurgel: I believe so.  The primary benefits of teleradiology are providing access to specialist radiologist expertise where or when none exists, the appropriate utilization of radiologist time and energy, and the overall enhancement of patient care—all while reducing healthcare costs. 

Subspecialty providers, such as RAYUS, that offer advanced diagnostic and interventional radiology are growing rapidly, with networks of imaging centers, hospital partnerships and short- and long-term hospital solutions. Many large radiology groups also offer affiliated subspecialized radiologist networks. These provide acute physicians with no shortage of radiologists, typically 24/7/365 coverage, which allows patients to be diagnosed and treated quicker and more efficiently.  

Nathan Gurgel

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