Throughput: The Post-DRA Watchword.

By Tobias Gilk

DRA is the biggest MRI drum at the moment, and we’re going to beat it one more time. Many MRI providers believed that as long as they could ride out the immediate storm of reimbursement cuts, they’d emerge “revenue victorious” after the weaker providers dropped out of the competitive landscape. This rose-colored forecast, however, fails to recognize two key products of DRA.

DRA has re-written the revenue rules, forever.

DRA is the beginning, not the end, of reimbursement cuts.

Let’s take these in reverse order… Despite vociferous moaning and groaning by imaging providers, United Healthcare, the Blue Cross Blue Shield companies, and many other private payors see the federal government’s imaging reimbursement cuts as a potent argument to cut their own reimbursement rates for MRI scans. Today average technical reimbursement rates may still hover around the $550 mark, but there’s no upward pressure on that figure, only downward.

As long as further cuts are targeted at the technical component of MRI imaging, the reductions eviscerate any efforts by the powerful physician lobbies because the only physicians who would have a stake in the technical component are ones who may also be on the accusatory end of self-referral finger-pointing.

So, with the private payors succumbing to the reimbursement reduction peer pressure and no substantial political forces to oppose them, it can be safely assumed that technical reimbursement will continue to drop, though hopefully not at the same gut-wrenching velocity that was experienced by the DRA cuts.

Which leads to the revelation that DRA has triggered a substantial revision of the revenue rules for MRI providers. Those who counted on riding out the storm and pick up ‘business as usual’ in a year or two miss the scale of the changes that are needed to remain financially viable, to say nothing of successful.

With permanent reductions in the technical reimbursement rates, the only ways that imaging providers can match prior business performance is to either (a) cut costs or (b) increase revenue.

Far and away the largest costs associated with an imaging center are personnel and the actual MRI equipment. Finding the needed highly-qualified technologists has grown increasingly difficult over the last several years, so it’s not likely that the most crucial positions are overstaffed to begin with. MRI equipment typically has a minimum 4-5 year payoff cycle, so providers are likely stuck with the equipment they currently have for a healthy amount of time and most new MRI equipment is not going to present significant cost savings and may, in fact, cost more than equipment purchased when reimbursement rates were significantly higher. So if cutting costs doesn’t hold much potential for revitalizing your practice, it falls to increased revenue.

While it is powerfully argued that patient care is not a commodity, MRI scans are reimbursed as if they were. The only way to make more revenue when you’re being paid for a commodity is to sell more of it.

MRI providers look at their product in terms of what it takes to provide the scan… the MRI scanner, trained technologists, a roof overhead, support staff and 40 – 45 minutes in the bore. Everyone else, patients, payors and referring physicians, consider the product to be the image.

Yes, providing the image requires facilities, equipment and personnel, but if you can provide the requested images for a greater number of patients using the same resources more effectively, you’re effectively changing your business practices to more closely align with the post-DRA rules.

The one thing that imaging providers can control is throughput. There isn’t (at least, not yet) a conveyor-belt MRI where you can line up your patients as if on an assembly line. You can, however, apply business principles from other industries to maximize your potential throughput and position your facility for financial success.

Even if you undertake this exercise today, you will likely have to repeat it in a few years as the business conditions, technology and clinical expectations continue to shift. This is just an expected feature of today’s business landscape.

If you have questions about the overall safety and efficiency of your MRI suite, you would be wise to have a MRI Suite Survey which can help you identify safety, throughput and operational improvements.