By: Patricia (Pat) Kroken, FACMPE, CRA, FRBMA
Originally Published in RBMA Bulletin November/December 2022
The day before officially opening for business, the radiologists toured their new outpatient imaging center and were proud of what they had accomplished. The facility was impeccable, boasting the latest advanced imaging equipment, patient-centric, efficient exam rooms and staffed by some of the best technologists and administrative employees in the community. Everyone was surprised to see the center close in less than two years. What the heck happened?
The physician planning committee had hired an experienced radiology department manager from a local hospital, based on his background in facility planning, equipment acquisition and workflow. He brought the project in on time and within budget. However, while he was experienced in Management of a physical plant, he had no background in billing and met the devil in the myriad of associated details.
The imaging center was a joint venture with a separate tax identification number and address. Since the radiology group was contracted with all major insurance carriers in the market area, the manager attempted to bill global imaging center claims under the group’s professional component contracts and the denials quickly piled up. There were issues on several layers, beginning with the fact the inhouse billing department handled professional component claims submission and an outside billing company was in charge of billing the imaging center’s global fees. The billing company had received a list of insurance company contacts but didn’t have copies of payor contracts. They quickly determined they were dealing with a contracting issue but found their calls of alarm fell on deaf ears with the Practice manager and physicians, who did not understand the complexity of billing issues and delayed taking action. At the same time, the owners were saying “Where’s the money?”
The staff put on a full court contracting press and even though appropriate contracts were eventually put in place, a tremendous amount of revenue was lost due to numerous denial issues, including timely filing. Negotiations were tense since the group had a track record of being contentious working with insurance companies so they met with responses of “Sorry, but you didn’t follow the rules” when they asked for concessions regarding reconsideration of improperly filed denied claims.
Most of the money the partners counted on was just gone. Financial projections outlined gradual increases in revenue as operations ramped up, but instead the partners found themselves taking on substantial imaging center expenses and eventually had to forego physician salaries for several months even as the joint venture partner pitched in to help cover overhead. There was finally a point at which admitting defeat, taking the losses and closing seemed to be the most prudent option.
How could this happen? The radiology group felt they had everything covered with their former hospital department administrator. The JV partner recommended hiring an outside consultant to guide start-up processes but the group felt the additional cost wasn’t justified and voted down that option.
Underestimating the scope
It’s the question that has cursed more than one project, “How hard can it be?” To the person successfully completing medical school, business decisions can seem pretty straightforward and simple. In fact, when presented to the group for consideration, many of the individual decisions are simple but the challenge comes in not missing any of them. There need to be comprehensive checklists behind all activities, requiring the person in charge to have a depth of experience covering the entirety of operations, supported by excellent organizational skills. Can’t a practice administrator just fill the role of project manager? Yes, but success could rely on that person’s ability to know when they are reaching beyond their areas of expertise and asking for help.
Another consideration for hiring an outside person to handle a large project lies in the complexity of interpersonal relationships within the group and the accompanying emotion some of the decisions will require. It is ill-advised for a practice employee to get between factions among physicians. However, the ultimate value lies in the scope of the checklists and the discipline an experienced consultant can offer, since he/she will not also be dealing with daily management activity and can focus on the project. That means it’s important to thoroughly vet the experience and success rate of the person selected since just one critical action step could have made the difference in the success or failure of our imaging center example.
Setting realistic expectations
More than one physician has asked how he/she will be paid for assuming the extra duties required of those on the planning committee. Normally business development (practice building) will be considered one of the expectations of partnership, with the idea the entire practice will benefit from the investment of time and therefore, participation is expected. In some instances, the group may allow additional administrative time for an intense developmental project, but this is not automatic nor the norm. Individual physicians within the organization often have no concept of the time spent by leadership in outside committee meetings, meeting with advisors or monitoring business activity. The “sweat equity” investments are the cornerstone of practice success and frequently go unrecognized by a large number of practice physicians, both shareholder and non-shareholder.
In terms of project management, it’s prudent to plan for a few bumps, some frustrating meetings and discouraging days when it just doesn’t seem worth all the hassles. Things have a way of not going according to plan so it can also take longer and cost more than estimated. As a friend once commented, “It’s all part of life’s rich pageant” and many of the lessons learned will be hard fought and sometimes painful. It’s up to the project manager to keep things moving, adjust to complications, work to maintain enthusiasm and deal with the devil.
Patricia (Pat) Kroken
FACMPE, CRA, FRBMA
Prior to joining MSN Healthcare Solutions as Director of Education and Corporate Communications, Pat Kroken had nearly 30 years of experience in radiology management as both a practice manager and consultant to radiology groups, billing companies, software vendors and hospital radiology departments.
Pat has had more than 200 articles published, is a regular contributor to the Radiology Business Management Association (RBMA) Bulletin and a frequent speaker on practice management topics. She served two terms as President of the RBMA, is Editorial Advisor for the national RBMA publication, The Bulletin, and represented the “business side of radiology” as RBMA Liaison to the Radiological Society of North America (RSNA) Associated Sciences Consortium for 7 years.
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