The hospital system believed it was important to expand its freestanding reach through imaging and other services, in part because of the competition with other healthcare systems. “We’re watching business directed to the freestanding center,” Geidt says. “If we don’t, though, we’d be watching business go away.”
Although the hospital system has not released data since the purchase of the freestanding center last year, Geidt says the program is providing a good ROI for Saddleback Memorial.
“In Southern California, there is a lot of competition, and we see a lot more focus on the payer as the customer,” Geidt says. “The payers are the ones pushing back, pushing everything toward freestanding centers because they have a lower unit price. So naturally we are watching all this, and business referred to competitors. It’s not so simple to lower our prices to become price sensitive. It’s about freestanding centers, and we feel the need to be there.”
The hospital has expanded its delivery of diagnostic services, CT scans, MRIs, ultrasounds, radiology, x-rays, and digital mammography, Geidt says.
The radiology program in the hospital “is good, but they are hospital-based, aligned with our pricing structure,” Geidt says. “Imaging done in a hospital-based imaging center is more expensive than done in a freestanding center due to the hospital being a 24-hour business, while freestanding imaging centers are open typically only during weekday business hours. We do a good job and have good equipment in the hospital, but the price is high. The business of the freestanding center is more price sensitive. It’s very customer friendly and very price friendly.”
Geidt says hospitals receive favorable margins on stand-alone imaging centers, and can reduce patient cost, but rely on volume. Referring to the hospital’s imaging center purchase, Geidt says the hospital system is evaluating its data, but says the outcomes appear “positive.”
The freestanding unit’s operations management structure has a different billing system from the hospital, and its employees are part of a medical foundation, not that of the hospital. The freestanding unit reports to the hospital system’s vice president of ancillary services.
As Geidt examines the hospital’s imaging portfolio, he says, “it’s about finding a balance. We need to rethink what our vision is as we evolve from volume to value.”
Success key No. 2: Imaging day and night
In competitive markets, hospital systems are evaluating price structures, and trying to find the best fit for their need for 24/7 coverage and subspecialty imaging. The evolving roles of hospital systems and radiology groups are the focus of a task force formed by the American College of Radiology to examine “relationships between radiology groups and hospitals and other health care organizations” to improve care.