Is Radiology at a Tipping Point?
“A View From the Top – Town Hall” panel discussion facilitated by Worth Saunders, President of Canopy Partners. Joined by Lloyd Stambaugh of Radia, Mark Jensen of US Radiology Specialists, Randal Roat of Strategic Radiology, and Anthony Gabriel of Radiology Partners.
Last month, I attended the 2019 Canopy Partners Imaging Summit in Raleigh, NC. The conference is attended by about 160 people in senior leadership roles in radiology practices and radiology departments. The theme of this year’s event was Tipping Point: How to Maintain Your Competitive Edge in Radiology. I attended the summit to learn more about the real problems radiology practices are facing and to understand how radiology leaders see the relevance of AI in solving these existential issues. The conference revealed how larger practices are responding. AI is part of that story but perhaps not in the way we might think.
Three tipping points for radiology practices
The “tipping point” metaphor was famously elaborated in Malcolm Gladwell’s best-selling book published nearly 20 years ago. Gladwell defines a tipping point as “the moment of critical mass, the threshold, the boiling point.”
The keynote address given by Erin Lane, Research Consultant at The Advisory Board Company, illustrated three strategic questions radiology practices should ask themselves:
1. What is their response to “steerage?”
“Steerage” occurs when payers influence patients to go to lower-cost imaging centers, often free-standing centers not served by the practice, rather than to where the prescribing physician refers them. The strategic choice for these practices—especially those lacking existing relationships with free-standing imaging centers—is either:
A.) To try to minimize the impact of lost revenues
B.) To seek new ways to gain more market share from steerage
2. What new relationships are needed with health systems?
The strategic question in this case is whether practices should:
A.) Stay the course with their traditional relationships with health systems
B.) Invest in new ways to align with emerging health system strategies, such as pursuing joint ventures to create new free-standing imaging centers
3. Who are they?
This is the fundamental identity question for practices of whether to:
A.) Continue to position themselves as a local group
B.) Position themselves as a regional or national player, such as by joining trans-regional partnerships
Perhaps it is my bias towards action, but it seems to me that the answer in each of these three cases is Option B. Repositioning to serve lower cost facilities, aligning with health systems on their strategic priorities, and playing in a trans-regional market all sound good in theory—but each requires more investment resources than many smaller practices are ready to commit.
What are large radiology groups investing in?
Several of the speakers noted a looming shortage of radiologists. Practices unable to recruit enough radiologists are at a strategic disadvantage in providing coverage to their health system customers. Several large radiology groups mentioned they are implementing home-grow AI solutions to improve operational efficiencies and ensure quality care. However, adoption of “off-the-shelf” AI solutions is minuscule, as revealed by a show of (very few) hands. Radiology groups with enough scale to make the right investments are doing just that, and while AI is part of that investment, “do-it-yourself” AI is playing a supporting and integrated role in practical operations. The more prominent large-scale practices now have in-house machine learning teams to enhance their enterprise work lists, improve revenue cycle processes, and support innovative, physician-led quality assurance programs.
Private equity enables transformation
Perhaps the unmentioned elephant in the room was the increasing role of private equity in fueling radiology practice consolidation. The most popular breakout session was the law firm Reed Smith LLP’s overview of consolidation models being used today, the lifecycle of radiology practice mergers and acquisitions, and liquidity in physician equity investments. The influx of capital may accelerate investments in technology-enabled practices.
I was surprised at how many of the radiologists I spoke with work in groups owned by large national players or are otherwise working with private equity firms. Being acquired by a national organization does not necessarily mean the loss of local identity. Several of the firms I spoke with who are part of a national practice mentioned that they still have local autonomy and also have the resources to make new investments.
Moving beyond the tipping point
Has radiology reached a tipping point? It is clear that the forces driving consolidation are quite strong for radiology practices. Ironically, it is the steerage away from hospital imaging centers that is driving some of the disruption today, so it is a different kind of consolidation. Like so many of Malcolm Gladwell’s memorable phrases—such as the 10,000-hour rule—while thought-provoking, it is anecdotal.
One of my other takeaways from the Summit was the observation from our motivational speaker, Phill Nosworthy, who challenged the audience of radiology industry executives to go beyond our habitual behaviors, to be reflective, and to be action-oriented. The recipe for growth, he said, is doing new things.
“Don’t get too settled, too comfortable, too confident. Have courage,” Nosworthy concluded.
This is good advice for all of us navigating the tipping point.