WORD ON THE STREET
There is simply no silver lining when the government makes significant cuts with its pen stroke. But how are things going so far for independent medical imaging facilities? While it's still early, administrators are already feeling the pain.

"We started to see the impact in January because you send out bills and start to get Medicare reimbursement within two weeks," said Eleanor Richardson, executive director, North Shore Magnetic Imaging Center, in Massachusetts. The operation has four magnets in Peabody, plus mobile units at Salem Hospital and Beverly Hospital. "We planned for it. We knew it was coming and budgeted for it."
Richardson reported that their facilities have been working to mitigate the cuts ever since President Bush signed the DRA into law in February 2006.

"We began our cost-effectiveness initiatives when these first were cleared. We renegotiated some of our vendor rates to keep our costs down," she said. "We have not compromised the quality of care or had to do any reductions in salaries and wages. We've not lost staff. [Our plan was to] make it up in volume and renegotiate any vendor agreements that we could. And we've been doing that."

Fortunately, business forecasts overall in imaging services are very favorable as America's baby boomers enter their golden years.

"The population is aging. The population is growing. We're developing new uses for existing diagnostic equipment and we're developing new types of diagnostic equipment. All of those have and will continue to result in an increase in the delivery of diagnostic services," observed Fred Gaschen, executive vice president, Radiological Associates of Sacramento Medical Group. "The issue is, we're going to get paid less per unit of service. There will be more units of service but, from Medicare's perspective, they are going to pay us less."

As a large imaging group of 70 radiologists serving a metropolitan area, Radiological Associates of Sacramento holds significant sway in negotiating contracts with private health insurers. The group stands firm when insurance companies try to link their reimbursement rates to Medicare.

"The thing everybody needs to do is to make sure that this [Medicare cut] does not flow over into the private sector," Gaschen cautioned. "DRA stands for Deficit Reduction Act. It was passed by Congress. It has everything to do with the federal government's budget. It has nothing to do with the private insurers' budget or their return to their investors.... Back in 2002 we got rid of our contracts that were based upon a percentage of Medicare."

More Industry Headlines