This report originally ran in the May 2008 edition of DOTmed Business News

In the midst of what had been an imaging economic boon, the free-standing imaging center industry - at the beginning of 2007 - suddenly had to cope with onset of the Deficit Reduction Act (DRA). Some said the DRA would spell DOOM for many centers because of its mandated and significant cuts in reimbursements - when passed in 2005, it was estimated the DRA would save the government $8.1 billion over 10 years by slashing payments for some technical procedures by nearly 50%. Others said the sky wouldn't fall, the strong would survive, but some fallout had to be expected.

The truth, as is often the case, lies somewhere in between. The imaging industry is still rife with analysis and differing opinions over the impact of the DRA. DOTmed Business News talked to many people on the front lines of the issue to get first-hand look at the DRA's effects, and what it will mean going forward.
The imaging centers' perspective: the pain continues, but changing business practices help many remain competitive

The most important view is from the independent imaging centers themselves, which see the day-to-day consequences. The harshness of impact differs from area to area, as does the effectiveness of various coping strategies - sometimes contradictory to one another. Nonetheless, the DRA has clearly become a challenge to successful management of all independent imaging centers.

Irvin Green is Director of Operations for Peninsula Imaging in Salisbury, MD. Green has observed first-hand the DRA economic downturn. He knows of other centers going out of business or being acquired by other companies. Green says Peninsula's numbers are holding, but the business earns less money. In response, the company has to question purchases carefully, and how they are doing business. Green sees a necessity to focus on efficiency and profit margins. "We are looking at business differently, focusing on the 'moneymakers,' and cutting expenses." Green also says that a full-service facility such as Peninsula is in a better position to attract patients compared to single-modality businesses.

Peninsula is building a new center in conjunction with a hospital. In reviewing equipment options, Green knows OEM equipment is generally of excellent quality and rarely breaks down when properly maintained. However, the monthly service contract fees for maintaining this up-time are steep and cut into his profit margin. Green feels OEMs should help the buyer and work with them to establish reasonable costs for items such as service contracts. Currently Green is buying more refurbished equipment, saying a center needs to shop wisely and have a good business plan in place. This means looking at the market and client growth patterns. Peninsula also recognizes they need to provide good service to the referring physicians - by giving them a "menu" of service options, good scheduling, and concise reports.

More Industry Headlines