By Patrick Flaherty and Joe Haduch
Based on the last HTM industry demographics survey we reviewed as well as the composition of our own organization, we have witnessed an unprecedented expansion of imaging and laboratory services over the past two decades. The rationale for this expansion was simple, “build it and they will come.” And they did. Volume-based care, certainly from a business perspective, was simple. The more you scan the more you make. In this environment, imaging and laboratory services were the darlings of CFOs across the industry, but now they’ve become their bane. What happened, and how can HTM adapt to this new dynamic?
During the expansion years of the health care fee-for-service business model, the two clinical areas whose growth and success were directly connected were laboratory services and diagnostic imaging. Given the variety of diagnostic tools and tests both services afforded, it was not surprising that health care providers made material capital and operating investments in order to increase capacity as capacity and referrals were seemingly the only barriers to an attractive operating margin. For diagnostic imaging, capacity meant increasing investment in heavy-iron and outpatient imaging while increased referrals provided an ROI to acquire physicians and practices, often at prices that required subsidies from the healthy margins created by diagnostic imaging services. Fast forward to 2019 and a significant portion of the erosion of operating margin can be found in the desiccating bones of this strategy:
- CMS and commercial payers identified diagnostic imaging (and clinical labs) as the primary culprits of excessive testing
- Given that testing volume was a massive component of physician practice acquisition, its reduction made the subsidy of the acquisitions difficult or impossible
- The expansion of the diagnostic imaging equipment was done with as much or more of an eye toward capacity creation as opposed to clinical and business efficiency, leaving care providers with a harder path in objective value creation
With all of this as the back-drop, the final contributor to the perfect storm for diagnostic imaging was the massive shift in health care financial responsibility from employers to patients; simply put, when confronting a high-cost bill coming from their own wallets, patients opted to defer more elective tests and procedures. Consumerism began to self-regulate imaging procedures based on affordability. Diagnostic imaging was and is far-down the road of converting from profit center to cost center.
As diagnostic imaging enters the cost-center phase, it is incumbent on care-providers to efficiently use its diagnostic services to lower its financial overhead in order to compete for procedural and capitated patient populations. In order to obtain contracts as a center of excellence locally, regionally or nationally with large employers like Walmart and Lowes, objective data needs to be produced and analyzed. Among the obvious and customary data sources for clinical data are the EMR, RIS and hemodynamic systems but none of these sources document detailed information regarding the clinical equipment used in the diagnostic or therapeutic care of the patient. This missing bridge between the clinical outcome and the diagnostic equipment is a major issue in objectively defining and operating a fleet of optimized diagnostic equipment. In addition to not having basic information like make, model and combinations of software utilized connected to the procedure, other critical and objective information is absent related to the cost of owing the equipment. Objective information related to expected and warrantable parts performance and diagnostic efficacy is not currently provided by manufacturers, nor is there any reliable comparison of the variable contribution (good and bad) of the many models and vintages of diagnostic equipment on broad-based clinical outcomes.
Frequently overlooked is the significant labor cost associated with maintaining general clinical and diagnostic imaging equipment. Labor costs for each can easily account for 50% of an organization’s service budget, and lifetime service costs for heavy iron devices typically materially exceed their initial purchase cost. The future requires more detailed expected parts performance information in order to drive cost-overhead management as well as drive toward cost-removal via predictive failure analytics. The organizations and manufacturers who succeed in this space can generate re-investable margin to strategically manage their expensive imaging equipment while inefficient management leaves fleets of older equipment.
In Dickensian fashion, Healthcare Technology Management (HTM) mimics the famous intro to “A Tale of Two Cities,” it is “the best of times and the it is the worst of times.” HTM’s best virtue and worst flaw is keeping equipment functioning. Given that matching both the functional value and cost to own the equipment is mandatory in a value-based business, it is clear that absent data needs to be collected as well as connected in ways previously not contemplated. The HTM professionals of 2020 and beyond have to partner with their clinical colleagues in product and patient matching so that just the right amount of clinical functionality, not too much and not too little, is achieved. HTM also has to be a large part of defining the clinical business language that increasingly connects diagnostic imaging equipment and services to objective patient populations in order to assess value appropriately. This data is available through OEM portals like iCenter and LifeNet/teamplay. HTM leaders can easily access non-PHI data that directly connects exam count, protocol use, patient demographics, scan times, gap times and more to equipment utilization and clinical use. Providing this data for clinical and financial decision making in an increasingly analytics driven environment will position HTM well in a value-based market.
Many of us take personal and professional satisfaction in extending the life of our equipment well beyond its intended life. It’s a badge of honor to some, a necessary evil for others. As the healthcare market continues to evolve so too does the HTM mission.
Maintaining equipment longevity will soon accompany the need to right size equipment fleets, identify and match clinical needs to equipment configurations and identifying operating signals for predictive failure analytics. Our basic tool kits will see little change; however, a concise pivot table and Tableau software will elevate your HTM department into the new world of health care and better position it for the strategic analysis required for success.
Patrick Flaherty is the vice president of operations for UPMC BioTronics.
Joseph Haduch, MBA, MS, is the senior director of clinical engineering for UPMC BioTronics.
