Inside Healthcare - RedCoat Publishing

When the Deficit Reduction Act (DRA) was implemented in 2007, everyone knew it would impact imaging companies like Nevada’s Desert Radiologists. But rather than run and hide, Desert Radiologists set its sights set on long-term growth.

“In spite of the DRA, which hit our bottom line by about $2 million, our cash flow has stabilized, and this past February was our best February in 43 years,” said CEO William Moore.

The right investments
Desert Radiologists was founded in 1966, and its services include everything from mammography, CT, MRI, and nuclear medicine to PET/CT, ultrasound, interventional radiology, and more. The company has four freestanding outpatient imaging centers. It did at one time have five centers but recently consolidated one.

“That was a long time coming. Equipment was aging, and we opened another facility three miles away that was built in 2005 with the intention of closing the other facility,” said CEO William Moore. “We migrated some equipment and most of the staff over, and thanks to diligent marketing and outreach to our referring physicians, we’ve retained about 99% marketshare.”

William Moore, CEO

In addition to its four centers, Desert Radiologists has eight hospital contracts.

All of them are in Nevada except for one in Arizona. Moore said the organization is actively working to increase the number of hospital contracts it has. Although the bulk of its history, patient base, and referring physicians are in the southern part of Nevada, the company’s strategic goal is to become a regional player.

Right now, Desert Radiologists is developing a five-year strategic capital plan to ensure all locations are properly equipped to bring in the highest patient volumes possible. In the past, the organization was an early adopter of new technology, but with technology changing faster than ever and reimbursement continuing to decline, the company has tightened its belt a little in terms of being the first to bring new technology to market.

“We keep current with technology and phase out older equipment with new equipment, and we will likely invest in a 3 Tesla MRI system in the next six months,” Moore said. “For equipment we can’t live without, we buy it. For anything we can live without, we delay that purchase.”

That is the reason the organization doesn’t yet have a 3 Tesla MRI. It has several 1.5 Tesla MRI systems, which are still far from becoming irrelevant or obsolete. However, the company knows it isn’t getting all the business from its referring physicians, specifically neurologists, neurosurgeons, and some orthopedic surgeons, because it hasn’t upgraded. The company weighed the pros and cons of the cost of the equipment versus the business it is potentially losing without the latest and greatest, and within six months, Moore expects to make the necessary purchase.

This strategy extends beyond MRI. Desert Radiologists has 64 slice CT systems at most of its facilities, even though dual energy 128 slice CTs are available. But Moore said there isn’t a huge difference between the two systems from an image quality standpoint. This is why the company hasn’t felt the need to go to a dual source camera yet. This wait-and-see approach has allowed the company to maintain a strong technological portfolio without making purchases that could be considered prohibitively expensive and have a minimal impact on quality.

“Our basic premise has always been quality first and everything else will follow,” said Moore. “We won’t compromise quality and have even turned business away to prevent compromising quality.”

Tighter, faster, better
The company has made some recent investments that are helping it become a leaner organization. In February 2008, the company selected Zotec Partners as its billing services vendor, a move that allowed Desert Radiologists to maintain control over billing despite giving up ownership of the process to an outsourced company. Moore said the move has already reduced operating costs and helped the company ensure it is getting paid what it is owed faster than before.

Desert Radiologists has also recently decided to switch its PACS and RIS vendor, choosing McKesson as its new partner. There was a significant capital investment to make the switch, but Moore said the new systems are more secure and consistent, and seamlessly connect to the Zotec billing system. The company is more than 90% complete with the transition of information from its old systems to the new McKesson PACS and RIS.

Lastly, the company recently invested in RadWare speech recognition software. It allows Desert Radiologists to turn reports around more quickly, as turnaround time is one of the key ways a radiology group can stand out in the marketplace.

Moore said the other way the company’s referring physician community judges Desert Radiologists is based on accuracy of reads. Therefore, the company has 40 radiologists with all sub-specialties covered. Although its radiologists don’t read only in their specialty area, it has sub-specialists who can provide an extra set of eyes in case assistance with a read is needed. This makes maintaining the expertise of its provider staff critical to the company’s plan to become a regional player. It has some radiologists who have been with company for more than 25 years, and some have been on board for a few months. To stabilize its staff, the company is placing great emphasis on lifestyle development. It is trying to decrease the length of the workday, decreasing 10-hour shifts to nine- or eight-hour shifts.

“That extra time will pay dividends, according to our senior radiologists. Our long scheduled hours take a toll on them,” Moore said, noting that his radiologists read an average of 25,000 studies per year, while the national average is 18,000. “We have also embarked on teleradiology. We just hired two teleradiologists out of Washington, DC, and a third will be joining us from Arizona. We begin teleradiology operations in September, which opens new possibilities for us from a growth standpoint.”

With a mission to become a regional force to be reckoned with, new avenues for growth will be critical to that effort. Desert Radiologists’ traditional growth has been purely organic, having explored acquisition opportunities in the past that haven’t panned out. However, Moore said industry conditions are likely to make consolidation and acquisition opportunities more plentiful in the future.

“Our current strategy is to continue growth one hospital at a time and look for acquisition opportunities that make sense for us,” he said. “We will also focus on organic growth to break through the 40 radiologist ceiling to take on additional business.”

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