Radiology practices are currently in a climate of increasing competition that requires self-analysis and more in-depth views of market trends that can be compared to their own business models.

Whether it is the emerging relationship between teleradiology groups and hospitals or competitive hospital contract bids or the independent formation of radiology groups, radiology practices are realizing that the time for “doing what has always been done” is over.

The big question is: Is there a case for re-engineering the radiology practice model? The greatest complexities exist between the radiology practice and the traditional business model.

The traditional business model is typically set up as a corporation or LLC, with owner operators and employer/employee hierarchies. Its purpose is serve clients and increase shareholder value from a remote location, with payments from the contract holder. The owners of this model report to the contract holder or shareholders.

On the other hand, the “new” radiology practice model is typically set up as a group practice, PC or PLLC, where the owners are the operators and procedures are conducted on-site. Its purpose is to serve physicians and professionals while managing overhead, contracts, coverage, administration and professionals’ knowledge and sharing. Payments come from patients or third-parties, and owners/staff report to themselves, hospitals, patients, insurers and government payors.

There are both strengths and weaknesses associated with a group practice (PC, PLLC, etc.) structure.

While owners are intuitively connected to their service offering, they are also fatally democratic and sometimes thought to offer a lethargic and inconsistent service approach. The quality and excellence a practice conveys is often consistent, but due to multiple voices there can be message confusion. Although there is an ownership of the quality delivered, many practices are comprised of employees who do not deliver the standard quality but that are also hard to remove.

With a clinically driven model, the hospital/client often times sees this “dirty laundry.” Many practice leaders want the control over their business while encouraging professional innovation; however, they find it hard to manage colleagues to drive consistent quality and messaging.

When considering the infrastructure of the group, practices must find ways to effectively support the hospital relationship, through improved governance, communication, relationship management and control of the deliverables. None of this can be achieved without motivation towards a “broader” goal. Either way, practice leaders are charged with navigating these waters and becoming a service-centered business entity.

Due to compelling arguments made by teleradiology groups, national radiology groups and employed physicians, the practice structure is swiftly being removed as a top of mind option once considered by hospitals. This could be due to the varying wants and needs of the hospitals versus the radiology practice.

The hospital seeks quality and consistency in its customer service with no complaints, paired with an ability to uphold performance standards with increased coverage hours. These standards are difficult to align with radiologists’ wants, which include a desire for steady incomes and certain vacation levels, while also maintaining improved exclusivity clauses, having more technical ownership, and offering Nighthawk coverage with reduced weekend coverage.

Due to the discerning needs and wants of both parties, there is often a relationship disconnect where common goals are not shared.

A smart solution for recognizing and bridging the gap is often achieved by hospital and practice leadership putting forth best efforts to maintain the relationship and discussing areas of common ground. Patient service; hospital viability; strategic direction; technology; leadership in the radiology department; the surrounding community: these are all areas hospitals and radiology practice leaders can collaborate on and filter into their shared goals.

While radiologists understand it is ideal to work “on the same team” with the hospital to service patients, the issue of contracting often stifles the relationship and requires conflict resolution which forces both parties to find common ground. Often times the hospital/radiologist relationship provides no insulation in contracting, and there is a transparency on goals and issues.

All of these issues set the table for the relationship as it moves forward. What radiology practices must remember as they take on this urgent “shift” is that, while great clinical skills get them to the table, great service keeps them there.

George Ehrhardt is a director of practice management with Medical Management Professionals, Inc. (MMP).