Leave it to the media to have a penchant for the dramatic. Last year's reimbursement cuts that created a "perfect storm" for independent diagnostic testing facilities (IDTFs) seduced imaging forecasters to all but report outside with wet, wind-swept hair. Such exposure rivaled coverage of the Centers for Medicare & Medicaid Services' (CMS) draconian reduction of positron emission tomography (PET) reimbursements a few years back.

In general, this proclivity to hype is understandable. The purchase of big-ticket imaging modality services are predicated on supporting assumptions regarding reimbursement revenues. By slashing this reimbursement, CMS has threatened the economic viability of many prior installations.

For many, the world of imaging, and nuclear medicine specifically, is an unstable quagmire full of threats and potential disasters. But step outside and take another look. With some planning--a forecasting of sorts for administrators--nuclear medicine still houses many of the most stable and profitable imaging studies reimbursable by CMS and other payers. Forget the doom, gloom and storm-front fears; now is the time to look at turning economic challenges into opportunities worth millions in additional revenue annually.

Referral assessment

Begin seeking this revenue by analyzing your referral base, especially your largest referring group. Is it a specialty one, such as cardiology, or a primary care physician (PCP) consortium? What about your own group? Until you become your largest referral source for professional reads, you're leaving the door open for others to capture millions that could be yours. As the baby boomer population ages, someone is going to be ordering and performing imaging studies--that someone might as well be you. The good news is that with proper planning, it's not too difficult to become your own largest referral source and boost revenue in a big way.

If this seems too esoteric or hypothetical, read on. Several imaging groups have adopted these principles and increased practice revenues by as much as $3.6 million annually, taking home more than $1 million a year. No joke--it pays to be your own largest referral source.

Ancillary services

Next, consider expanding from the professional to the technical component. Many nuclear medicine physicians limit themselves only to performing professional reads for others. If this sounds familiar, you've been fortunate by networking with other physicians and managing to build a dependable flow of reads to support your practice and families. But keep in mind: Depending solely on professional reads is a fickle and demanding mistress. It doesn't take much of a slowdown--in number of reads or in collections--to start feeling the economic heat.

For example, how many of you have been approached in the last year to lower your read fees? How many have altogether lost the referral source of an IDTF that went out of business? In most cases, affirming hands will shoot up in response to both questions. When the fee is $45 to $125 per read, there aren't many extra funds to play with--which is why you need to shift a larger percent of your practice to a bigger ticket revenue source.

What's missing is summed up in a popular buzz phrase: "ancillary services." Examples include a PCP group expanding with a lab facility or X-ray unit, surgeons opting to build an ambulatory surgery center, or a large oncology group installing a CT or PET/CT. In your case, ancillary revenue can come easily by expanding from the professional read-only model to one that also provides the technical component, as mentioned. By purchasing equipment at the right price and building this equipment into a regional network that can operate with minimal overhead (i.e., one technologist for several locations), it won't take long to double, triple or quadruple your overall revenue. With these ancillary services, you've become your largest customer--one that won't switch to a competitor who charges less per read or continually tries to negotiate lower fees.

Equipment assessment

Now is also a good time for a fresh look at your marketplace since reimbursement cuts have resulted in a glut of used and remanufactured equipment on the market for sale or lease. Consider the following when targeting your market: First, studies performed on relatively inexpensive gamma cameras, purchased for $50,000 to $100,000 per unit, still receive about the same reimbursement levels from CMS as studies (e.g., PET, CT and MRI exams) performed on higher-priced technology costing more than $1,000,000 per unit. For a fraction of the cost, you can expand into the technical component and reap a much higher profit per study than the standard radiology group down the street with its high-priced bells and whistles.

Compare your monthly lease payment on a $50,000 single photon emission computed tomography (SPECT) camera of $2,700 to a payment of $27,000 a month for a PET/CT purchased for $1.2 million. This savings will allow you to find previously overlooked secondary and tertiary markets to create business. Think about it: The equipment cost determines how many studies are needed to break even and attain profitability. If 10 studies per month will cover the costs of office rent, equipment, maintenance and technologists, you can afford to seek new opportunities.

Share and share alike

If you've managed to reduce your equipment costs, you can also afford to reach area communities. Consider distributing your technical component into smaller communities in need of services. Every time we conduct patient surveys in the outlying areas of our clients, we consistently find that 15 to 20 percent of people won't drive to an urban center to undergo an initial diagnostic study. However, if the modality is located in their home town, they'll get the study done.

PCP offices and the local small hospital are great locations for placing your equipment. Both frequently have an extra room or two they'd rent for a modest fee (roughly $300 to $750 per month). To comply with Stark and anti-kickback federal laws, formalize the relationship in writing--ideally in the form of a fair market office lease--before you perform studies on patients. Also, consider entering a personal services agreement (Stark compliant) with the local physician for a monthly fee (e.g., $500 to $1,000 per month), so he can serve as your supervising physician, sign CMS and payer forms, and provide coverage for your technologists. You'll be surprised at how many local physicians will welcome your business as the only imaging modality in their small town. The local doctor from whom you rent office space will enjoy the added revenues of being the supervising physician and the marketing advantage of housing this equipment. It's a win-win for all.

Remember though, initial planning is critical. If you can't afford t buy the equipment, connect with a company that specializes in this type of small-market equipment placement to at least attain the professional reads. Costs and complexity go up as well, so make sure you have a disposition to handle the added stress.

Without a huge financial outlay, you'll soon be basking in sunny days and the opportunity to collect technical revenues that are many times greater than your professional fees. Carpe diem!

Patrick E. Adair, JD, is a practicing health law attorney and the chief executive officer of Pinnacle Practice Management Associates Inc. based in Post Falls, Idaho. Thomas F. Heston, MD, is on staff at Johns Hopkins Hospital, Baltimore.

15 Planning Tips

Before pursuing ancillary revenue, consider the following:

1. Be Stark- and anti-kickback-compliant with every physician who will refer to you (check your state laws, too).

2. Form a new legal entity to hold ownership of the equipment.

3. Determine whether to own or lease (capital or fair market value), and do so from a reputable source.

4. Organize as a physician-owned practice (as opposed to the IDTF model).

5. Check malpractice insurance for coverage.

6. Start credentialing early (it always takes longer than you think).

7. Research CPT and other codes for your region.

8. Get proper business permits and nuclear licensing before going live.

9. Hire one or more competent technologists.

10. Create a plan for scheduling appointments, billing and completing timely and professional reads.

11. Consider electronic medical record (EMR) system integration.

12. Implement a storage and archival system for long-term retrieval (use a regional PACS on a cooperative basis).

13. Determine if you can afford the float on cash flow delays. Credit lines for operations could be a solution.

14. Watch for hidden costs such as those associated with maintenance fees and special permits.

15. Designate someone to oversee the time-consuming responsibility of operations management.

--Patrick E. Adair, JD, and Thomas F. Heston, MD