A perfect storm leads to a progressive employed practice model

The Challenge

A large regional medical center and a small community hospital in a mid-sized city merged causing disruption of the medical staff. The radiology group was a victim of the merger being forced to cover both hospitals with the increased volume. Due to internal difficulties in the group and a poor financial plan, the group was unable to recruit necessary additional radiologists. This resulted in the long term use of expensive locum physicians-thereby worsening the financial strain. The group was in debt, working short staffed and unable to maintain minimum service levels. A local free standing imaging center flourished by offering excellent service and quick turnaround times for the medical staff. This caused the hospital to lose substantial technical income impacting the hospital’s financial security. The hospital also developed a multi-modality imaging center, coming online in the near future, which would require top service to be competitive. The group was struggling to meet the hospital’s needs, let alone the demands of a busy new center.

Financial support for the group by the hospital did not improve service levels or result in recruitment of radiologists. The Hospital Board of Directors demanded administration effect change within the radiology department to stem and reverse the financial bleeding.

The Approach

RBS was invited to professionally evaluate the radiology service and determine if the problems within the radiology group could be addressed successfully. The analysis showed:

• The group had excessive debt
• The group structure had a costly, outdated partner buy-out
• This buyout effectively inhibited any potential new recruitment to the group
• 1/3rd of the group members where within retirement age
• Any restructuring of the current group would not change referral patterns back to the hospital. The medical staff had lost confidence in the group from a quality and service level vantage point

The Solution

After looking at several options, the hospital decided to rebuild radiology using a progressive employed model. The hospital helped the radiologists reduce their debt over time and to close the corporation without severe personal financial losses during the transition. The radiologists were encouraged to apply and join the new group. The hospital and RBS devised a unique employed practice model whereby the radiologists enjoy the security of hospital employment with a high level of clinical and financial autonomy. The Hospital and RBS developed a fair market value compensation package including an attractive incentive model.

The Result

The custom made hospital employed practice model proved to be very attractive to the radiologists. An exceptional new leader was recruited and subsequently 10 specialty trained radiologists joined the practice within a few months—including four radiologists from the old group. The group is thriving and gaining outpatient market share from the competitor. Together the group and the Hospital are aligned and ready to open the new imaging center to serve the community. They are confident in the adequate staffing, high quality reads and cutting edge customer service.

Our Successes