Is your in-office MRI as profitable as it should be?
Increased Profitability for your MRI Imaging Center!
Are you earning as much as you could from your in-office MRI?
If you have ever wondered, “Why isn’t my MRI Imaging Center as profitable as I had expected, and what can I do about it?” You are certainly not alone.
Before I became CEO and Principal Consultant of MRI Consulting Group, I was the CEO of a successful Orthopedic and Spine Center for many years.
Starting in 2006, I worked to plan and implement many very high-quality MRI Imaging Center Projects. Since then, I have facilitated and placed into service MRI Imaging Centers for Orthopedic and Spine Surgeons, Neurosurgeons, Physiatrists, Neurologists, General Surgeons, and several other practice groups.
I know the MRI Imaging Center business, all that needs to go right, and the numerous areas where things can go wrong.
Here is an important personal note on MRI Imaging Profitability.........
In one of my early positions as the CEO of an Orthopedic and Spine Medical Group, I worked with the surgeons and physicians of our musculoskeletal group, and we built out an Orthopedic and Spine Center and installed a brand new 1.5 Tesla MRI Magnet in our Imaging Center space. I remember fondly, and with a significant amount of satisfaction, following the end of the first year of operation, reviewing the financials for the physician group with our CPA and discussing the distribution of $1,000,000 dollars in profit from the MRI Imaging Center among the five physician owners! Profitability increased every year after that, and when we added more physicians, the new physician partnership buy-in and entry into the group not only brought with it more monthly MRI scan revenue and additional new physician sharing of MRI expense costs but the return of additional monies to the existing physicians, related to the buy-in sale of shares in the group as the result of the addition of the new physician. And, of course, we could show any potential new physician that becoming a partner in a medical group with a profitable MRI was an excellent idea and provided all physician partners with substantial additional annual ancillary revenue.
Feel good about profitability from your MRI Imaging Center!
If done right, an in-office MRI is worth the money and the effort necessary to make it happen. Done well, it is the gift that keeps on giving.
What if your previously profitable MRI Imaging center has run into problems?
Let us discuss what we often see.
Competitive landscapes can change, and hospitals can set new rules that may impact physician referrals. They often work to restrict the use of MRIs owned by physician groups. In several forms, there is also continual downward pressure on reimbursement from managed care insurers.
Perhaps aging equipment has become prone to excessive downtime and has become an issue, or referring physicians are dissatisfied with scan quality, and competing MRI centers are now a problem. Sometimes, a lack of patient satisfaction with the facility or the MRI Scanning experience can diminish referrals to your MRI Imaging Center. Referring Internal group physician group members and/or referring physician assistants may have left your group since your MRI services were implemented, resulting in decreased MRI scan referrals.
At times, we find internal management billing and collections issues. There are many ways that profitability can begin to slip.
Due to reporting practices, a gradual decrease in scans often goes unnoticed for quite some time.
The Financial Impact of Decreased MRI scans
If you assume that you will perform 180 MRI scans per month in your MRI Imaging Center and identify that you are underperforming by 20% or 36 fewer MRI scans per month, how bad can that be? Let us say you are, for example, 36 MRI scans per month short of projections, and you had expected to earn an average of $650 per scan; you will be off on your revenue projections to the tune of $23,400 per month, or $280,800 per year. This is not a small sum, and it may be a large part of the difference between projected annual profitability and the non-profitability that you are experiencing at present.
Diminished MRI scan volume is often a significant factor in the decreased performance of the MRI Imaging Center.
The Financial Impact of Decreased Revenue per MRI Scan
Perhaps your scan volume numbers align with projections, but your average per scan revenue amount is falling short.
It is not uncommon to see how often slippage in total profitability can be traced back to the failure to collect patient co-payments before service or the inability to get necessary test pre-authorizations from insurers. These failures result in payment denials, which collectively and ultimately result in significant erosion in revenue and full reimbursement for your MRI Imaging Center scans.
You will be pretty surprised when we show you all the avenues in which your revenue slippage can or did occur.
It may also be that you are not being paid per your managed care reimbursement agreements. We find this to be an issue quite often.
There are several ways that we can address this head-on and succeed in increasing reimbursement.
We also work to implement strategies to recover the monies you should have received.
Time is of the essence in recovering money when you have been underpaid.
Payment for your MRI Imaging Center Scans can be subject to different reimbursement tiers (MRI only, MRI with Contrast, MRI with and without Contrast) and the various scan CPT codes. These are all individualized to the varied payers in the geographic area where you perform your MRI scans and your specific practice contract with each insurer. Medicare, Medicaid, and other government payers are often near the lowest end of the reimbursement scale.
Each of the managed care and commercial insurance plans will offer differing amounts of reimbursement and will vary in reimbursement amounts and contract terms, sometimes quite dramatically.
This provides a continual environment for diminished and eroded MRI scan reimbursement amounts that must be monitored and addressed.
This blended set of payment amounts and clinical procedure mix influences the computation of your projected annual average reimbursement amounts for your MRI scans.
Stewardship and internal practice audit of the reimbursement amounts you receive from all payers for the MRI Scans you perform in your MRI Imaging Center must be thorough, ongoing, and constant.
Whatever the cause—and many more reasons we have not discussed—the impact of insurer/payer underpayment on your MRI Imaging Center's bottom line is undeniable.
Suppose you projected to perform 180 MRI scans per month (2,160 MRI scans per year), with an average projected reimbursement rate of $700 per scan. Still, your average reimbursement after center opening is, in reality, $600 per scan.
In that case, you will be earning $216,000 per year less than you had projected and may have yet to analyze the individual and collective reasons why that might be. You also might not know what your remedies and action plan to turn that around might look like.
We have found this problem of Decreased Revenue per MRI Scan to be quite common.
We have a successful track record of negotiating with insurers and managed care providers to increase reimbursement.
This will start with a review of your existing contracts and any recent extensions.
We know the necessary analysis to pinpoint what you are experiencing and why. We also know the various action plan details and the remedies to implement to turn this around!
The Impact of MRI Imaging Center Expenses on Profitability
In a recent review of an MRI Imaging Center Financial and Business Viability Analysis, I noted that, on average, 47% of annual center revenue was necessary to meet Imaging Center expenses each year. As such, the impact of increasing expenditures on profitability must be understood and responded to quickly when required.
Expenses can gradually increase without anyone taking much notice until the situation becomes obvious and profitability is threatened. Unrestrained expense growth in your MRI imaging center can severely impact profitability in a handful of larger expense areas.
The annual MRI lease amount is the highest expense when conducting a Financial and Business Viability Analysis for an MRI Imaging Center.
The second highest expense is the yearly cost of MRI professional scan interpretations, followed by the cost of MRI Technologists' Salary, Wages, and Benefits, the third highest expense. Let's also consider the cost of a single receptionist and an Administrator/Manager. Employee costs emerge as the single largest expense category on the ledger for the MRI Imaging Center.
The Impact of Increased Employee Payroll Expenses
Payroll expense growth can be a common contributing factor in the decreased financial performance of an MRI Imaging Center. Overstaffing is expensive and can be easy to fall into, and we often see it. I mention this because I sometimes note that MRI Imaging Centers are quick to add employees when that may not be necessary. Through experience, I have seen MRI Imaging entities with more full-time MRI technologists hired than is essential. Your MRI technologist staffing levels should relate directly to actual scan volume, scan types that you are performing, and your specific MRI Magnet scan throughput speed. In addition, a less expensive front office person can take a patient to a dressing locker room area and return them there after a scan, which is far less costly than an MRI Technologist performing that same task.
When your MRI Technologist requests another technician, which may or may not be needed, it is your call to make after a solid analysis has been completed. Of course, you also do not want to incur expensive overtime pay amounts. Our review of MRI scan throughput and available appointment hours can usually uncover many areas of efficiency to be gained and determine efficient staffing coverage.
We perform a very solid and unique analysis of MRI scanning time to Staffing Hour Equivalent, which is an analysis based on your specific MRI unit scan throughput times and your specific center patient clinical mix (complexity of scans) to reveal the need for additional staff members in the MRI Imaging Center, or not. We can determine the number of needed MRI staffing hours and how many employees are needed per year to meet your actual MRI scanning needs.
Bringing your MRI Imaging Center to Improved Profitability
If your MRI Imaging Center procedure revenue and net income after expenses are lower than you planned for or when the negative deviation from your financial performance goals becomes apparent, you will want to intervene sooner rather than later.
MRI Imaging Centers may underperform, muddle along for some time, and finally fail when there is no need, possibly without the physician principals knowing exactly why it went in that direction.
Candidly, the financial turnaround at the MRI Imaging Center can take some time, so it is critical to take decisive corrective action while it can still make a difference.
We can work with you and your partners to conduct an IN-DEPTH BUSINESS ANALYSIS, which is a very comprehensive analysis and financial review. Once that analysis has occurred, we can put a highly individualized and highly effective ACTION PLAN in place. Then, we closely track the intended upward improvement financially and through several operational metrics for your specific Imaging Center.
It is gratifying for everyone to put an underperforming MRI Imaging center back on the path to improved, sustainable financial performance.
Choosing to live with your MRI imaging center's diminished financial performance is not an attractive option, nor is it sustainable, given the significant investments that will have been made in developing your MRI Imaging Center Project.
Financial underperformance does not need to happen at all, and it certainly can be remedied!
Call us for a confidential but candid discussion. We will work together to make your MRI Imaging Center the valuable ancillary revenue practice asset you need!