How Quickly Can My MRI Imaging Center Become Profitable?
Stephen Veals
CEO MRI Consulting Group
June 3, 2024
When I was an orthopedic CEO installing a 1.5 Tesla MRI for our medical group several years ago, this was undoubtedly the most pressing question on my mind long before the MRI Magnet was installed.
Now, I know the answer, borne out by my own experience and that of clients in the years since.
You should plan for five to six months of operations before your MRI Imaging Center is profitable.
After the implementation of your new MRI Imaging Center, you will begin to incur operations expenses, even as you diligently bill and collect your Insurance Carriers for each MRI scan.
It is a little like a child’s teeter-totter. The teeter-totter will be tipped incorrectly in the first five months. The practice will be paying out more in expenses than it collects from the insurers and payors for the billed MRI scans.
The insurer payments may be delayed and seem painfully slow during the first half of that first year of operations.
But by month six, things will be looking up.
What will happen by month six to bring your MRI Imaging Center to profitability?
You should see an increased amount of money in receipts in the second half of the year, which reflects the amount of money you should have received in the first six months of the year, plus the money to be obtained for scans performed in the second half of the year as well.
While you may see some payments from insurers, self-pay client payments, and insurance deductibles from patients even from day one of your MRI Imaging Center start-up, it simply takes time before insurance payments are released by your insurers in sufficient amounts to catch up financially.
From the six-month mark forward, the teeter-totter will be tipped in your favor. You will finally see significantly more insurance payments and dollars coming in than you pay for MRI operations.
Normally, by the sixth or seventh month of operations, you will be able to see your normal revenue stream.
Tips to make your initial MRI Imaging Center practice expenses less burdensome!
How your MRI Imaging Center project financing was arranged will matter, both for the MRI magnet itself and any facility acquisition or improvement costs.
With the correct documentation and negotiations, selecting lenders and leasing groups that will agree to defer payments through the first six months of operations is possible. This is a crucial step to conserve client start-up funding.
A six-month break on payments gives some very welcome breathing room until 100 % of the insurer payments start to come in.
What else can be done to ensure MRI Imaging Center profitability by month six?
Start early in the project planning process to communicate with the managed care insurers in your area and inform them of your intent to provide MRI Imaging Center Services.
Submit the necessary managed care plan paperwork with your insurers early in the project.
You are not asking for their approval to plan and implement MRI services; you are simply letting them know you intend to provide these services and need to understand their policies, guidelines, and paperwork for the adoption of your MRI services for your patients and insurer enrollees.
You must determine and begin negotiating contracted reimbursement amounts for your various MRI procedure scan codes.
It can take over 6 months to complete the approval process for payment and accreditation of your MRI Magnet with Insurers.
This timeline is important. Your Managed Care Insurers will have policies for proper independent professional credentialing and accreditation of your MRI Magnet.
Your insurers will pay your group for the MRI scans of their enrollees and their family members after you have received full MRI Imaging Center Accreditation.
You certainly want to avoid having your MRI Imaging Center online, with patients to be scanned, but not have insurer contract agreements to be paid for those MRI scans.
If that sounds like a lot of paperwork and detail, it can be.
Our physician clients prefer to hand this process off to the professionals rather than rely on their busy staff members.
Imaging center performance results from month seven forward!
You will receive more money in the second half of the year and will be profitable for the remainder of the year.
Along with payments received in the first half of the year, consistent with your initial MRI Project Financial Viability Analysis, you will experience full profitability.
In addition, since your MRI unit will be under at least a full first-year equipment warranty, you will be free from the expenses for the first full year of an annual MRI equipment maintenance agreement.
This will result in a bottom-line boost of over $100,000 to $160,000 in that first year when it is most welcome.
With focused efforts and good planning, your first year of operations for your new MRI Imaging Center should be one of Excitement and Profitability!
Don't hesitate to contact us to schedule a complimentary phone call if you have questions or would like to discuss whether your practice can benefit from owning an MRI.
We provide advisory services to physician practices.
Please read the additional pages for more in-depth information:
The MRI Business Decision – Full Service – 1