Bringing your MRI Imaging Center to Improved Profitability!
Stephen A. Veals
CEO MRI Consulting Group
April 7, 2024
Have you asked yourself: “Why isn’t my MRI Imaging Center as profitable as I had expected, and how can I improve profitability?”
Much can happen that you did not anticipate, resulting in an MRI Imaging Center that is not performing at the level you had expected. We are experienced in improving MRI profitability!
In-Depth Business Analyis to improve profitability
Time is of the essence in the process of effecting a medical business turnaround. Let us demonstrate through our quick but thorough in-Depth Business Analysis, which leads to the recommendation of highly individualized strategies in the Action Plan Implementation, just how we can work with you to lift your underperforming MRI Imaging Center to strong, sustainable MRI profitability.
Hope is not a strategy for Change. We have witnessed high-quality MRI Imaging Centers that have burned through their remaining funds, closed their doors, and sold off assets, all while spending valuable time trying to figure out what they should do to revitalize their underperforming Centers.
Don’t let that be your MRI Imaging Center!
We perform a highly individualized, in-depth business analysis based on your MRI Imaging Center Metrics and implement proven strategies that can provide the foundation for improved and sustained performance for your MRI Imaging Center.
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 several 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 in which 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 thereafter, 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 had provided all physician partners with robust additional annual ancillary revenue. Feel good about profitability from your MRI Imaging Center. If done right, it is more than worth the expenditure of money and the work 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 down new rules that may impact physician referrals, often working to restrict the use of MRIs owned by physician groups. There is also the continual downward pressure on reimbursement in several forms from managed care insurers.
Perhaps aging equipment has become prone to excessive downtime and 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. 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 the number of scans often goes unnoticed for quite some time.
The Financial Impact of Decreased MRI scans
If you made assumptions that you would be performing 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, and you had expected to earn an average of $650 per scan; you are now off your revenue projections to the tune of $23,400 per month, or $280,800 per year. Not a small sum, and maybe that sum is 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 seen in the MRI Imaging Center, which experiences decreased performance.
Our IN-DEPTH BUSINESS ANALYSIS can determine the origins, possible reasons for, and impact of your decreased MRI scan volume in your MRI Imaging Center. Our ACTION PLAN will offer proven strategies and solutions that can be implemented to reverse this problem.
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 full profitability can be traced back to the failure to collect patient co-payments before service or failure to get necessary test pre-authorizations from insurers, resulting in denial of payments, collectively and ultimately resulting 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 in accordance with your managed care reimbursement agreements. We find this to be an issue quite often. There are several ways to address this head-on, and we frequently succeed in increasing reimbursement. We also work to implement strategies to recover the monies you should have received. Time is of the essence in the recovery of funds you should have received.
Payment for your MRI Imaging Center Scans can be subject to different tiers of reimbursement (MRI only, MRI with Contrast, MRI with and without Contrast) and is also subject to the various scan CPT codes, all individualized to the varied payers in a geographic area where you are performing your MRI scans, and individualized to 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. These provide a continual environment for diminished and eroded MRI scan reimbursement amounts. 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 that you would perform 180 MRI scans per month (2,160 MRI scans per year), with an average projected reimbursement rate of $700 per scan, but your average reimbursement after center opening is, in reality, $600 per scan. In that case, you are earning $216,000 per year less than you had projected and may not have analyzed the individual and collective reasons why that might be. You also might not be sure 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 know the necessary process of analysis to home in on precisely what you are experiencing and why. We know the various action plan details and the remedies that need to be implemented to turn this in the right direction! In utilizing our IN-DEPTH BUSINESS ANALYSIS, we will find the information necessary to create and IMPLEMENT AN ACTION PLAN that can provide solid solutions and significant increases in profitability when the ACTION PLAN is fully Implemented in your Imaging Center. But do not delay; this can be a catastrophic problem that needs to be addressed quickly.
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 expenses on profitability must be understood and responded to quickly when necessary.
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.
When I review a typical Financial and Business Viability Analysis for an MRI Imaging Center, the highest amount on the expense side of the ledger is the annual MRI lease amount, the second highest expense is the annual cost of MRI professional scan interpretations, and the third highest expense is the cost of MRI Technologists; Salary, Wages, and Benefits. And that is just if I count Technologists. Suppose I add the cost of a single receptionist and the cost of an Administrator/Manager. In that case, employee costs are the single largest expense category on the expense ledger for your MRI Imaging Center.
The Impact of Increased Employee Payroll Expenses on Profitability
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 an excellent 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 tell you the number of MRI staffing hours that are needed and the number of employees that are needed per year to meet your patient's MRI Imaging Center scanning needs.
Working with your center and staff members, and in a review of the information provided through our IN-DEPTH BUSINESS ANALYSIS, we can IMPLEMENT AN ACTION PLAN that is individualized to your MRI Imaging Center and can work to ensure that your profitability can be restored and significantly improved upon, and not entrapped in excessive payroll costs.
Bringing your MRI Imaging Center to Improved Profitability
If your MRI Imaging Center procedure revenue and net income after expenses are lower than you were planning for or when the negative deviation from your financial performance goals is apparent, you will want to intervene sooner rather than later.
MRI Imaging Centers may underperform, muddle along for some time, and 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, a comprehensive analysis, and a financial review. Once that analysis has occurred, we can implement a highly individualized and effective action plan. Then, we closely track the intended improvement upwards financially and through several operational metrics for your specific Imaging Center.
It is gratifying for everyone to put a lesser-performing MRI Imaging center back onto the tracks of 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 in light of the significant investments that will have been made in developing your MRI Imaging Center Project.
Your MRI Imaging Center's financial underperformance does not need to happen at all; it can be remedied!
Call us for a complimentary, confidential, candid discussion so we can work together to make your MRI Imaging Center the valuable ancillary revenue practice asset you need it to be!
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