Radiology Department Strategic Plan Template

Radiology Department Strategic Plan Template

Managing a radiology department is no small feat. It requires strategic planning, precise execution, and constant evaluation to ensure the best patient care and departmental efficiency. That's where ClickUp's Radiology Department Strategic Plan Template comes in handy!

This template is designed to help hospital administrators and radiology department managers:

  • Define clear goals, objectives, and action plans for the department
  • Allocate resources effectively and strategically
  • Improve efficiency, quality of care, patient satisfaction, and financial performance

With ClickUp's Radiology Department Strategic Plan Template, you can streamline your planning process, align your team, and achieve your goals, all in one place. Don't miss out on this essential tool for radiology department success!

Benefits of Radiology Department Strategic Plan Template

Developing a strategic plan for your radiology department can have a significant impact on the overall success of your healthcare organization. Here are some benefits of using the Radiology Department Strategic Plan Template:

  • Aligning department goals with the overall hospital strategy
  • Improving operational efficiency and resource allocation
  • Enhancing the quality of patient care and safety measures
  • Increasing patient satisfaction and experience
  • Maximizing financial performance and revenue generation
  • Facilitating effective communication and collaboration among department stakeholders
  • Identifying and addressing potential challenges and opportunities in a proactive manner

Main Elements of Radiology Department Strategic Plan Template

ClickUp's Radiology Department Strategic Plan template is designed to streamline the planning and execution of strategic initiatives within your radiology department. Here are the main elements of this template:

  • Custom Statuses: Track the progress of your strategic initiatives with five different statuses - Cancelled, Complete, In Progress, On Hold, and To Do.
  • Custom Fields: Utilize eight custom fields, including Duration Days, Impact, Progress, Ease of Implementation, Team Members, Department, and Project Lead, to capture and visualize essential information about each initiative.
  • Custom Views: Access six different views to gain valuable insights and effectively manage your strategic plan. These views include Progress view, Gantt chart, Workload view, Timeline view, Initiatives view, and Getting Started Guide.
  • Project Management: Leverage ClickUp's powerful project management features, such as task dependencies, collaboration tools, and automated notifications, to ensure smooth execution and successful completion of your strategic initiatives.

How to Use Strategic Plan for Radiology Department

Creating a strategic plan for your radiology department is essential for setting clear goals and objectives. Follow these five steps to effectively use the Radiology Department Strategic Plan Template in ClickUp:

1. Assess your current situation

Begin by conducting a thorough assessment of your radiology department. Evaluate your current resources, strengths, weaknesses, and opportunities for improvement. This will help you identify areas that need attention and set a baseline for measuring progress.

Use the Gantt chart in ClickUp to visualize your assessment timeline and track the completion of each task.

2. Define your goals and objectives

Based on your assessment, establish clear and specific goals for your radiology department. These goals should align with your organization's overall strategic objectives and address any identified areas for improvement. Break down each goal into measurable objectives that can be tracked and evaluated.

Use the Goals feature in ClickUp to set SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals for your radiology department.

3. Develop strategies and action plans

Once you have defined your goals and objectives, it's time to develop strategies and action plans to achieve them. Identify the key initiatives, projects, and activities that need to be implemented. Assign responsibilities to team members and set deadlines to ensure accountability and progress.

Use the Board view in ClickUp to create cards for each strategy and action plan. Assign team members, set due dates, and track progress using the Kanban-style workflow.

4. Monitor and measure progress

Regularly monitor and measure the progress of your radiology department's strategic plan. Establish key performance indicators (KPIs) to track and evaluate the success of your initiatives. Use data and metrics to identify any deviations from the plan and take corrective actions as necessary.

Use the Dashboards feature in ClickUp to create visualizations of your KPIs and track the progress of your strategic plan in real time.

5. Review and adapt

Periodically review and adapt your radiology department's strategic plan to ensure its continued relevancy and effectiveness. Evaluate the outcomes of your initiatives, gather feedback from stakeholders, and make necessary adjustments to your goals, strategies, and action plans.

Use the Table view in ClickUp to conduct a comprehensive review of your strategic plan. Collaborate with your team to make revisions and keep everyone on the same page.

By following these steps and utilizing the features in ClickUp, you can effectively use the Radiology Department Strategic Plan Template to drive the success and growth of your radiology department.

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Get Started with ClickUp’s Radiology Department Strategic Plan Template

Hospital administrators and radiology department managers can use this Radiology Department Strategic Plan Template to effectively plan and execute strategic initiatives for the department.

First, hit "Add Template" to sign up for ClickUp and add the template to your Workspace. Make sure you designate which Space or location in your Workspace you’d like this template applied.

Next, invite relevant members or guests to your Workspace to start collaborating.

Now you can take advantage of the full potential of this template to strategize and plan for the radiology department:

  • Use the Progress View to track the progress of each strategic initiative and ensure alignment with departmental goals
  • The Gantt View will help you visualize the timeline of each initiative and manage dependencies between tasks
  • Use the Workload View to ensure balanced resource allocation and avoid over or under-utilization of staff
  • The Timeline View will provide an overview of all initiatives and their milestones, ensuring timely delivery of results
  • Use the Initiatives View to brainstorm, prioritize, and track all strategic initiatives, including their objectives, key results, and action plans
  • The Getting Started Guide View will provide a step-by-step guide on how to effectively use this template and maximize its potential
  • Organize initiatives into five different statuses: Cancelled, Complete, In Progress, On Hold, To Do, to keep track of their progress
  • Update statuses as initiatives progress to keep stakeholders informed and ensure effective communication
  • Monitor and analyze initiatives to measure their impact and make data-driven decisions for continuous improvement.

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ACR Strategic Plan: “Empowering the Radiologist of the Future”

“Empowering the Radiologist of the Future” is a bold, new American College of Radiology® (ACR®) Strategic Plan to increase member value, improve radiologic care and strengthen healthcare for all.

When fully implemented, this plan will position radiologists and the ACR for success in future years and support improved health equity, quality, delivery and outcomes.

Developed by , with and for members, twelve interconnected and interdependent strategic objectives, organized across four organizational perspectives, will focus and drive ACR activities.

The College will continually update members on progress toward these objectives.

Increase External Influence

The ACR is driven to increase radiology’s influence across the House of Medicine, industry and government. To be effective, the ACR will:

  • Pursue strategies that encourage members and stakeholders to promote the use of information management to deliver best outcomes and increase the visibility and influence of radiology.
  • Identify areas in which the College wants to increase influence (e.g., government, AI/technology).
  • Empower radiologists with the right tools to be leaders within their healthcare systems.

radiology strategic planning template

Increase Young Member Engagement

The ACR is committed to increasing young and early career member engagement, encouraging them to take ownership of, and have a voice in, College initiatives. The ACR will pursue this by:

  • Ensuring representation for young and early career members within the ACR.
  • Providing mechanisms for effectively communicating with young members.
  • Encouraging young members to participate in ACR initiatives.

radiology strategic planning template

Promote Radiologists’ Role in Population Health and Health Equity

The ACR believes radiology is a critical participant in the multidisciplinary medical team and is committed to driving recognition of its vital role. The ACR will:

  • Optimize the use of diagnostic imaging, non-imaging data and tools (AI) to keep radiologists central to diagnosis and management.
  • Ensure equitable distribution and access to necessary imaging technology, including screening for early detection of disease, for all patients.
  • Adapt current models of care for patients with different needs.
  • Use radiology’s unique capabilities and access to data streams that other specialties do not have to enhance early-disease detection through improved, expanded and more equitable screening efforts.
  • Encourage the development of tools to help radiologists take a more holistic approach to patient care.

radiology strategic planning template

Strengthen Inclusivity and Transparency

The ACR desires to build trust within the membership. To accomplish this, the ACR commits to:

  • Welcome all members, ensuring each feels a sense of ownership and community.
  • Communicate consistently about the inner workings of the ACR, instilling confidence that the College is operating in the best interest of members.

radiology strategic planning template

Improve Governance and Staff Agility

The ACR embraces good governance practices for the future success of the College. To succeed in this objective, the ACR:

  • Seeks out governance best practices with a focus on Board diversity.
  • Considers the respective roles of, and interaction between, the ACR Board of Chancellors, Council, and steering committees to ensure smoother operation.
  • Ensures effective outcomes through a structure that allows for quick, nimble decision-making.

radiology strategic planning template

Strengthen Mechanisms for Addressing Controversial Topics

The ACR’s strength is derived through its diverse membership. Its success is made possible by a commitment to improving tools and processes to identify and hear different perspectives. The ACR will:

  • Identify potentially controversial topics and actively listen, seeking all perspectives while promoting and enforcing respectful, professional dialogue.
  • Utilize subject matter experts and relevant factual resources.
  • Communicate regularly with all stakeholders throughout the deliberative process.

radiology strategic planning template

Strengthen Multidirectional Communication

Critical to ACR’s success is true multidirectional listening and communicating, and engaging members, leadership and staff as active participants in the communication process. To achieve this, the ACR will:

  • Strive for a better understanding of what members want.
  • Improve prioritization, categorization and streamlining of communication with member input.
  • Engage members in the communication process.

radiology strategic planning template

Champion the Leveraging and Mobilization of Emerging Technology and Artificial Intelligence

The ACR promotes the key role radiologists must play in ensuring the integrity and implementation of AI, data science and emerging technology. To accomplish this, the ACR:

  • Provides education and change management to adapt to new technologies.
  • Proactively engages members and ensures they have the necessary tools to make transitions.
  • Pursues strategies that promote the development and implementation of AI in ways that ensure patient safety.
  • Engages with a broad array of stakeholders, including government regulators, industry and others in the House of Medicine.

radiology strategic planning template

Ensure Stewardship of ACR Financial Resources

The ACR is among the nation’s most financially sound medical associations. The College will continue to update its financial framework to ensure that assets are allocated and invested optimally to provide the most value to members. To meet this objective, the ACR will:

  • Enhance and strengthen its resource-utilization framework to ensure College assets are being used and deployed appropriately.
  • Strike an appropriate balance between qualitative and quantitative decision making.
  • Maintain a long-term perspective.
  • Focus and align resources and efforts to maximize member benefit.

radiology strategic planning template

Expand New Areas of Quality Improvement Infrastructure for Radiology

The ACR will expand the QI infrastructure, building on its strength in developing new capabilities. To achieve this, the ACR will:

  • Establish radiologists as QI leaders within delivery systems.
  • Educate members as to optimal QI practices.
  • Create opportunities for improved quality through interoperability.

radiology strategic planning template

Enhance Proactive Commitment to Fair Payment

The ACR will continue to work to protect the current fee-for-service payment systems while exploring and developing fair alternatives. This will be achieved by:

  • Continued involvement in existing payment rate determination processes.
  • Engagement with the Centers for Medicare and Medicaid Services, Congress and other medical associations.
  • Fair implementation of “no surprise billing” regulations.
  • Development of value-based payment models.
  • Consideration of innovative members practice models.
  • Ensuring the federal government and payers understand and do not impede the role radiology plays in technology development and the additive value to patient care.
  • Exploring ways radiologists can use new technology to become more efficient as their roles in patient care expand.

radiology strategic planning template

Strengthen All Members’ Sense of Purpose and Confidence in the Future

The ACR will strengthen members’ sense of purpose and confidence, increasing their awareness of the integral roles that radiologists play in overall healthcare. Key to this objective is:

  • Promotion of a positive work environment that fosters quality radiologic care and meaningful relationships between radiologists, radiation oncologists, medical physicists and nuclear medicine physicians with their colleagues and patients.
  • Highlighting opportunities for members to take part in and utilize the dynamic changes impacting radiology.
  • Educational advancement through practice management, scientific and health policy research.

radiology strategic planning template

Strategic planning in radiology

Affiliation.

  • 1 Radiology Management Group, Department of Radiology, Brigham and Women's Hospital, Harvard Medical School, Boston, Massachusetts 02115, USA.
  • PMID: 17411829
  • DOI: 10.1016/j.jacr.2004.08.018

As radiology continues to evolve and grow, radiologists must be concerned with preparing radiology for the future. Decisions in capital investments, mergers, outpatient diagnostic clinics, and payment and liability issues will require practicing radiologists to develop and follow up managerial, interpersonal, and learning skills that were not as necessary in the past. To become adept in the new radiology environment and be able to manage change and deal with difficult decisions, radiologists need to acquire a background in strategy.

  • Decision Making, Organizational
  • Forecasting
  • Organizational Innovation / economics*
  • Planning Techniques*
  • Practice Management, Medical*
  • Radiology / economics
  • Radiology / organization & administration*

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Strategic Planning in Radiology

Sep 17, 2001 | CT |

My approach to strategic planning is very pragmatic. Among the primary principles of this approach is the need for radiologists to be involved in planning, although it may constitute a foreign area for many of them. The thought process used in planning is very different from that used in radiology, for example. A radiologist makes literally hundreds of decisions each day, but once each of those decisions is made, the case is finished. The radiologist is free to move on to the next set of decisions. Radiology practice administrators, in contrast, may be tied up solidly for 6 months while carrying out one business decision. The decision-making processes, environments, and timetables differ so greatly between physicians and administrators that bridging those cultural gaps becomes, in itself, an important step in planning.

Failure to plan is a plan for failure. Planning gives a practice a map and a game plan. It does not mean that the practice cannot deviate from the plan, but it enhances the focus and efficiency of the practice in pursuit of its goals. Planning is not a hard-and-fast exercise; instead, it sets a direction for the practice to follow. Lack of planning leads to uninformed decision making. It may also cause decisions to be made that favor the most persuasive advocate of a particular action, who may not always have the goals of the practice in mind.

Inadequate planning means that a practice is operating with fragmented resources. Insufficient funding, overworked personnel, and reactive (rather than proactive) actions are symptoms of this problem. The results produced by the practice will be inconsistent, and success, if obtained, may be expensive. Stress levels are much higher in the absence of planning, and the likelihood of error increases, as well. Personnel may be very busy every day without being very productive, and the practice is likely to spend money unnecessarily.

Often, radiology practices realize that they need to plan only when they are struggling to survive or are expanding rapidly. It should be remembered that, even in the absence of these two extremes, radiology markets are volatile and subject to unexpected change. Entrepreneurial activity, managed care, and nonradiologist imaging can? create instability in a market at any time; a strategic plan should be in place at all times as a coping mechanism.

BEGINNING TO PLAN

There will always be factors (such as Medicare reimbursement rates) that the radiology practice cannot control. Planning will let that practice determine what it can control (or at least influence) and then commit the resources and effort needed to assert control in the areas that it considers most important. Planning also helps physicians and radiology practice administrators agree on reasonable expectations, and this helps to prevent unpleasant surprises for either.

Formal planning begins with physician input.? Measurable, specific goals are then outlined. Action steps and timelines are constructed next, and these are accompanied by detailed cost estimates that include the cost of staff hours. The last step is the measurement of progress, which is accompanied by reporting on the degree to which the plan’s goals have been met.

Taking the plan from its infancy (the talking stage) through to reality requires the radiology practice administrator to know and keep track of the many variables that help him or her produce an intelligent plan and obtain the necessary background to implement it. Documenting what is happening in the practice’s market area is the first necessity. Each year, before planning, I have spent several days just going over what has occurred in the market area. Once that has been documented, the practice should look over the plans of the previous 3 years. There may be strategies there that are still viable, but were never implemented because of interim changes; it can be helpful to review what the group was thinking at the time that each prior plan? was written. In addition, it may be far easier to update a past plan than to start over in its construction.

The practice should consider the kinds of entrepreneurial activity taking place in the area, including the degree to which radiology services are being offered by nonradiology specialties. The effects of managed care should also be evaluated. This analysis will help the practice determine whether it is a good idea to expand services at a given time. Expansion may sound like a great idea, and nearly everyone will want to do it, but the practice must be careful to avoid spending a great deal of money to obtain business that it already has. Even if the business is obtained in a less-than-ideal way and the practice wishes it had more control, additional spending could be unwise. An example is to build a new imaging center and take on the associated debt simply to get business that the practice is, in fact, already getting.

ASSESSING THE SITUATION

In evaluating the impact of managed care, the practice should determine its penetration in the local market and whether it is still evolving or on the decline. The relative dominance of HMOs, preferred provider organizations (PPO)s, fees based on Medicare allowables, and capitation should be evaluated. These factors will determine the financial projections of the practice. If the practice plans to launch new initiatives, it must first be certain that it will be paid. It is necessary to understand whether payor activities and policies have changed recently. In our market, capitation is definitely on the decline because physicians have been leaving for areas where their incomes will be higher. HMOs are still dominant, but PPOs are beginning to move up; plans are offering more options and are paying slightly more.

The realities of managed care are such that if it is growing in the practice’s market area, it will cause a reduction in what that practice is paid.? Managed care? also has other ways to decrease practice revenues. For example, decreases in the time limits set for filing claims will lead to more denials of reimbursement. Some practices have been accustomed to having as long as a year to file claims; in Albuquerque, NM, having 90 days to file is considered very good and having 60 days is considered more normal. In fact, our practice turned down arrangements permitting only 30 or 45 days because, being hospital based, information did not always reach us in time. A practice that does not have the systems in place that would permit it to file timely claims, and that will be moving from a 365-day filing limit to a 90-day limit, is guaranteed to lose money until it learns to work with a shorter filing limit. Prior authorization requirements can also affect practice revenues. HMOs seem to be strictest in this area; the practice that performs an examination without prior authorization has performed it free of charge, in effect.

Capitation for radiology services has not, to date, been successfully designed. The practice might make money for the first 2 years under a new capitation plan, but the payor will eventually find ways to make the arrangement less profitable. Utilization is a constant worry, but the practice has no control over it. The practice? can be the victim if the health plan manages utilization poorly. If the members of a referring specialty attend a society meeting at which they are told to order MRI studies for a particular condition, for example, the resulting jump in MRI utilization is desirable only in a fee-for-service setting. Under capitation, it can be fatal.

Utilization-review requirements are usually built into managed care agreements. They may have no negative impact on practice operations, but they add to overhead. Few add administrative layers, but compliance requirements vary from contract to contract. The accreditation of health plans causes additional provisions to appear in contracts. Suddenly, radiology practices may be required to provide more documentation, and periodic site reviews may be mandated. The practice has little room to negotiate, in this regard, because these provisions are conditions of the health plan’s accreditation.

MAKING FINANCIAL PROJECTIONS

Generally speaking, more managed care in a market means higher overhead and lower income. If the practice must verify eligibility, for example, more staff time will be required to handle managed care accounts. Managed care is also a consideration in capital planning: what happens to the practice’s pro forma projections if fees decrease slightly for each of the next 5 years? Often, in putting together a pro forma, assumptions are made; a given case volume is expected to generate a predictable number of dollars. If fees can be expected to decrease, this information should be part of the planning analysis.

It can be a helpful exercise for the practice to determine where it would stand financially if it were to receive reimbursement strictly at Medicare rates. When the practice is looking at capital equipment, these projections will determine the merits of leasing versus purchasing. It was once fairly common to purchase equipment and simply pay cash for it, with financing? beccoming necessary only at the MRI cost level or higher. Physicians were willing to pay a great deal out of their own pockets for their own imaging centers. Leasing means that the practice will pay more for an item over the course of the lease, but it is tremendously helpful in month-to-month cash-flow implications.

Developments in financing should be researched and reviewed by radiology practices. I remain neutral regarding the application service provider (ASP) model, although I am studying it more. In some cases, ASPs appear viable, particularly for MRI and CT teleradiology, but they may be less so for plain film. Practices can use vendors as their experts in this area (and many other types of trend watching), since the vendors will be able to make projections based on knowledge that is not always available to an individual practice. ASPs are more common in medical technologies due to the high cost of equipment; for example, positron-emission tomography is being used by facilities that pay a fixed amount per scan to the company providing the technical component. This is one of the typical uses of the ASP model, but it is also available for picture archiving and communications systems (PACS) and teleradiology. ASPs of this kind might be popular for a few years and then disappear; they could, however, also continue to grow and to become more successful. ASPs are now becoming available for billing systems. Practices should bear in mind that, after the technology actually needed to perform imaging, their second-highest expenses are usually for their billing systems. Many of those costs are staying the same, but vendors are becoming ever more creative (with? ASPs being one example) because they realize that many radiology practices face financial challenges.

Pro forma projections are based on a predicted number of examinations per day and an assumed revenue per examination. Many practices forget that they must also take the collections ratio into consideration. Otherwise, the pro forma amount will be based on an unrealistic presumption of 100% collections. Clearly, the projection must be adjusted for collections failures if it is to provide an accurate estimate of the revenues needed for an activity to be viable (defined as paying for the necessary equipment and making a profit). A reliable projection requires a thorough knowledge of the business and its efficiency (collections, bad-debt write-offs, and average days in A/R). In developing projections, the practice should also assume that the promises of referral that it receives from physicians are usually overestimated. If a physician claims that he or she will send the radiology practice every single case if only the practice will open a new imaging center, the physician’s assertion must be taken with a grain of salt.

Using the standard definitions and formulae of the Radiology Business Management Association will help the practice set up reports and conduct business analysis. In making projections, practice administrators should assume that the practice will be less efficient when it introduces a service than it will eventually become when it has gained more experience.

DETERMINING STRATEGIES

Practices should remember that market-expansion options may include the use of the money of others. At times, for example, expansion can be funded through a joint venture with a hospital. It should be realized, though, that joint ventures always have strings attached.

The imaging center constitutes the most traditional option for business expansion, and this is the direction chosen by most groups seeking expansion. Teleradiology, however, eliminates geographic boundaries, and mobile radiography is a relatively low-cost (if highly regulated) avenue for business expansion. For example, mobile units can serve prisons and nursing homes.

Among market strategies, being first is always best and being second is always a weaker stance. If three imaging centers are opening in an area, the one that opens first is going to have a strategic advantage (unless it provides inferior service). It is harder to take business away from the center that opens first than it is to open first oneself. When it is possible, first to open is what a practice should aim to be. If it is not possible to open first, the practice’s projections should reflect the fact that it will take longer to obtain a share of the market as the second center. If the practice will be third to open, it should determine very carefully whether it can afford to wait for its share of the market until the one of the two previously opened centers has failed.

No matter how tempting it is to believe that your radiology group is the best, it is important to determine what other groups do better. Through acknowledging that superiority and paying attention to the operations of others, a practice can learn a great deal concerning its own path to success.

In considering any expansion, the practice must determine whether it really has the financial resources needed. The initial investment can often be found, but operational resources, including personnel and funding, may be harder to maintain.

INFORMATION NEEDS

New developments are being seen in information services in response to the needs of radiology. Managed service providers (MSPs) are an example; as more of radiology’s information technology moves to the Internet, practices must either incur much of the cost of that migration directly or pay companies to perform their network-management, web-hosting, security and security-monitoring, archiving, and disaster-recovery functions. It may be preferable for a practice to obtain these services through contracts instead of building these functions into its daily operations by itself. The emerging, rapidly changing industry that provides these services appears to offer considerable cost efficiency and to allow practices to remain up to date (through ongoing upgrades) without high initial investments. MSP services are available at various levels of complexity and cost, based on the client’s needs; for some clients, MSPs do a tremendous amount of work. MSPs are used heavily in the banking and credit-card fields, where clients pay a premium to have the MSP support and monitor a very high number of transactions. MSP use allows the radiology practice to obtain help in managing its wide-area network and virtual private network.

Practices need to look at information technology as a means of furthering operational improvement. It is necessary to improve the efficiency of physicians because they are the most expensive employees of a practice.? Most of the time, they should be reading films. This is made possible by technologies that move the images to the physician instead of moving the physician to the images. Teleradiology and PACS are the means of obtaining and benefiting from this access to images.

Information technology can also promote operational improvement through report delivery to referring physicians via web access or email, as well as through Internet-based eligibility verification, claim status checking, claims editing, and electronic filing. Expansion may sound more exciting than these investments, but such technologies can help make later expansion a reality by improving efficiency.

It is necessary to maintain an ongoing awareness of technological developments. The use of artificial intelligence for coding is now undergoing beta testing in radiology practices, and this ability appears to be reaching a level of considerable refinement. While oversight coders (perhaps at off-site locations) will still be needed to check the work of the coding systems, overall coding costs may decrease significantly.

Telemedicine and online patient visits are now beginning to gain reimbursement. Teleradiology has been fortunate in being reimbursable for some time, but telemedicine has not. Some California insurance plans are now recognizing telemedicine patient visits as reimbursable. This is a trend to watch, as is Internet access to major payors.

PLANNING FOR COMPLIANCE

Radiology is already one of the most heavily regulated industries in the United States, but I can guarantee that the Health Insurance Portability and Accountability Act (HIPAA) will be the single largest operational initiative of a radiology practice administrator’s career. Compliance is mandatory, and it is 75% administrative (only 25% technical). Documentation is one of the most frequently encountered words in the HIPAA regulations. HIPAA compliance can be built on the practice’s fraud and abuse compliance program, if it has one in place; those practices having such programs will see less extreme changes, but HIPAA will, nonetheless, represent major change for all US radiology practices.

HIPAA transaction standards are due in October, 2002; privacy standards, in April, 2003; and security standards, after that. HIPAA affects radiology practices throughout their businesses: in patient registration and flow (because of privacy issues); hiring and firing (in the granting, removal, and documentation of removal of access codes); training and its documentation; billing and collections, in terms of how information moves; how, where, and when people use equipment; formal disaster planning and its documentation; and communication with other providers, patients, health plans, nonmedical business associates, and regulatory agencies. Teleradiology audits and verification are required by HIPAA, along with formal teleradiology disaster planning. Downloads of hospital demographic information will be affected and must be made secure; some hospitals are already refusing to permit them.

Practices can prepare for the HIPAA transaction standards by talking to their billing-system vendors to determine their progress, in terms of formats and data sets. Vendors should be asked when they will begin testing the changes that they have made, and practices should now begin cleaning their databases in the same way that they would if they were about to undergo a computer conversion. HIPAA preparation may also call for leadership training and baseline assessment, along with gap analysis (to determine the distance between compliance and current procedures).

Formal planning does take time and discipline. The first time that the practice goes through the planning process will be the most difficult. A month spent on fairly intensive planning, however, will pay off for the entire year that follows, if not longer.

Patricia Kroken, FACMPE, is president of Healthcare Resource Providers, LLC, Albuquerque, NM, and immediate past president, Radiology Business Management Association. This article has been excerpted from Strategic Planning for the Radiology Group Practice, which she presented at eMed?s Business of Radiology seminar in Flushing, NY, on June 20, 2001.

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radiology strategic planning template

Budgeting for Radiology Practices — Combining Science and Intuition Gives Practices More Control Over Their Future By David A. Myrice, CPA, MBA Radiology Today Vol. 12 No. 8 P. 10

While creating an operating budget may not be an organization’s overarching goal, it is an integral part of strategic planning that requires a radiology practice to look forward, see the desired results, and try to set a course to achieve them.

Mapping out a strategic plan involves goal setting, a plan of action to achieve the goals, and monitoring systems to measure the efforts intended to achieve those goals. Operating budgets can tangibly show the results of numerous decisions that have been made and often act as a report card on the success of any given strategy. The intent of this article is to define and illustrate the necessary components that radiology practices must consider as they carve out a budget.

In simple terms, an operating budget is a projection or a snapshot of the results a practice hopes to achieve or believes it will achieve. The words “hope” and “believe” are used here because budgeting is an intuitive process that can be employed for different purposes and executed in various ways.

While hospitals tend to be steeped in the budgeting process, in many radiology practices, budgets are often wrongly considered unimportant or unnecessary. A general feeling that the clinical side of a practice lacks control over the business aspects of revenues and expenses can lead to the mindset that there is no reason to project them. Such thinking often leads to mediocrity and lost opportunities for practices. Once a group determines it will put a budget in place, the process can be based on scientific data or hopeful intuition.

The most commonly applied budget process involves looking at historical data and assuming a repeat in the future. Small changes are usually made to either revenue or expense figures based on known differences. So using a historical budget method as an example, if a practice spent $50,000 in legal fees last year, the budget for next year would be $50,000 with perhaps a small inflation adjustment. This type of budget can be useful, especially in a stable revenue and expense environment, but it does little to show that the practice is operating efficiently. It merely projects future results based on past results.

A much more effective budget method is called zero-based budgeting. Although zero-based budgeting is more time consuming and difficult, it produces a better model of a practice’s operations and can help identify waste or inefficiencies. With zero-based budgeting, a practice looks at each revenue and expense category individually and projects what it hopes and believes will be used over the next year. A practice may still use past performance in this process but only as one component of a more in-depth review, which should also be tied to its strategic plan. Using the legal fees example from above, instead of assuming it will spend the same as in prior years, a practice would look at its anticipated regular legal needs and then review potential outstanding issues and calculate a total projected cost based on projected rates. This process produces a budgeted expense that is more reflective of both what the practice believes it will spend and what it hopes to achieve.

Three Budget Components Whether doing a historically based budget or a zero-based budget, a practice should separate projections into three basic components: revenues, variable costs, and fixed costs. Each of these components is handled differently and, when combined, they flow into a snapshot of what the forecasted results will be.

1. Revenue: The most critical elements and usually the most difficult to project are revenues, which are the driving force of the budget and the operation. Accurately projecting revenues will be the most critical element of a budget’s value to the practice. While revenue is the linchpin to a good budget, the key is to accurately project them via the strategic planning process. Analyzing historical allocations by CPT code and payer mix for each location serviced is a good starting point.

Next, an analysis of the competition changes in the market and reimbursement changes on the horizon should be considered. Looking at seasonal ups and downs and the number of working days in a given month are also notable elements. For example, practice members might ask, “When do holidays fall and how might they impact volumes?” By piecing together various factors, a practice can intuitively predict volumes and match them against local market trends and rates to project its revenues.

If a practice traditionally has a Medicare volume of 30% of charges and no changes of consequence are anticipated in the market, then it can project the reimbursements for this category based on the correlative information. However, let’s say the hospital the practice provides service for is planning to install a new 64-slice CT scanner. Will the practice pick up new volumes or potentially lose them to other specialties? Looking at historical volumes may help identify past trends, but practice members must ask whether these trends will continue. There are many considerations that should go into a good zero-based revenue budget and while revenue projections may never be exact, there should be a firm idea of the trends expected. Once revenues are set, expenses should come into greater focus with variable costs being next on the list.

2. Variable costs: Variable costs, as the name implies, are subject to change based on volumes. Once revenues are projected, the anticipated volumes of procedures can be used to project variable costs associated with those procedures. For a hospital or a radiology practice with its own imaging centers, projecting variable costs is another critical exercise—and important to a hospital-only–based radiology practice. Projecting variable costs, also known as cost accounting, is the process of determining the number of units of material or labor that goes into the production of a product or service. In radiology, the cost per unit of these items is determined and then the cost per procedure is projected.

Many radiology firms work with medical consulting firms and certified public accountants to look more closely at cost accounting. For example, the expenses associated with an MRI of the brain with contrast could be found by costing out the number of milliliters of contrast needed per procedure, then estimating the average time to perform the procedure and using this to assign the cost of staff. To take it a step further, the cost of utilities needed to perform the task may also be projected. Typically, the process is simplified to focus only on those costs that will not occur if the procedure is not performed, like the use of contrast in this example.

While staffing and utilities may be a variable cost in the technical sense of the term, in actual operations these items are usually considered more of a fixed cost. Therefore, the goal in looking at variable costs is to determine those expenses that fluctuate up or down solely based on procedure volumes. Though a hospital-only radiology practice may not need to worry about costs such as contrast, volumes may affect physician-staffing decisions. A practice might ask whether it anticipates the need to replace a retiring partner or add a physician due to increasing volume or what impact these volumes may have on vacations or schedules. It may discover a need for locum coverage to fill some gaps, for example. All these considerations greatly depend on volumes.

3. Fixed costs: Fixed costs are expenses that occur even if there is no volume and no procedures. As discussed in No. 2 above, practices can sometimes blur the application of fixed and variable costs and, depending on the level of sophistication and detail desired, a practice often lists technically variable costs as fixed. The most common fixed costs are relatively simple to identify and include rent, lease payments on equipment, maintenance contracts, administrative salaries, and other items such as licenses and fees. The gray areas of variable and fixed costs may include part-time staffing, legal services, and office supplies. Fixed costs are usually the easiest section of the budget to project and typically are the most accurate since rent and other fixed payments do not change that often.

The Budget Is in Place. Now What? Once the various budget components have been developed, leaders can use the budget to anticipate what a practice’s profitability will look like. It makes sense for practice members to confirm the results of their calculations, that estimates are reasonable, and whether the totals appear to make sense. Once a practice has what it believes and hopes to be an accurate depiction of future results, its leaders can begin measuring actual results against anticipated results.

Comparing each budget category monthly and seeking explanations of variances help keep the budget on track or point out where adjustments may be needed. If revenue or expenses are dramatically different from the budget, understanding why is important. The true benefit of a budget is its ability to highlight the accuracy (or inaccuracy) of assumptions in real dollar terms and provide timely understanding about where and how those assumptions may have been right and where and how they may have been wrong. This knowledge—which develops as practices go through the budget process year after year—gives leadership an opportunity to make changes to its operation on a timely basis. In addition, by analyzing how budget aligns with the strategic bets placed during the planning process, practices will have an additional report card as to the effectiveness of those bets.

While a budget does not define how effective an operation is, without one, operating results are left to chance with no real measure of success or failure. Good budgeting includes both science and intuition in making projections. Practices working with budgets control their destiny better and operate less blindly. In today’s tumultuous healthcare environment, using all the tools available may be necessary to radiology business success—even if a little guessing is involved.

— David A. Myrice, CPA, MBA, is a senior finance manager and practice administrator with Atlanta-based Medical Management Professionals, Inc.

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Over the 20 years I have spent working in healthcare, I have realized that it is critical to understand how to access capital and manage assets. And with the expense of imaging assets, it is imperative that the imaging administrator be able to tell the right story to help the executive team make informed decisions. 

Here are the six steps I have found helpful to build the justification and tell the story for managing assets.

1. Know the Plan

Understanding where to begin with asset management in radiology starts with understanding your organization’s strategic plan. It is essential to know the strategy to meet the needs of the patient population that is targeted. For example, if the organization placed a high priority on cardiovascular services as a major service line, you will need to evaluate if you have the imaging assets to compliment the strategy.  

2. Create an Asset Inventory List

Next, you will need to organize all of your imaging assets on an asset inventory list. Data to track would be modality, vendor, model, age, projected volume growth, estimated life, service cost over two years and any comments that may add value. This asset list is an objective way to inform the capital budgeting process. If you have an aging asset with high service cost that is growing volume due to it being aligned with the strategic plan, then it is a good example of an asset to target for replacement.

3. Create a Five-Year Capital Plan

Once an asset inventory list is created, you should start working on the five-year capital plan. This exercise should occur prior to the organization’s capital planning in order to best inform the planning process. Create a grid for a rolling 5-year period that lists the modality, description of equipment, cost and total cost by year. This exercise is completed annually and updated on a rolling five-year basis. It is helpful for an organization to understand the type of capital needs coming in the future that may lead to higher spending. This gives everyone a longer runway to plan for upcoming costs and helps keep the team on the same page at all times.

4. Choose Your Equipment 

Selecting the vendor and model of equipment can be a challenge without a standard process to work within. Another decision that will need to be made for each piece of equipment is whether a purchase should be new, used or leased. There are pros and cons to each of these options. For example, a large hospital system may choose to always buy new and never lease to ensure buying power is maximized. A small private practice or imaging center, however, may elect to lease to ensure modern technology optimization is in use while preserving cash flow to the business. Understanding company resources to take advantage of buying power and existing contracts will help narrow choice and streamline process. If you are in a small business or independent practice, you will have more flexibility on choice, but will need to send out a Request for Purchase to vendors to get an apple-to-apples comparison of equipment delivered in an objective format for review.  

5. Create Your Proforma/Business Plan

Once equipment has been selected, it is time to build a proforma or business plan. The business plan should tell the story, in financial terms, of whether a project should be considered. Decision makers can then compare multiple business plans and decide what should be funded based on organizational goals and strategy.

To construct the proforma, reach out to the finance resources available to you within the organization; there are typically some templates used that the decision makers can evaluate when planning is complete. If a template is not available, then work alongside the finance designee within your organization to build the document. 

As the subject matter expert in imaging, be prepared to create volume assumptions for the equipment. The volume needs to be new/incremental volume to support the investment of the project. A good way to assume volume is to study leakage from the referral base or study the ratio of imaging referrals based on physician specialty. If the physician specialty in the service area refers 100 tests per year per provider, you can assume that if a new provider of that specialty is recruited, then a similar volume will follow after ramp up time is considered.  Talking with colleagues within the imaging administrator arena is another good way to see how other professionals create volume assumptions. 

Once volume assumptions are complete, you can start working on the expense side of the equation. There is history within the business that will demonstrate the per-unit cost associated with similar business. If the current cost per unit in the department that is getting the equipment is $100/test, it will be a good starting point to assume future expense on the future volumes. Specific operational costs that will be new need to be included in the new cost per unit number. 

Of course, there also are staffing costs that need to be considered. The exercise most helpful to use is taking the current productive hours per unit of service as a ratio and then calculating the productive hours needed to support the new volume. For example, if it takes 40 productive hours per week (one FTE) to support 100 tests per week, the ratio is 40/100 or 0.4. If the new volume in the proforma is projected at 5,200 tests per year, multiply 0.4 by 5,200 and get 2,080 productive hours needed to support that new annual volume. (Remember: One FTE is equal to 2,080 hours per year!) The net new FTE for the project in this example would be one FTE.  You can then multiply the 2,080 hours by the projected average hourly rate plus 20 percent for your estimated benefits cost.

Volume, cost per unit and labor are the main components to putting together a proforma. Other data that will be needed to complete the proforma are charge per test, service costs, depreciation and allowance rate used to discount revenue. Allowance rate is determined by the payor contracts and revenue cycle process the organization has. It is the relationship between what is charged and what is collected. If total annual charges for a service are $1 million and the business collects $400,000 based on contracts and revenue cycle practice, then the collection rate equals $400,000/$1 million or 40 percent. The allowance rate is what the organization will discount or allow off of the total charges, which in this case is 60 percent.

But you’re not quite done yet. All of the variables for the proforma have come together and they now need to be detailed in a projection over a 5- to 7-year period. This total financial analysis should be coupled with a narrative of why the purchase fits within the strategic plan and initiatives of the organization, which shows why the very first step I mentioned was to make sure you fully understand the plan.

6. Conduct More Analysis

The proforma is a tool that helps you show the projected revenue and expenses associated with a project. More detailed financial analysis also should be conducted to further tell the story, statistics such as Net Present Value (NPV) and Internal Rate of Return (IRR).  NPV describes future revenues in terms of the present-day value of money, since we all know $1 today does not have the same value as $1 in the past. The organization needs to be comfortable that the investment in the project will yield value in the future considering their buying power will be less due to inflation. In general, if the NPV is above zero, the project is considered worthy to pursue. The higher the number, the better.

IRR, meanwhile, captures the percentage of profit over the life of the investment. The higher the percent, the better the return; somewhere between 8 to 12 percent is average. This demonstrates the “hurdle rate” needed to overcome risk associated with an investment.

Once these six steps are complete, you should be ready to pitch the project idea to the decision makers in the organization. Good luck! This level of due diligence will ensure that you are prepared to answer to the assumptions around the analysis and be able to describe how the project fits within the long-term capital and strategic planning of the organization. Keep in mind that your overall goal is to put the organization into a position to make objective, informed decisions with the scarce capital dollars that exist within healthcare.   

Kevin Smith, MHA, is the vice president and chief operating officer of High Point Regional Health, part of UNC Health Care, in High Point, N.C.

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