PET/CT profitability hinges on building the market

New players must tend to reimbursement, education, and customer service

By: Charles Bankhead

Few hospitals or radiology groups have the luxury of spending $2 million for a piece of equipment without knowing what can be expected in return. In the current era of budgetary belt-tightening, healthcare organizations have even less margin for error in planning the acquisition of a PET/CT fusion scanner.

To maximize the chances for financial success, investors in hybrid scanners must meld the technologic capabilities of the machinery with marketing and business acumen and good old-fashioned customer service.

Much of the foundation for success should be in place before the scanner is installed, particularly for organizations that do not have existing PET facilities. Preplanning should lead to a thorough understanding of the market, the competition, and the payers.

Oncology continues to represent the reimbursement backbone of PET imaging. As a consequence, knowledge of the oncology practices in a service area is a necessity for estimating referral potential and image volume. Where PET is available, an oncologist typically refers between 2.5 and four patients a week for imaging.

"That's just a rule of thumb, but it can provide a starting point for estimating volume," said Sue Halliday, vice president of ImageMed Group, an imaging consulting firm. "It's essential to know your potential referring physicians and their practices."

A fair amount of data are available to estimate the potential use of MR, CT, and other imaging services within a defined patient population. Such data are just starting to accumulate for PET, placing the onus on would-be operators of PET/CT facilities to gather their own information about referring physicians and how busy their practices are, Halliday said.

Dr. Michael Fagien has seen estimates of three studies a day as the break-even point for a freestanding PET imaging center, but he considers such figures to be shortsighted. Instead, PET should be viewed as a potential trigger for other imaging studies used to guide patient care and to follow patients throughout their clinical course, all as part of good medical practice.

"One thing I love about PET is that for the first time in my medical career, what's good for business is also good for medicine," said Fagien, medical director of three imaging companies in South Florida. "If you look just at the volume of PET scans or a break-even point for business, you're actually missing the boat."

Knowing the PET/CT competition is just as important as knowing and understanding the referral base. As the number of reimbursable indications for the technology has increased, the availability of PET and PET/CT in the community setting has expanded.

In some parts of the country, the PET imaging market has already become crowded. San Francisco offers one example, said Dr. Stephen Bunker, clinical director of nuclear medicine at California Pacific Medical Center and medical director of FDG Fusion Diagnostics. The PET market has a large number of players and will increase further if more reimbursable indications are approved. Characterizing himself as a fan of fusion imaging, Bunker nonetheless has difficulty justifying the additional cost of a PET/CT unit, and he estimates that in 90% of cases he can get the information he needs by using fusion software.

A few hundred miles to the south of San Francisco, Dr. Richard Hoffman weighed the pros and cons of a PET/CT scanner and fusion software and came to a different conclusion. Hoffman had concerns about the probability of misregistration of separate CT and PET scans with fusion software, and he appreciated that a hybrid machine makes for a faster study. For clinical and competitive reasons, he decided on PET/CT to replace an existing mobile PET unit for Torrance Memorial Medical Center, where he is director of nuclear medicine. The availability of a dedicated PET/CT unit has boosted the center's PET imaging business.

"Our volume has increased since we acquired the PET/CT scanner in March," he said.

PLAY TO YOUR AUDIENCE

Knowledge of the competition ties into potential relationships with payers. If a major payer in a particular geographic area has a closed network of PET providers, operators of a start-up PET/CT facility will have to determine whether business from the remaining private payers and Medicare can accommodate another entry into the market. The situation is somewhat less restrictive for providers who want to add a PET/CT unit to existing radiologic services, Halliday said. But any new entry into the PET imaging market requires a careful assessment of major payers and their acceptance of additional providers.

"From the payers' perspective, they are seeing a proliferation of freestanding PET sites where that is the only imaging modality provided. The cost of contract administration is the same whether you provide all radiology services or just PET," Halliday said.

Once a decision has been made to acquire a PET/CT unit, the technology may represent one of the simplest components of the profitability equation. The newest PET/ CT innovations offer the potential to accommodate substantial increases in volume. Equipped with the latest hardware (including multidetector CT), software, electronics, and scintillator technology, a PET/CT machine can complete a whole-body scan in less than 10 minutes. Extrapolating that figure over the course of an entire work day leads to the potential for 50 or more studies a day with a single PET/CT unit.

Without question, the technology can be ramped up to meet currently foreseeable demands for PET imaging. Less consensus exists about the answer to a related question: How much does the increased throughput matter right now?

Holy Name Hospital in Teaneck, NJ, acquired a PET/CT machine about a year and a half ago to facilitate radiation therapy planning, for which localization is an absolute necessity, said Dr. Jacqueline Brunetti, director of nuclear medicine. But similar to the experience reported by Hoffman, availability of the fusion imaging unit has led to an increase in the hospital's total cancer imaging volume with just a modest amount of promotion.

"We are now getting patients from areas where we traditionally have not had referrals," Brunetti said. "Having PET/CT capability has clearly expanded our oncology grab. The only advertising we've done was when the unit was first installed."

Yet Hoffman has seen little bottom-line effect from the increased throughput potential. Although PET imaging volume has increased because the PET/CT unit is in operation more days of the week, the demand for PET studies has yet to reach a point that makes speed of image acquisition a major factor. When the use of intravenous contrast for attenuation correction mapping becomes more common, the speed of the exam will become a more prominent consideration for the comfort of patients in an arms-up position, but not necessarily because of imaging volume, he said.

The true potential of increased throughput probably won't be fully realized until PET/CT imaging becomes essential to the diagnosis or evaluation of a common malignancy, said Dr. Ethan Spiegler, director of nuclear medicine at St. Agnes Health Care and director of Advanced PET Imaging of Maryland in Baltimore. Spiegler cites breast and prostate cancer as potential volume drivers in PET/CT imaging.

"If things develop in the future such that PET imaging becomes critical to every new diagnosis of breast or prostate cancer, then throughput will become a big issue," he said. "Right now, throughput is not an issue for most people."

BOOKKEEPING MATTERS

Two factors that do influence the volume and the profitability of a PET/CT facility are education of referring physicians and appropriate documentation and coding of studies. PET is the newest imaging modality and the least understood by physicians, Fagien said. Operators of PET/CT facilities have to make a concerted effort to inform potential referring physicians about the appropriate indications and use of the imaging modality. Moreover, physician education should tie in closely with the marketing of PET/CT.

"No one will ever fault you for marketing that is educational," he said.

Operators of new PET/CT facilities often organize programs to promote the technology and its capabilities to potential referring physicians. Acquainting them with the capabilities of the hybrid machines is just the beginning of the educational process, however. Improving physician awareness about the appropriate indications for PET imaging is a key to the generation of volume and profits.

In particular, many referring physicians need education about reimbursable indications for PET imaging, Halliday said. Medicare has historically set the standard for reimbursement, and private payers tended to follow suit. Today, Medicare reimbursement for PET is fairly straightforward in terms of indications and billing. In contrast, non-Medicare payers often set their own guidelines. Some managed-care plans have separate rules for Medicare and non-Medicare patients.

"You often find yourself working through a matrix of payment policies," Halliday said. "Reimbursement can change by plan and by disease category. The PET community has always focused on Medicare, but that's just the tip of the iceberg these days. You have to know what the other payers are doing, and you need to provide the referring physicians with a simple reference guide to make sure they know what is indicated and appropriate and reimbursable."

Even if a plan covers a PET/CT study, the payment may be set too low to make economic sense for the imaging facility, she said. Referring physicians and providers need to know each payer's rules from the outset, because trying to negotiate a higher payment after the fact or appealing a denial that is backed up by a payer's published guidelines often proves futile.

Medicare guidelines for PET also include some reimbursement curveballs that can lead to nonpayment if the referring physicians and providers don't have a thorough understanding of the rules, said Michael Viguet, manager of the PET imaging center at

the University of Texas Southwestern Medical Center. Medicare has approved PET indications for non-small cell lung cancer, for example, but not small-cell cancer. Reimbursement for evaluation of solitary pulmonary nodules is restricted to a single nodule between 1 cm and 4 cm. Use of PET for lung cancer diagnosis is limited to specific situations, such as a patient who cannot undergo biopsy.

Similarly, Medicare coverage of PET imaging for breast cancer includes staging and restaging of metastatic disease and monitoring response to therapy. Breast cancer screening and diagnosis are not covered. If a referring physician's request for a PET/CT scan merely states "breast cancer" or "breast pain," the study will not be reimbursed.

In contrast to Medicare's rigid reimbursement policies, managed-care organizations and other insurers sometimes exhibit flexibility in their attitudes toward reimbursement of PET studies, Viguet said. At his center, private payers occasionally agree to cover studies related to ovarian cancer, testicular cancer, and other types of cancer that are not currently covered by Medicare. The degree of flexibility varies from one insurer to another, and precertification should be secured before the patient arrives for the study.

The nuances, variability, and negotiability of reimbursement rules make the "front-end" people at a PET imaging facility most valuable. They have to sift through all this information and determine whether the request is for an appropriate indication, whether the coding is correct, and whether the center can do the study for what the payer is paying, Halliday said.

"In many instances, the same people will be responsible for communicating this information to the offices of the referring physicians. Having good people in these positions is an absolute necessity," she said.

CUSTOMER SERVICE

The overlap of marketing and education continues after a patient undergoes a PET/CT exam, and an element of customer service comes into play. Follow-up after a study is key to repeat business. At one start-up site, Halliday found few multiple referrals among the first 250 physicians who referred patients to the facility. That observation led to a computerized prompting system that ensured follow-up phone calls to referring physicians to inquire about their impressions of the imaging facility and whether the study was helpful to patient management.

Follow-up with referring physicians revealed that physicians have distinct informational needs that they expect PET to address. An imaging facility's request form for a PET/CT study should capture those expectations in a specific, unambiguous manner.

"You need to know why the scan is being performed and what diagnostic question the physician is trying to answer. Those are the two questions that have to be covered on the request form," Halliday said.

A report should not leave room for ambiguity, Fagien said. He cited a hypothetical study of a focal, FDG-avid lesion in the colon. If the report does not go beyond that simple description of the findings, the study did not address the referring physician's needs. Instead, the report should describe the lesion, discuss what the study might indicate (normal physiologic uptake versus a polyp), and perhaps suggest

a possible follow-up action, such as colonoscopy, if warranted.

"Physicians don't like to be hung out to dry," he said. "They want to know what to do with a report. If the referring doctor asks what to do with a report, then we have failed as radiologists."

Communication between the physician who interprets a scan and the referring physician is the single most important marketing tool for a PET/CT facility, said Dr. Todd Blodgett, a radiologist at the University of Pittsburgh Medical Center. Such communication represents an important mode of education and perhaps the biggest contribution toward repeat referrals. No amount of advertising and promotion can overcome the impact of a single unsatisfactory experience with PET/CT, which might form the sole basis for a referring physician's conclusions and attitude toward the technology. On the other hand, a personal phone call from an interpreting radiologist or nuclear medicine physician can educate a referring physician about the strengths and limitations of the technology and encourage future referrals.

The future looks bright for PET/CT, and the present clinical and economic environment might offer the best time to take the plunge.

"I think reimbursement levels for PET are about as good as they will ever be," Spiegler said. "I believe this imaging modality will become increasingly important over the next 25 to 30 years, and I plan to ride it right into retirement."

Fagien is even more bullish about the future of PET/CT and fusion imaging in general. The future of imaging will involve using data from CT, MR, and PET to narrow the differential diagnosis and provide a meaningful impression in a report that helps the referring physician, he said.

"The question comes up whether we really need a CT to read a PET. I think that's an absurd question. Of course we need CT to read PET. Without the anatomic data, the metabolic data is less meaningful. In the future, we won't be asking whether we need CT to read PET. Instead, we will be asking how the heck did we ever read CT without PET," Fagien said.

MR. BANKHEAD is a freelance writer in Houston.