It is not news to anyone that we are going through some very difficult economic times. Radiology groups are feeling the economic squeeze just like other small businesses.
The costs of operating a radiology practice are increasing at the same time that radiology groups face dwindling possibilities for increasing their revenues. Decreased reimbursement and fewer avenues to participate in new technical component ventures characterize the current radiology market.
In these tough times, those radiology groups that are hospitalbased are focusing on their important strategic relationships with their hospitals. The professional services agreement that a radiology group has with its principal hospital or hospitals, consequently, has become more important than ever.
Scores of important business and legal issues confront a radiology group as it begins negotiating a new agreement with its hospital. But, for my money, there are three core issues that make for a successful— or less than successful—radiology hospital contract: the scope of exclusivity, the pervasiveness of any noncompete agreements, and the presence or abscence of opportunity for compensation beyond payment for professional services.
EROSION OF EXCLUSIVITY
At one time in my career, exclusivity in most hospital contracts was meaningful. Chatter about turf erosion has always existed, but in the last five years, I've seen a cascading erosion of exclusivity.
The typical hospital administrator's attitude is, “Sure, this contract is exclusive. No other radiologists can apply for privileges to do what you do, can they?” It's an understatement to say that administrators are less willing to resist giving radiology privileges to cardiologists, oncologists, vascular surgeons, and numerous other nonradiologists who can bring their patients to the hospital and fill its beds.
