Due Diligence for Practice-Hospital Clinical Integration

June 7, 2011

The overall political and social pressure to contain healthcare spending will heighten the value and requirement for clinical integration between physicians and hospitals. At a high level there are essentially two considerations for hospitals and radiology groups.

The overall political and social pressure to contain healthcare spending will heighten the value and requirement for clinical integration between physicians and hospitals. Accordingly, the long term viability of both parties will be largely dependent on their ability to strategically align objectives and develop joint-business models capable of demonstrating cost effectiveness and quality.

At a high level there are essentially two considerations for hospitals and radiology groups. The first issue is structure: How do both parties transact with each other from a business and contractual perspective? The second issue is mechanics: What systems are developed and deployed that facilitate cost effective and quality care?

Both issues present significant complexities. The overriding challenge of macroeconomics is a powerful force that requires a complete dissection in order to design the right structure. For example, initiatives to reduce imaging utilization for the emergency room and inpatient populations can have a positive impact on a hospitals bottom line. However, the effort may appear detrimental to radiologists who are struggling to preserve income in a volume driven reimbursement environment. Despite what appears to be a counterproductive initiative, setting up the right structure and implementing an effective system to address and manage the situation can result in the proverbial "win-win".

The issue of mechanics will be addressed in a later blog.

As healthcare delivery evolves towards the realm of "accountable care" hospitals and radiology groups have a significant opportunity to take a leading role. Although the due diligence process depicted above requires a significant investment the results can be extremely powerful.

Timothy Stampp is Chief of Corporate Development at Medical Imaging Specialists. Timothy has 17 years of healthcare management experience and extensive domain expertise in dealing with the complex business issues surrounding the field of radiology in both the free standing and hospital based settings. Reach Tim at: stampp@medicalimagingspecialists.com