A recent whitepaper by the Economist Intelligence Unit deems value in the “emerging new currency within health markets.” Since medical imaging represents a fairly large segment of the broader healthcare market and certainly one of the most capital-intensive — even if dwarfed in size by other segments such as its pharmaceutical counterpart — this farsighted statement begs the question, “Would saying value has already emerged as a major new currency within the U.S. medical imaging market be too much of an overstatement?”
Value-based Healthcare Trickles Down to Imaging
The concept of value-based imaging is certainly not new, but it has garnered considerable attention from the medical imaging community the last few years. Confined until recently to the realm of thought leaders at luminary healthcare and advocacy organizations, including the brains behind the Imaging 3.0 initiative, the concept has gained such momentum lately, it is now giving food for thought to every imaging professional in the field.
Imaging professionals taking a minute to reflect on their own day-to-day profession or the discipline in general would likely question whether imaging, as they’ve practiced it until now, is indeed what is being referred to as “volume-based imaging.” Additionally, they must be questioning how urgent it really is for them to “be prepared” for the next phase, the era of “value-based imaging,” which is slowly but surely coming to fruition.
Value Continues to Gain Ground
There is no question that “emerging” is the right word to currently describe the rise of value in the mindset of the imaging community as a whole. The more important question, however, is gauging the emergence of value as a major “currency” for the imaging market — meaning a significant medium of exchange between the various actors along the medical imaging value chain — one that actually fuels the monetary fluxes throughout the system across its various constituents, including healthcare providers, imaging facilities (the technical component), imaging providers (the professional component), technology suppliers and payers.
The statement by the Economist Intelligence Unit pertains to healthcare markets globally, but nowhere is it more applicable than it is to the U.S. market. It is actually hard to think of any other country where the emergence of value as a major new currency would drive as fundamental of a change and have as profound of an impact on the imaging market as it would in the U.S. Value-based imaging essentially breaks away with the “do more, earn more” mentality aligning with American work culture and underlying volume-based imaging. It is, in many aspects, at the antipodes of the reality of U.S. imaging today.
Defensive medicine is one such reality that still characterizes the practice of U.S. healthcare today. Having to strive in a highly litigious environment continues to lead physicians to aggressively order high-cost imaging exams with little consideration for the “big picture” of patient care — a factor that has provided a fertile ground for an over-utilization of imaging in U.S. healthcare.
Payers Pushing the Envelope
For payers, both public and private, the main priority has been and remains to be able to shift part of the financial risk associated with over-utilization of imaging. To this aim, the Centers for Medicare and Medicaid Services will likely continue to employ the brute-force approach of slashing reimbursement rates for advanced imaging. However, today, other utilization management approaches stand a higher chance than ever to be relied on instead.
While payers have relied almost exclusively on radiology benefit management partners to act as their “gatekeepers” for advanced imaging, they are now seriously considering alternative models. One such model poised to gain ground is basing prior authorization on appropriateness criteria such as the evidence-based guidelines developed by the American College of Radiology (ACR) Select or the American College of Cardiology (ACC).
At the same time, payers are experimenting with their partners in more than 600 active U.S. accountable care organizations today with pay-for-performance and bundled reimbursement models that would include imaging, lab tests and any other procedure that is part of a given care pathway for a particular condition. The plan is to restructure their plans and policies such that they can base their coverage terms and rates on the clinical value and patient outcomes of complete pathways — that is, regardless of the volume of imaging procedures performed as part of the pathways. If this transition takes place on a wide scale, it will put an end to the traditional for-service payment model, which has worked hand-in-hand with volume-based imaging to keep healthcare spending and market revenues growing so healthily in medical imaging over the last several decades.
The Imaging Community Steps Up to Advocate Value
Sensing this climate change forthcoming, but perhaps not so early on, the imaging community has been fairly proactive in weathering the impact of these changes. The campaigns encouraging radiologists to be more engaging with patients and more interactive with their referring physicians as a means to extend their value within the healthcare service that they take part in illustrate these proactive efforts. The numerous dose reduction initiatives, such as Image Gently, Image Wisely or ALARA, in addition to various provider- and vendor-driven efforts, and utilization management initiatives, such as Choosing Wisely, constitute other examples of the industry’s self-improvement efforts in recent years.
Another area imaging organizations have started to make long-needed advances to is imaging analytics. Working with value as a currency and outcomes as a target assumes the ability to measure value and outcomes through reliable, insightful and actionable measurements — a prerequisite to developing and maintaining value-based performance metrics. While most activity with imaging analytics today is still merely basic, descriptive operational, financial and clinical analytics, the collective efforts of innovator providers and a burgeoning vendor industry are gradually pushing toward more predictive, comparative and prescriptive analytics, which will be facilitated by the more robust healthcare IT ecosystem that will likely prevail post-Meaningful Use Stage 2.
Providers Forced Into Trading Value
As providers are challenged to operate with lower reimbursement levels for imaging procedures, they also are witnessing rather flat procedure volume growth, while their procedure mix continues to shift to “value” imaging procedures. This places imaging providers increasingly more at-risk, especially under the new emerging models. Soon, even more imaging procedures will not necessarily imply higher revenue for themselves. Their ongoing consolidation, deep reorganization and increasing involvement with ACOs and population health management reflect the vast transformation the changing tides have brought in the imaging provider landscape.
In order to succeed in trading with the value currency, imaging providers will need more efficient means to measure and demonstrate the value of imaging service lines — compared to other imaging but also non-imaging alternatives that may compete with the imaging procedures along the different care pathways. The expected increase in the pool of insured patients and the ongoing focus on preventive and personalized care are generally favorable to imaging over the long term but require overcoming the shorter-term obstacles first before they can materialize a positive impact.
Vendors Left With No Choice but to Invest
Just like their customers, the imaging equipment manufacturers are having to adapt to operating at lower profit margins and work harder than ever before to counterweigh the downward pressure on margins. The effect is multi-faceted and fundamental for them as they start to realize the critical need to revisit their pricing and business models, and enable lower price points to refine their product portfolio and redesign their marketing strategies to focus on selling a complete value proposition rather than discrete products, and to refocus their research and development efforts to cater more adequately to the rising demand for value.
While value-based imaging and value purchasing do not necessarily equate to one another, so far the two have walked hand-in-hand in the U.S. market. This is clearly apparent with the main capital imaging equipment markets, computed tomography (CT) and magnetic resonance (MR) imaging systems, where much of the market activity remains centered on mid-range systems (e.g. 64-slice CT and 1.5-Tesla MR), while new premium segments are taking longer to develop and grow than they would in the past (e.g. new-generation CT and 3.0-Tesla MR).
Multidisciplinary, Shared-service Imaging to the Rescue
While imaging by non-radiologists continues to grow, outpacing growth in radiologist imaging, partnerships and coordination are also accelerating amongst multi-disciplinary teams involving imaging specialists. The “power of partnerships,” the theme of RSNA 2013, goes far beyond the clinical benefits of care coordination by various specialists. It holds the promise to uplift the medical imaging market into its next growth phase, where the healthcare enterprise is fully cognizant of the value proposition of its imaging component, and imaging is widely shared and wisely utilized as an enterprise resource.
The U.S. imaging market is known for providing one of the world’s widest access bases to advanced imaging equipment and clinical expertise. As such, if it succeeds in embracing value as an opportunity to trade with new currency, rather than a threat to its customary high-end profile, it will stand the greatest chance to maximize the value of imaging throughout the healthcare system.
Nadim Michel Daher is a principal analyst with Frost & Sullivan’s advanced medical technologies practice, specializing in medical imaging and imaging informatics. His knowledge base covers radiology and cardiology informatics and imaging equipment across modalities and information systems.
1 “Succeeding in a value-based environment,” The Economist Intelligence Unit Healthcare, pages.eiu.com/2014JanSucceedinginVBH.html, accessed May 1, 2014.
2 “Visualizing Imaging 3.0,” American College of Radiology, www.acr.org/Advocacy/Economics-Health-Policy/Imaging-3/Presentations/Ima..., accessed May 1, 2014.
3 “Accountable care and value-based imaging: Challenges and opportunities,” Rasu B. Shrestha, Applied Radiology, April 2013, www.appliedradiology.com/articles/accountable-care-and-value-based-imagi..., accessed May 1, 2014.