Radiology and the Hospital Stipend

By: Brian Callahan, MAcc, CPA,  Practice Manager, MSN Healthcare Solutions and
Pat Kroken, FACMPE, CRA, FRBMA, MSN Director of Education and Corporate Communications

The president of Flowing River Radiology was discouraged but still hoping to reach a new agreement with the hospital as renewal talks for their professional services agreement (PSA) progressed. The group’s shareholder meeting last night confirmed the realities of their situation. Recruitment efforts with radiology residents and fellows had been unsuccessful in the highly competitive market and in six months one of the senior physicians in the practice would retire. The group had dealt with downward reimbursement pressures by increasing workloads in an attempt to maintain salaries and that now presented a huge work/life obstacle, impacting both physician recruitment and retention. Shareholders accepted a salary reduction three years ago with the idea it would be temporary. It hasn’t been temporary. At last night’s meeting the shareholders voted to ask the hospital for financial support. The president was now imagining how that conversation might go and mulling over how to ask for a stipend. 

Flowing River Radiology is a fictitious practice but the situation is very real for many groups across the country.

The state of radiology

Hospital-based radiology has functioned in a changing and pressure-filled business environment for more than a decade. Outsourced teleradiology offered a call schedule pressure release valve, radiologists used technology to increase productivity and squeezed excess fat out of operational support costs. For years we heard of the impending physician shortage, increased burnout and disenchantment. The shortage is here—and very real.

The result? Groups are dealing with significant shifts in workforce dynamics and market pressures and one of the most pressing challenges facing the field today is the long-term shortage of radiologists, creating a hyper-competitive environment for recruiting and retaining physicians. 

This has left radiology practices grappling with inadequate staffing levels while dealing with soaring workloads and surging patient volumes. Practices are under immense pressure to deliver high-quality care while contending with diminishing reimbursement rates and escalating operational costs. 

Once efforts to optimize productivity through the use of technology such as artificial intelligence and workflow optimization tools have been implemented, is the group out of options? We know hospital-based groups have negotiated financial support through stipends so is it realistic for Flowing River Radiology to seek that route?

Nicole Palmer, CPA, FRBMA and MSN Vice President of Practice Management and Consulting Services, knows the terrain and has assisted numerous radiology practices as they sought financial support.  She cautions against asking for a stipend without sufficient preparation, stating, “This ask can backfire if done poorly, with the wrong timing and/or without the correct parties having well-organized and thought-out arguments supporting the need.”

The relationship of the players

Ms. Palmer notes, “It is almost impossible to get a stipend unless you already have a strong relationship with the hospital.”  That means one of the first steps in preparation is to conduct an honest gut check regarding this critical relationship. 

Unfortunately, over the years many radiology groups have been characterized as only showing up to interact with hospital leadership during planning meetings for capital equipment acquisition.  On top of that, hospital administrators have complained that radiologists are often resistant to change, unwilling to help market new services or assist with Joint Commission priorities and react adversely to dealing with problem physicians and human resource issues.

Many issues cannot be corrected overnight but if these describe your practice, there will certainly be opportunities to exhibit a more collaborative relationship.  At the same time, requests for financial assistance need to be viewed from the hospital’s perspective.  How will the request assist the hospital delivery of services?

Should the group terminate (or threaten to terminate) its professional services agreement (PSA) as a means to trigger negotiations for financial support?  Ms. Palmer gives that strategy a resounding “No.” And she adds such a move forces the hospital to immediately begin identifying alternative providers so that step should be avoided until all alternative solutions have been discussed at length and ultimately determined unsatisfactory for both parties.  She instead says, “Allow the hospital the opportunity to collaborate with you to solve the problem while reassuring them the group wants to continue serving their community.”

Plans for requests should also consider the hospital’s budgeting cycle since that entity will need to plan for the group’s needs to order to allocate funds. This recognizes the fact discretionary/emergency funds may be limited and there will be numerous competing demands for that money. In other words, ideally a request for assistance will not happen at the last minute.

Preparing the case for assistance

Hospital administrators are experienced negotiators and will want more than a “we need help” statement in order to loosen the purse strings. Ms. Palmer advises, “Begin preparation by prioritizing pain points for the group. These might include costs of recruiting, teleradiology costs that exceed reimbursements, providing coverage at remote locations and challenges related to maintaining sufficient radiologist staffing.”

The group needs to realize their request for financial assistance may require sharing financial and operational information with the hospital, perhaps more than they are comfortable sharing under normal circumstances. While this might indeed be uncomfortable, it is a step to be taken seriously because it provides a baseline for establishing fair market value (FMV) – which will often be a requirement of the hospital. Ms. Palmer recommends hiring an experienced valuation firm, ideally one that is jointly chosen.  In this instance, it is fair to request both parties share in the cost. It is also possible that the hospital may contract with the valuation firm but if the result is not satisfactory to the radiology group, the group can always contract with another firm to dispute the hospital’s valuation.

Why is this necessary? It will establish an objective baseline source for the negotiation regarding market salaries, productivity data, modalities and payor mix. It should be noted that available survey data will reflect lagging information so may already be outdated in terms of what is happening in the market and that fact can be addressed in both the group’s proposal and subsequent discussions.

Developing the proposal

Ms. Palmer advised starting with a description of the group’s situation, which could include any of the following applicable to the practice:

  • Coverage and/or subspecialty requirements outlined in the PSA
  • Steps the group has taken to optimize billing and collections and to control expenses
  • Issues related to physician recruitment and retention (difficulty of recruiting to a specific geographic area, workloads or coverage demands, specific difficulties hiring for certain modalities such as mammography, for example)
  • Staffing limitations, which may necessitate use of a teleradiology company for nighthawk coverage or an expansion of the hours the teleradiology firm is currently covering

Ms. Palmer stated she has not yet been successful negotiating a stipend for unprofitable dedicated interventional radiology teams so groups should keep in mind that this would probably be a difficult first pass request. The exception could involve a coverage requirement in the PSA when there is insufficient patient volume to support the IR program.

What have hospital stipends covered?

Where have hospital-based radiology practices successfully received stipend support?  Ms. Palmer stated her practice management group has successfully assisted practices to receive stipends or get other types of support from hospitals for:

  • Salary guarantees and/or payment per work RVU guarantees
  • Physician recruitment support including recruiter fees, paying sign-on bonuses, salary supplemental support and having the hospital recruitment team help directly with the recruitment process
  • Hospital payment of a retention “stay” bonus for physicians who stay with the group for a designated period of time (typically 1-2 years)
  • Hospital assistance with the purchase and implementation of Artificial Intelligence (AI) software to increase physician productivity
  • Purchase and implementation of software to assist with workload balancing and direction of work. This functionality is often already available on the hospital PACs system but just not turned on.
  • Assistance with nighthawk company fees
  • Assistance decreasing emergency department CT usage when not medically necessary
  • Reduction of on-site coverage and allowing for remote coverage, in some cases paying for the cost of remote coverage set-up
  • Payment for locum tenens support
  • Payment for interventional radiology call
  • Payment for stroke call

Ms. Palmer stated a common theme among successful discussions is the development of a compelling argument and an organized approach. A compelling argument has often involved the fact the group cannot afford to lose additional radiologists and still comply with required coverage requirements. 

The group can present its need to be compensated at fair market value in order to anchor the group to the hospital for the long term and this can be presented as a desire to ensure a long-term professional relationship. 

Setting expectations

Requesting hospital financial support through a stipend is not a simple process, nor does it happen quickly unless the radiology group can no longer support required services provided to the hospital, which in most cases will speed up the process. It’s also possible the hospital may not have the means to fully fund the request within the group’s timeframe. In that instance, it will be important to be open to alternative or interim solutions. 

“Hospitals have been receptive to requests for assistance,” says Ms. Palmer, who recommends approaching the issue with optimism. “These are solvable problems,” she continues. “Listen to others, work together as a group and recognize yesterday’s solutions may not be adequate for today’s challenges.”

Nicole Palmer, CPA, FRBMA and MSN Vice President of Practice Management and Consulting Services

Nicole Palmer

CPA, FRBMA

MSN Vice President of Practice Management and Consulting Services

Nicole provides client financial and practice management services and also manages the MSN Consulting Division.  Nicole has worked specifically with radiology practices for more than 31 years to increase financial management effectiveness as well as managing billing operations.  In the last 15 years, she has focused on strategic planning, consolidation design and facilitation, implementing several large divisional radiology practice mergers.  Nicole is an active member of the Radiology Business Management Association (RBMA) and has served as the Chairman of the Data Reporting and Collection Committee and as President of the Northeast Chapter.  She is currently the Chair of the SEAC of the RBMA, the steering committee ultimately in charge of all RBMA educational offerings and is a Board Member of the RBMA Northeast Chapter.

Brian Callahan

Brian Callahan

MAcc, CPA

MSN Practice Manager

Brian is an MSN Practice Manager and seasoned professional with nearly three decades of experience dedicated to serving healthcare providers. His extensive career spans both public accounting and various practice management roles establishing him as a trusted advisor in the financial and operational aspects of healthcare management. Throughout his career, Brian has leveraged his accounting expertise to support healthcare organizations in optimizing their financial performance and operational efficiency. His work in public accounting involved auditing and consulting for healthcare providers, where he gained in-depth knowledge of the industry’s financial intricacies and regulatory requirements. Transitioning into practice management roles, he has applied this knowledge to improve the financial health and operational effectiveness of radiology practices.

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