costs Archives - RadsResident

In an environment where hospitals’ profit margins are becoming tighter, what is the most likely area where they can cut costs? Well, it’s undoubtedly not surgery or nursing. That would look not very good for the hospital and drive competitors elsewhere. Could it be hospital beds? No, because that would lead to direct patient complaints and less capacity. Is it the high-tech equipment and hardware? Not usually, because that is a great marketing tool to get doctors to refer patients your way. Instead, unfortunately, the places where a hospital can cut costs are usually the behind-the-scenes. And one of these areas on the chopping block is radiology IT support.

Who cares if the radiologists if a radiologist’s job is more demanding? It doesn’t affect the hospital’s bottom line, right? Does it matter if the radiologists must stay an hour later to deal with PACS crashes, firewall issues, and incompatibility with outside studies? The radiologists need to get their job done anyway for patient care. Well, that philosophy has become commonplace in the world of hospital savings.

In reality, the costs of not supporting a hospital’s information technology are enormous. It decreases efficiency for doctors, patient outcomes, and staff morale. And hospitals certainly do get complaints, albeit on the back end. So, what are the tangible results of having poor IT support, and why should hospitals treat this issue as mission-critical for the system. Let’s delve into the reasons why.

Radiology IT Support Allows For Quicker Turn Around Time

Turnaround time is one of those statistics that hospitals hang their hats on to show that they are efficient. And what is one of the most significant factors in a delayed turnaround time? Well, it’s the radiology study. The time it takes for the patient to have dictated images is widely dependent on having a constantly functioning PACS and dictation system. Patients will have to stick around longer without a functioning IT support system, a money-losing proposition.

Better Patient Treatment

Not having IT support may mean malfunctioning networks and servers for many reasons (decreased bandwidth, storage capacity, etc.). Often, this process results in loss of access to priors. And guess what? As I said in my previous rant on priors, this leads to poorer patient care because of decreased specificity and sensitivity. Or, it can even lead to disastrous outcomes if you can’t process studies like CTAs of the brain. And these are just some horrible outcomes of many!

Increases Morale (Waiting on The Phone)

Want to keep your doctors within the hospital system in a competitive market. Then be sure to support IT. Radiologists, physicians, and nurses are more apt to leave when they notice a constant breakdown of the electronic health records and PACS systems. These nagging factors are a continuous source of reported physician burnout (among others). We should be trying to maintain our physicians, not creating a revolving door!

Increasing Patient Satisfaction Scores

One of those other factors that hospitals love to tout is their patient satisfaction surveys. Hospitals regularly feature positive survey outcomes on billboards and commercials to show that they are competent institutions. Well, guess what? Those scores will not cut the mustard if patients have to stay in-house because no one can access the electronic records!

Saves Hospital Costs

The costs of malfunctioning electronic support systems are substantial. Imagine having to keep your patient for extra days in the department because a lack of support prevents patient discharge. Based on this issue alone, costs skyrocket to thousands of dollars per day for a hospital stay. And this doesn’t account for all the other expenses that a poorly served electronic health records and PACs system entail!

Radiology IT Support Is Not An Option That Hospitals Can Skip!

Although many hospitals would like to skip this “expensive” service to save money, you need the full-time support of a dedicated IT team for better patient care, decreasing hospital costs, and increasing the system’s efficiency. Although not evident on the front end, the downstream effects can be enormous. By not supporting IT, hospitals are merely shooting themselves in the foot. It’s not an option that hospitals can skip!

Ever get a question that goes something like this, “Why don’t you start up an imaging center?” Well, in the land of pixie dust and chocolate-covered mountains, that may work. However, in an expensive world with loads of student debt, only the rare physician can gather enough cash to begin a new radiology practice. Additionally, who is to say that you will have enough patients in your location to survive? In any case, that got me wondering how much does it take to create an imaging center startup? So guess what? That is my insane plan for today. We will calculate the annual capital expenses to start/run your practice. So, at least, you will have a response that you can give to those naive friends and relatives of yours!

First, let’s sort out what kind of imaging center about which we are talking. Well, I am thinking about the average Joe diagnostic center with one of each piece of equipment. And let’s skip interventional and nuclear medicine for the sake of simplicity. Perhaps, this center will have an MRI, a CT scanner, an ultrasound unit, a mammogram tomography unit, and an x-ray apparatus. We will also assume that you locate your practice in an average part of the country with mediocre building costs. Let us say that we will amortize the sizeable capital-intensive equipment for over ten years. Finally, we will amortize the building for thirty years.

Most importantly, these calculations are made on “the back of the hand,” meaning that I would not rely on them to create your imaging center. Numbers can vary widely. Nevertheless, I am doing this so that you can get a sense of the costs involved.

What are the fixed capital costs for an imaging center?

Building

So, we will begin with fixed expenses. What are the most considerable fixed costs of an imaging center? Of course, these include the building that houses the equipment and staff and the imaging machines that make up the imaging center. Concerning the structure, we will assume that it is around 5000 square feet. So, how much is it annually to pay for an average space measuring 5000 square feet? It turns out I was able to find the average cost per square foot of retail and industrial space throughout the country. Based on the realtors website chart, the average industrial area would measure 6.92 per square foot, and the average retail space would be 17.12 per square foot. The building we would need could be in an industrial space but would need to be accessible to customers, so let’s make our cost 10 dollars per square foot or 50,000 dollars per year.

Not only do we need to pay for the building, but we also need to renovate the building before beginning our center. Designing the construction would involve spending on an architect to create the renovations—figure on another 20% of the building’s cost or 100,000 dollars. Let’s amortize over ten years and say that it will cost around an additional 12,000 dollars per year.

Then, of course, we need to pay property taxes. Let’s figure that the number is around 2% of the price per year or 10,000 dollars. Also, we need to insure the building and business. Let’s tack on another 10,000 for good measure.

Moreover, finally, the structure and practice need to be certified and inspected. So, let’s add another 10,000 dollars.

Total= 82,000 dollars per year

Machines/Service Contracts

How much is an MRI? Well, the answer to that is that it varies widely. However, we are talking about the average MRI, maybe even used. So, based upon this MRI price guide, let’s say that it costs around 200,000 dollars. That would amount to a monthly payment of about 2,000 dollars or 24,000 dollars per year. You will also need a service contract to maintain the system. That would run another 100,000 dollars.

Next, let’s take the price of an average CT scanner. Based on information on the lbnmedical website, it would cost around 100,000 euros or 116,000 dollars for a typical CT scanner. Again, amortized over ten years, we are talking approximately 1,200 dollars per month or 14,000 dollars per year. However, that is not the only significant expense for the MRI and CT scanner. You need a service contract. That service contract goes for around another 100,000 dollars per year per machine based on the blockimaging website.

Next, let’s look into the price of an average mammography unit. That would cost somewhere in the realm of 250,000 dollars (or 30,000 dollars per year) if we use the data from tractmanager with a service contract costing around 50,000 dollars per year.

Also, we need an x-ray unit. That would be around 100,000 for a digital machine, according to the blockimaging website(or 12,000 dollars per year). Finally, let’s say service would cost another 50,000 dollars per year.

Total= 380,000 dollars per year

PACs system/RIS

Naturally, our center will need an information system capable of handling all the studies that we are performing. That does not come for free! So, how much does that cost? For an average “smallish” imaging center like ours, the website purview.net states it costs around 1500 dollars a month or 18,000 dollars per year for a cloud-based solution, including IT. Not so bad, right? Well, you also need an information system management package to schedule, manage dictations, and more. That would run you another 450 dollars per month per user, according to this website. We will assume a couple of users. It would cost around 900 dollars per month for 12 months or 11,000 dollars per year.

Total= 29,000 dollars per year

Furniture/Room Items

Furnishings can be a hard one to estimate. Moreover, it can be more costly than you might think for desks and chairs, as well as patient tables, and more. Unfortunately, I cannot perform an exact calculation. However, I will estimate for the facility that it would cost around a few hundred thousand dollars. If we were to amortize that over ten years, we would say that it would cost about 24,000 dollars per year.

Total= 24,000 dollars per year

Sum Total For Capital Expenditures= 515,000 dollars per year

What are the annual recurrent costs for an imaging center?

Workforce

The annual recurrent costs include all the people and things you need to run a practice. Let’s start with the workforce. Most importantly, we will begin with the behemoth expense in the room, the radiologist. What is the average annual package for a radiologist? According to salary.com, that would be around 400,000 dollars, of course not including extras such as malpractice and more benefits. Let’s say for argument sake that would end up at approximately 500,000 dollars.

You also need technologists to run the show. So, we will assume that you have a moderately busy practice. Therefore, you will need an ultrasound tech, an MRI tech, a mammogram tech, and a CT/x-ray tech. According to salary.com, this would run around 60,000 dollars per year per technologist. For this imaging center, that would total about 240,000 dollars.

We would also need a medical physicist to make sure our practice is compliant with all regulations. The mean medical physicist salary is around 183,000 dollars per year. However, we don’t need a full-time physicist. Let’s say we were able to share a physicist among several other practices. So, let’s say that it would cost 183,000/4 or around 45,000 dollars per year.

Importantly, you need to hire secretaries to run the front desk. Let’s take a couple of secretaries for our practice at the cost of 40,000 each per year, according to salary.com. That would total to 80,000 dollars per year.

Also, you may need a business/marketing manager for the site to run the show. That does not come cheap as well. The cost would run around 100,000 dollars per year, according to salary.com.

And finally, you need someone to clean the facility. Perhaps, a janitor? Let’s say another 25,000 dollars per year.

Total= 990,000 dollars

Billing And Benefits Management

Nowadays, you also need an expert that helps with billing since it is complicated and takes much time to learn. Besides, it is critical for maximizing revenue for the practice as well as for avoiding Medicare fraud. Often, these same “experts” also help out with payroll, insurance, and more. Most work on a percentage of the gross revenue for the practice. We will say for the sake of argument around 5 percent. For an average facility, we will say total revenues are around 3,000,000 dollars. So, a billing/benefits management for this site would run approximately 150,000 dollars per year.

Total= 150,000 dollars

Other Costs

Of course, you also have to pay for heat, hot water, and electricity. These expenses do not come cheap, especially when you are running all this equipment. I will estimate a lump sum of around a couple of thousand per month or 24,000 dollars per year.

Moreover, it would help if you had miscellaneous recurrent expenses like toilet paper, contrast media, intravenous supplies, and more. Let’s figure on another 35,000.

Total=59,000 dollars

Sum Total For Recurrent Costs= 1,199,000 dollars/year

Let’s Add It All Up For The Imaging Center- Don’t Shoot The Messenger!

So, there we have it. I have created an approximation of most of the expenses that you might have if you were to start your imaging center. Of course, if you decide to plop the imaging center in the middle of Manhattan or San Francisco, my estimated costs would be a lot smaller than the real total costs. (You know what they say- location, location, location!) Alternatively, if you stationed the imaging center in the middle of nowhere or an undesirable area, the costs would likely be less. However, this may be somewhat closer to the actual expenses for an average place in the United States. So, drum roll, please… Here is the final summary total of our costs-

Building- 82,000 dollars per year

Machines/Service Contracts- 380,000 dollars per year

PACs System/RIS- 29,000 dollars per year

Furniture/Room Items- 24,000 dollars per year

Workforce- 990,000 dollars per year

Billing and Benefits Management- 150,000 dollars per year

Other Costs- 59,000 dollars per year

Final Total= 1,714,000 dollars/year

Think you can afford that, starting as a new radiologist? I bet for most of you out there, probably not. Of course, you may be able to obtain financing. However, for the majority of us without the experience, it is a tough nut to crack.

So, there you have it. You now have an answer for your naive family members when you get popped the question, “Why don’t you start an imaging center?” Until next time, signing off…

For those of you interested in how imaging centers market themselves online, especially during the time of Covid-19, take a look at some of these tips from tomatoes.digital below

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Hospitals Need to Invest More In Radiology IT Support!