Radiologists: Stay competitive by defining your value proposition

In today's healthcare environment, in order to survive in an increasingly competitive market, radiologists are under more pressure to demonstrate that what they do is valuable.

In an article in the March issue of the Journal of the American College of Radiology, Dieter Enzmann, M.D., of the University of California, Los Angeles, and Donald Schorner, M.D., of Banner MD Anderson Cancer Center in Gilbert, Ariz., argue that in order to best position themselves competitively, radiology practices need to define the dominant value propositions that support their business models.

According to Enzmann and Schorner, there are three main value propositions--the low-cost provider, the product leader, and the customer intimacy models. "Each ... has been a valid market position," Enzmann and Schorner write, "but each demands specific capabilities and trade-offs."

The low-cost provider value model translates into low costs for acceptable quality. "Wal-Mart's and McDonald's are excellent examples of low-cost, operational excellence," the authors write. How does such a value proposition translate to radiology practices? They would reduce costs by limiting the number of radiologists on staff, as well as how much they are paid, while employing, if practicable, nurse practitioners, physician assistants, radiology assistants, or radiology practitioner assistants.

Investments in mobile and communication infrastructure would be made to cut costs and improve productivity. The use of teleradiology would be common and there would be increased investment in computer-aided diagnosis. "This value position is attainable by groups adding a robust teleradiology value chain or by teleradiology companies integrating downstream into hospitals," Enzmann and Schorner write. The trade-off is that teleradiology reduces the interaction with referring physicians and patients, "increasing the risk for commoditization."

Apple is the prime example of the second model: the product leader value model--a company whose product commands a premium price for its creativity, innovation and performance. The authors point out that diagnostic radiology became a service leader toward the end of the 20th century "by riding multiple waves of technology breakthroughs in CT, MR, PET, and ultrasound." But now that these advanced technologies have become standard services, in order to maintain or reestablish their positions as product and service leaders, radiology will have to become an information business that can help referring physicians and patients become better medical decision makers.

The customer intimacy value model, meanwhile is aimed, not at a general market or market segment, but at specific customers/patients.

"This model seems suited for large multispecialty radiology groups, academic or private," write Enzmann and Schorner. "It asks radiology to gain detailed understanding of referring physicians' or patients' medical and economic needs, to provide solutions that yield value beyond individual reports or procedures."

Enzmann and Schorner see a future in which value is rewarded, and consequently, no matter what kind of environment radiologists are operating in--fee-for-service, bundled, or ACO--they'll have to deliver value.

"To ensure fair and effective participation," they write. "radiology should follow Wayne Gretzky's advice and skate to where the puck, the value position, will be."

To learn more:
- see the article in the Journal of the American College of Radiology

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