Reimbursement cuts mean challenges, opportunities for imaging centers

Reimbursement cuts will continue to challenge the medical imaging industry in 2014 (and beyond) and will impact all imaging centers--both freestanding and hospital-based--though some will be affected more than others depending on a variety of factors, according to an article in ImagingBiz.

This analysis is consistent with the predictions of other industry analysts as recently reported in FierceMedicalImaging, which observed that standalone imaging centers are likely to be hit hard by reimbursement cuts this year.

According to Aaron Murski, a partner with VMG Health--a firm that specializes in health care valuations and transaction advisory services--and Nick Tagliolo, a senior analyst at VMG, the current round of reimbursement cuts will probably affect smaller centers, or limited modality centers that aren't affiliated with a chain or aren't a hospital joint venture partners. But, what could threaten the viability of some centers may also result in opportunities for others. Reimbursement cuts are bound to result in the close of "marginally-profitable" imaging centers, the authors say, which means that there will be opportunities for their local competitors or other imaging operators to either acquire these centers at attractive prices or grab some of that imaging volume.

While Medicare Hospital Outpatient Prospective Payment System (HOPPS) rates are being aligned with Medicare Physician Fee Schedule rates, those imaging centers affiliated with hospitals still are getting significantly higher managed care and commercial reimbursement than freestanding centers. According to Murski and Taglioli, the difference in reimbursement rates could make freestanding imaging center acquisitions more attractive for hospitals.

Differences in market conditions will impact how well a particular imaging center fares in this environment, the authors write. Much will depend on local competition from freestanding and hospital imaging centers, as well as the local payment environment.

"Having an acute understanding of whwere an imaging center is positioned in a particular market should guide and inform an imaging center's strategic plan," Murski and Taglioli say.

Although some at-risk centers will be forced to close as a result of reimbursement challenges, freestanding centers will continue to survive since they continue to represent low-cost, good quality healthcare alternatives, the authors write. "The one thing that is more difficult to discern is how patients will be impacted as a result of these reimbursement cuts," they say.

To learn more:
- read the article in ImagingBiz

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