17 Aug The Difference Between Radiology Predators and Competitors

Recently, there has been a great deal of discussion about so-called “predatory” teleradiology companies.  This conversation turned ugly when an investor-backed teleradiology firm took over a large hospital contract in Toledo, OH, replacing a traditional radiology practice incumbent at the site.  Further discussion on the topic followed similar events from other large so-called  ”predatory” firms. Other smaller companies, including ONRAD, have been asked, approached, or even accepted a hospital based radiology contract.  The question that I have asked is, “Is the issue really that ALL teleradiology firms that take a hospital based contract are in some way evil and “predatory”, or is the term “predatory” being used too broadly?”

What is it the difference between a predator and a competitor?

Many articles have been written on this topic in recent months.  Certainly, it is well accepted that radiologists tend to join radiology groups to earn a living.  These radiology groups are both medical service providers, as well as businesses that must earn enough income, and maintain low enough costs, in order to be sustainable, and thus provide quality patient care over the long haul.  To do this, these groups typically contract with one or more hospitals, set up insurance provider agreements, and tend to market their services to local referring physicians to attract more patients to their hospitals and/or imaging centers.  If another radiology group nearby is doing the same, there may be competition over hospital contracts and the hospital will pick the best solution for them economically and medically, which usually includes a provider that can perform a larger array of services (perform more complex procedures or read more complex exams), and that will get along well with the medical staff.

It is well established that, with the advent of modern technology in healthcare IT systems, specifically the PACS system, images can be routed to the radiologists more efficiently than the radiologist being routed to the images, such that a radiology group can cover larger geographical areas than they used to.  Many radiology groups, under economic pressures spurted by healthcare cost cuts, such as the DRA, have begun marketing their “teleradiology” services to remote facilities.  Thus, the traditional radiology group has become a modern teleradiology provider.  Of course, this is a direct competition to the teleradiology groups that started years ago covering primarily night call from remote locations by moving images to the radiologists, and that have continued to learn and grow their capabilities in this market segment into the daytime and final reads market, driven by market forces.

Teleradiology companies have NOT complained that their customers, the radiology groups,  are now becoming their competitors in the teleradiology market.  However, as cuts force these traditionally radiology practices to move into the world of teleradiology, is has also forced teleradiology companies to move into the world of the traditional radiology companies, and yes, dare I say it, compete on some level for hospital based contracts.

I submit that the teleradiology company that wants to survive will CHOOSE NOT TO COMPETE with their own customers.  Thus, a company like ONRAD may take a hospital based contract in its own backyard (Southern California) where it has for many years provided radiology services, so long as they don’t compete for the contract with their customers.  Even more appealing are remote facilities where the teleradiology company can leverage their technology and experience moving images and reports efficiently in order to staff the facility more cost effectively, while still providing a wide array of services demanded by the local community of referrers.

As this trend continues, traditional radiology groups and modern teleradiology providers will likely consolidate into national or regional radiology services companies, leveraging strong local connections to maintain their hospital contracts, while providing a wider array of services more efficiently than either could on its own before.  Is it the teleradiology providers that are leading this charge as “predators”, or the traditional radiology groups that are competing, or perhaps both.  There will be partnerships formed, and healthy competition that will continue to drive this healthcare market, and over time, there will be little distinction between the local radiology group and the teleradiology provider.

These trends are driven by market forces.  While some complain that “investment backed” corporate entities are being hyper competitive for the wrong reasons (money instead of patient care), it should be noted that 1) not all radiology hybrid companies are the same or have the same motivations, and 2) money cannot be dis-entangled from patient care.  It is not only important to provide HIGH QUALITY patient care, but also to do it economically so that patients can afford it, and so that hospitals can afford to stay in business.  Healthcare cost is a huge topic this way, and I believe that only with technology driven efficiency, and a departure from the traditional to the modern, can radiology groups provide quality healthcare in a sustainable way moving into the future.