[Radiology in managed care environment: opportunities for cost savings in an HMO]

A large regional health plan in the Northeastern United States noted that its radiology costs were increasing more than it anticipated in its pricing, and noted further that other similar health plans in markets with high managed care penetration had significantly lower expenses for radiology services. This study describes the potential areas of improvement and managed care techniques that were implemented to reduce costs and reform processes.

We performed an in-depth analysis of financial data, claims logic, contracting with provider units and conducted interviews with employees, to identify potential areas of improvement and cost reduction. A detailed market analysis of the environment, competitors and vendors was accompanied by extensive literature, Internet and Medline search for comparable projects. All data were docu-mented in Microsoft Excel(R) and analyzed by non-parametric tests using SPSS(R) 8.0 (Statistical Package for the Social Sciences) for Windows(R).

The main factors driving the cost increases in radiology were divided into those internal or external to the HMO. Among the internal factors, the claims logic was allowing overpayment due to limitations of the IT system. Risk arrangements between insurer and provider units (PU) as well as the extent of provider unit management and administration showed a significant correlation with financial performance in terms of variance from budget. Among the external factors, shared risk arrangements between HMO and provider unit were associated with more efficient radiology utilization and overall improvement in financial performance. PU with full-time management had significantly less variance from their budget than those without. Finally, physicians with imaging equipment in their offices ordered up to 4 to 5 times more imaging procedures than physicians who did not perform imaging studies themselves.

We identified initiatives with estimated potential savings of approximately $ 5.5 million. Some of these initiatives are similar to the reforms to reduce cost and improve quality that are already implemented or proposed within the German healthcare system.