A model to determine payments associated with radiology procedures.

Area of Science:

• Health Economics
• Radiology Business Management
• Healthcare Payment Models

Background:

• The shift to value-based care and risk contracts necessitates a move from profit-center to cost-center models for hospital radiology departments.
• Current financial reporting often lacks granularity, presenting data at an aggregated level, hindering accurate assessment of individual procedure value.
• Radiology departments need to align their financial structures with actual revenue and value contribution.

Purpose of the Study:

• To develop and present a methodology for determining technical payments at the individual radiology procedure level.
• To provide enhanced financial visibility into radiology services to support strategic decision-making.
• To enable better calibration of the imaging enterprise's expense and capital structure.

Main Methods:

• A proportion-based model was employed to allocate payments to specific radiology procedures.
• The allocation was based on the ratio of individual procedure charges to total charges, accounting for non-radiology expenses.
• A production dataset of 424,250 radiology exams was utilized for calculations.

Main Results:

• The average technical charge per radiology procedure was calculated at $873.08.
• The corresponding average payment was $326.43, representing an average payment percentage of 37.39% across all exams.
• Payment varied significantly by exam type, ranging from $48.27 for XR to $2750.11 for PET/CT.

Conclusions:

• The charge-to-total charge ratio effectively approximates technical payments at a procedure level within radiology.
• This methodology offers a granular view of payments, aiding in strategic practice planning.
• The approach is generalizable for approximating payments in other healthcare services.