The pandemic made one thing very clear: Practices must become more agile to survive inevitable imaging volume fluctuations in the coming months and years. Changing how they manage operational costs and business risks will be critical to success.
According to a recent report by the RSNA COVID-19 Task Force, private radiology practices that depend solely on revenues from diagnostic interpretations experienced dramatic decreases – in some cases as much as 80% – in examination volumes as a result of the pandemic. These practices not only faced difficult cost-cutting decisions, but now must consider how to better manage capacity and demand changes no matter the cause.
“The future of private radiology practices will be impacted by the pandemic in that practices are likely to restructure operational policies and business risks." – RSNA COVID-19 Task Force, July 2020, The Short- and Long-Term Financial Impact of the COVID-19 Pandemic on Private Radiology Practices.
Evaluating the practice model
Prior to the pandemic, market forces were indicating the demand for imaging services would continue to outpace radiologist bandwidth. Practices were managing costs and planning for staff and infrastructure investments based on those assumptions.
Then the pandemic hit. Demand dropped sharply and suddenly. Groups were forced to reduce costs to compensate for short-term revenue losses. Subsequently, uncertainty has replaced the previously anticipated demand curve.
In addition to evaluating their projections for future volume and reading capacity, groups are rethinking their financial plans. Prior to COVID-19, operational budgets for many imaging providers consisted of predominantly fixed costs – physician salaries, support staff, office space, workstations, PACS, etc. A typical hospital-based practice, for example, may have budgeted as much as 90% to 95% in fixed costs. That works in a steady predictable market, but can leave a group vulnerable to sudden changes, as the pandemic brought to light.
Prepare for the unpredictable
While most predict that demand will eventually return to pre-COVID levels, no one knows when that will be. Introducing a greater balance of variable costs into business plans can provide needed flexibility for responding to volume changes, making it easier to seize upside opportunities while reducing the potential pain of a decline in demand.
One strategy for reducing a practice’s allotment of fixed costs is to augment onsite radiologists with a partial FTE virtually through a teleradiology provider on a per-exam model. vRad partners with many clients to provide this built-in variable cost structure according to individual needs. Practices can focus on their core activities and rely on vRad to smooth out the bumps.
Benefits beyond COVID
Certainly, the pandemic was a wake-up call to how quickly and drastically the market can change. The benefits of partnering with a teleradiology provider can extend to managing the ebbs and flows of normal operations as well.
For example, if a radiologist retires or leaves for another reason, it doesn’t have to disrupt workflow. Teleradiologists can pick up the caseload in the interim, while management takes the time to identify and hire the best replacement candidate.
A teleradiology partner can also be an important component of a practice growth strategy. New contracts can be brought on without disruption to current clients by tapping into the teleradiologists for additional capacity. This flexibility allows the practice to respond quickly when new opportunities arise and provides time for the hiring process when volume warrants additional investment in staff and infrastructure.
Bottom line, with a more variable cost structure, practices have the flexibility to make thoughtful business decisions when the timing is right for them.
For more on how vRad can help your practice prepare for the unexpected, learn more about our virtual FTE options and schedule a call with one of our expert advisors.