Study the case of COMMUNITY MEDICAL IMAGING:

COMMUNITY MEDICAL IMAGING

Jessica Kelly wrote this case under the supervision of Elizabeth M.A. Grasby solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.

It was February 18, 2009, and Dr. Frank Davis, a radiologist with Community Medical Imaging (CMI), in Toronto, Ontario, had just received an anxious phone call from the chief of radiology at Thunder Bay District Hospital. The Vancouver-based company that had provided on-call service¹ to Thunder Bay and the surrounding area had relocated to the United States and could no longer provide service. The chief was hoping that Davis and his highly regarded team at CMI could take on the extra workload. Davis knew the deal would provide interesting work and improve CMI’s presence across the province, but it would also place an increased demand, both professionally and personally, on CMI’s physicians.

RADIOLOGY

History

Radiology was a branch of medicine that utilized radiation for the treatment and diagnosis of disease.² The field of radiology began with the discovery of X-rays and their analysis in 1895. Today, radiologists not only read images from X-ray films but also images from ultrasound, magnetic resonance imaging (MRI), and computerized axial tomography (CT scan). These different techniques used within medical imaging were referred to as “modalities.”

Radiologists were physicians and, as a result, we're required to complete two to four years of undergraduate studies, four years of medical school, four to six years for their specialization and an optional fellowship.³ Within the field of radiology, doctors often focused on areas of specialization such as neuroradiology, obstetrical imaging and gastrointestinal imaging. The length of education was related to these specializations; for example, neuroradiology required 16 years of post-secondary education.

Radiology in Ontario

Within Ontario’s universal health-care system, many medical procedures, including medical imaging services, were paid by the provincial government. Typically, patients were referred for medical imaging by their family physicians and were then booked for appointments at clinics. At these clinics, patients would present their provincial health cards and then have the appropriate procedure(s) completed by technologists. The technologists then uploaded the image to secure picture archiving communication systems (PACS). These images would then be read by radiologists who dictated their reports. These oral reports were typed by medical transcriptionists and sent back to family physicians, who in turn reported the diagnosis to patients. For emergency or acute treatment in hospitals, this process was completed entirely within the hospital.

Radiologists in Ontario received all their revenue from the provincial government, through standardized professional fees (P-fees) and technical fees (T-fees). Exhibit 1 shows the P-fees and T-fees for a few standard procedures. P-fees were paid directly to the radiologists performing the image readings; whereas, T-fees were paid to the clinics or to the hospitals and were intended to cover the cost of technologists, transcriptionists, investments in equipment and any overhead costs. The time required to read an image could vary from a few minutes (for a simple break in an arm) to a few hours (for neurological images). Since revenue was received on a per-reading basis, radiologists’ ability to read images quickly and reduce downtime contributed to their financial success.

There was great demand for radiologists across Ontario, especially in rural or remote areas of the province. CMI’s director, who managed all business operations, estimated that she received four to five requests every month for CMI to provide services outside of Toronto. To help fulfil this need, many radiologists used portions of their vacation time to perform locums — short-term placements (typically one week) — in underserviced areas.

Industry Trends

The digitization of medical imaging had drastically altered the dynamics of the industry, mainly due to the introduction of teleradiology. Teleradiology was “the electronic transmission of diagnostic imaging studies from one location to another for the purpose of interpretation and/or consultation.” ⁴ Teleradiology offered the opportunities for providing top-level service to rural and remote areas without having to recruit specialized physicians to these areas; however, clients still preferred to have a radiologist present.

Historically, due to the “windshield factor,”⁵ radiologists had provided service only within their geographic regions and, therefore, maintained some competitive protection from other radiologists within their area. With the ability to read images remotely, the medical imaging industry became more global, and radiologists were increasingly forced to cater to their customers’ needs (such as on-call service and flexible scheduling) rather than dictate to their clients. Personal relationships and strong reputations also became more integral to developing partnerships between hospitals and radiology groups.

Another notable trend was the increasing level of bureaucracy in the health-care industry. The majority of “contracts” for remote work was historically done on a handshake between physicians; however,

government and hospital administration were playing a growing role in formalizing documentation for these arrangements.

COMMUNITY MEDICAL IMAGING (CMI)

History

CMI was established in 1931 at one location with one radiologist. At the time, radiological examinations were so infrequent that the radiologist was able to manage both his clinic and all radiology at St. Michael’s hospital. By 1954, CMI had four radiologists, and the team began reading films from a handful of hospitals in small towns across region. In the decades that followed, additional clinics and physicians were continually added and, in 2002, CMI converted the business from a film-reading centre to a state-of-the-art digital imaging center, a six-month process. The CMI team had grown to14 radiologists (all partners). In recent years, a new partner was hired every three to four years. Recently, CMI had been one of four finalists in the small business division of the Chamber of Commerce Business of the Year Awards.

Current Operations

Currently, CMI owned and operated five clinics throughout Toronto and provided all medical imaging services at St. Michael’s Hospital. CMI’s physicians rotated throughout these facilities, with six physicians at St. Michael’s Hospital each day. CMI also provided on-site coverage and teleradiology services to numerous small rural hospitals, although most were within one hour’s drive. For each rural hospital, there was a dedicated, secure PACS system where images were read within CMI’s largest Toronto clinic. Additionally, CMI’s partners taught at the University of Toronto, Faculty of Medicine. To fulfil these numerous commitments, CMI’s partner physicians worked long hours, typically 10 to 12 hours per day, five days per week.

CMI employed a full-time director who managed all aspects of the business and advised the partners on its future direction. Also, an extensive team of technologists and support staff performed many of the procedures and completed administrative duties such as scheduling and billing.

Partner Physicians

Each of CMI’s 14 partners received equal pay and equal distribution of income. (Typically, $100,000 cash was kept on hand for daily business needs, and all other income was distributed.) As such, the team exhibited a significant level of co-operation and a collective pride, both in CMI’s reputation and in its quality of work provided for the community; therefore, when making decisions, the partners had to consider what was in the best interest of the entire team. In 2006, the partners developed mission, vision and key values statements to help guide the decision-making process. CMI’s mission and vision emphasized the importance of providing the very best in imaging and patient care while also benefiting the health care and academic communities. CMI’s values echoed these sentiments and also discussed the importance of collaboration and fairness within the organization, a commitment to upholding the Canadian Medical Association’s ethical standards, and a pledge to stay on the cutting edge of innovative technology. Obtaining work-life balance was an important yet often elusive goal for CMI’s partners. Davis knew that this balance was important for current partners (some of whom had young families) and for the recruitment of future partners.

CMI’s partners also placed a high value on being leaders in their field. This meant they would be early adopters of new technologies, be exposed to challenging and intriguing work, and maintain a sizable presence in the province. Professional autonomy was important to the partners, and an integral component of achieving this goal included their ability to lobby the Ministry of Health and Long-Term Care.

THE THUNDER BAY PROPOSAL

Geographic Coverage

The Thunder Bay proposal would involve providing service, both on-site and through teleradiology, to 10 Northern Ontario hospitals with Thunder Bay as the main hub⁶ (see map in Exhibit 2). As the primary hub of medicine in the north, Thunder Bay District Hospital had the very best equipment in medical imaging. A few of CMI’s partners had completed locums at the hospital on a trial basis and had found the work to be quite intriguing; for example, due to differences in living conditions and culture, medical conditions were often seen in Northern Ontario that were rare in Southern Ontario.

New Physicians

To meet the demands of the northern Ontario hospitals, there would have to be two major changes to CMI’s operations. First, there would be an evening shift added from 5 p.m. to 11 p.m., seven days a week, in Toronto. Although CMI’s team had always worked long hours, there had never been a formal evening work shift. Second, a CMI physician would have to be present at Thunder Bay District Hospital for three out of four weeks each month. The 14 physicians would have to rotate through this responsibility in one- week intervals.

CMI’s director estimated that the existing team’s average workday could increase to a high of 15 hours per day with the additional workload; consequently, she recommended that CMI hire four additional radiologists to make the Thunder Bay workload more manageable. This approach would also help to spread out the physicians’ day-to-day work in Toronto; however, it was unlikely that additional partners could be hired until mid-2010 because CMI had historically hired recent graduates (who finished university in early May each year) to help grow its business.

Financial Considerations

Potential revenue from the Thunder Bay proposal was expected to be $167,000 each month, beginning in January 2010. The 14 existing partners would receive no increase in pay⁷ for any additional hours worked; however, all cash in excess of $100,000 would be evenly distributed among the partners at the end of each year. All revenue earned would take 30 days to receive and would be paid to Thunder Bay District Hospital, and then directed to CMI. Costs to provide on-site coverage — including flight, accommodation and food — were estimated at $4,500 a week and would be reimbursed by the Ministry of Health and Long-Term Care through the province’s Northern Outreach Program. Payment for these expenses would be received from the government in 30 days.

To provide teleradiology service, a new diagnostic suite would need to be created at the main Toronto clinic. The total cost for the renovation would be $85,000, which included the cost of the PACS workstation and the installation of a secure communications line for privacy. Thunder Bay District Hospital was prepared to contribute $65,000 towards this renovation upon its completion. Although PACS technology was quite new, Davis estimated the new system would function for 10 to 15 years.

CONCLUSION

Although Davis was proud of CMI’s existing business and reputation, he knew the draw of unusual work and therefore recognized that helping an underserved area could be difficult for the team to turn down. If they turned down the opportunity, one of the other medical imaging companies vying for the job — many based in Calgary — would easily step in. If CMI took on the job but could not handle the increased workload, Thunder Bay District Hospital would use locums, and CMI would be quickly phased out of the job. Regardless of their decision, the partners would need to act quickly but practically.

Exhibit 1

CHART OF PROFESSIONAL AND TECHNICAL FEES

	Professional “P” Fee	Technical “T” Fee
X-Ray: forearm including one joint (two views)	$6.75	$15.30
X-Ray: chest (single view)	$6.75	$15.30
Ultrasound: pregnancy (on or after 16 weeks gestation)	$24.20-$32.30	$50.00
MRI: head (multislice sequence)	N/A	$73.05

Exhibit 2

MAP OF ONTARIO

1. Analyze the issues, evaluate the alternatives and make appropriate recommendations.
2. Assume you are consultants presenting your recommendations to Dr. Davis. Draft a script summarizing your findings.

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