Hospital Imaging Center Revamp Generates $10.3M in Year One

Outpatient imaging is historically among the greatest revenue sources for many hospitals, contributing as much as 30% or more to annual profit. Outpatient advanced imaging in the U.S. is projected to grow by 13% over the next decade. Despite being a major profit center, most hospitals experience outpatient imaging access and utilization issues, which leads to delayed patient care, frustrated providers, and a reduction in potential revenue. Optimizing the revenue-generating potential of imaging is essential for hospitals, especially in light of the demand to increase profit with fewer resources. 

Case in point: a major academic medical center was experiencing access challenges with its outpatient MRI services, as well as operational inefficiencies due to an increase in demand. In response, the hospital engaged Freed Associates (Freed) to help provide interim executive leadership, improve imaging operations, and lead future strategic planning efforts. Freed was selected due to its extensive operational and imaging services experience, as well as prior familiarity with the hospital. 

What Got You Here Won’t Get You There 

Through interviews with the hospital’s executive team, referring service line leaders, and imaging staff, Freed quickly identified the root causes of the access and utilization issues — and corresponding opportunities for improvement: 

• Clarify Governance Roles – Increase leadership resources, better define roles and responsibilities and improve cross-team communications. 

• Expand KPIs and Reporting – Improve data definitions, reduce ad hoc, manual reporting that is primarily enterprise-level and not reliable. 

• Uplevel Scheduling Capabilities – standardize scheduling, eliminate faulty logic, fix broken templates, and slash manual processes using a decentralized system. 

• Make Capital Planning Proactive – Set clear guidelines, reduce reactive processes, ensure fund allocations are correct, better define future growth plans and reduce lengthy capital approvals. 

Six High-Priority Improvement Opportunities and Action Plans

Due to the issues Freed uncovered, imaging was consistently providing patients with inadequate access to outpatient MRI services. On average, patients were experiencing a wait of 40+ days for a third next available appointment for a medically necessary MRI. And utilization issues were depriving the department of significant revenue. 

The Freed team partnered with the hospital’s leadership and imaging staff to identify six principal areas for improvement, each tailored to the needs of the imaging department. Simultaneously, Freed filled the department leadership gap by serving as interim executive director for imaging, reporting directly to the hospital’s COO. Below are the six organizational and operational improvement areas: 

1. Outpatient MRI optimization – Significant enhancements were needed to improve patient access and realize the financial potential for the hospital. To meet increased demand for outpatient MRI services, Freed set a plan to revamp outdated processes, eliminate non-standard scheduling templates, cut variable management oversight, fully leverage under-utilized machines, and take advantage of underleveraged technology

Freed identified ways to reduce overscheduling and build additional capacity.
Freed also oversaw critical improvements starting with redesigning the outpatient MRI scheduling.  

2. Replacement capital plan – Previously, imaging’s approach to capital planning was reactive, and time-consuming. A lack of a formal investment strategy and unclear project submission deadlines also detracted from capital planning.

In response, Freed created a proactive, 10-year plan for capital improvements, established a separate, imaging-specific capital pool and clarified planning criteria for the entire imaging fleet.
 

3. Future growth capital plan – Imaging lacked a future growth capital plan. Desired future growth was unaligned with the department’s equipment and staffing capacity, and future capital funding requests were placed in direct competition with those of other departments.

Freed created a future growth capital plan for imaging that aligned with the growth plans of referring services. The plan included new equipment needs and performance improvement opportunities for imaging staff. Freed also established a channel of protected capital, allocated specifically for imaging.
 

4. Team call center restructure – A mismatched call team model between physicians and technologists inhibited and impaired effective and timely patient communication. Due to these known issues, there was often disproportionate call center work volume, with some staff overburdened while others were frequently underutilized. Freed consolidated the call team model between physicians and technologists to eliminate all prior known inefficiencies.
 

5. Organizational restructure – An unbalanced organizational structure created too much work for imaging’s managers. As a result, there was limited to no development of imaging staff or mentorship provided by the department’s leaders. Freed aligned imaging’s operational structure to a system operating model that is scalable with future growth and hired additional managers to oversee operations. To make up for past/lost development and mentorship opportunities, Freed created a year-long leadership development program for the department’s teams and individual employees.
 

6. Inpatient MRI optimization – Distinct from outpatient MRI issues, inpatient MRI had its own set of operational challenges. This included a lack of standardized processes, metrics, internal communications or accountability for performance. Due to these issues, inpatient MRI was inefficient and often appeared underutilized. Freed responded by coordinating standard work practices and creating a new MRI staffing model. Additionally, Freed created standardized MRI turnaround time metrics, and established daily team huddles

$10.3M Outpatient MRI Margin Improvement in One Year; and Poised for the Future 

Freed helped the hospital’s imaging department achieve significant improvements.  

Outpatient MRI improvement efforts elevated labor productivity by 33% and schedule utilization by 19%.  This resulted in a $10.3 million increase in annual contribution margin and the ability to accommodate thousands of more patients per year. Inpatient MRI saw substantial time improvements, with a 21% increase in ordered MRIs completed within 24 hours, and a 46% decrease in MRI study turnaround time. 

Freed’s capital planning improvements enabled imaging to quantify its 10-year capital needs, and bundle purchases over time. Future growth capital planning improvements established new, replacement and supplementary equipment needs and dates, and new performance improvement standards.  

Team call center restructuring resulted in $300,000 in annual labor savings. Freed also provided the overall imaging department with clearer roles and responsibilities, as well as new leadership development and mentorship opportunities that led to a significant improvement in staff morale.