Radiology Corporatization is Here (to Stay?)

CollinsPortraitJannette Collins, MD, MEd, FACR, director of medical content, MRI Online and editor of Seminars in Roentgenology, contributed this post.

In radiology, corporatization refers to the corporate radiology groups that provide hospitals with specialty radiology services and 24/7/365 radiology interpretation via on-site services and teleradiology. The radiologists are employees and receive salaries and benefits determined by the corporations, which, in aggregate, employ thousands of radiologists and operate hundreds of imaging centers across the country.

What can a large corporate entity offer to private practice owners and managing partners?

Let’s start with the good:

  • Access to centralized resources (such as access to capital, administration, recruiting, contracting, nighttime support, advanced technology, lower malpractice insurance rates, and sharing best practices)
  • Better positioning to participate in population-based care, alternative practice models, and federal and private payer value-based payment programs
  • Ability to subspecialize
  • Greater market power and leverage when negotiating payer contracts

And the bad:

  • With acquisition comes relinquishment of control and decision-making to a remote group of owners/investors whose primary allegiance may emphasize profitability over patient care

What can it mean for partners of private practice groups that are bought by a corporate entity?

The group can still offer partnership, which may mean owning a share of the group’s assets if they own equipment, and/or it may mean owning equity in the larger corporation. Partners can be eligible for elected and appointed leadership positions locally and nationally at the corporate level. However, although salaries for those on the partnership track may not change, full partners generally see a drop in salary, which could be substantial after a buy-out/partnership with a corporation.  

Large groups are attractive to some radiologists, especially those more recently finishing their training who value flexibility, stable salary and other lifestyle considerations over practice ownership. However, younger radiologists may be more apprehensive of corporations.

A recent survey of over 600 early career radiologists found that 86% believe that corporate entities harm radiology as a specialty. And another 83% said they’d prefer to work for an independent practice, rather than one owned by a corporation. Many are worried about a national chain “gobbling up their workplace, driving down salaries and prioritizing profit over patient care.” They don’t want to work in any system in which “executives, non-physician administrators and public stockholders are reaping the financial rewards of radiologists’ work output.” They’re also frustrated that when they interviewed with a provider, they were not informed about merger and acquisition talks occurring behind the scenes. Some say that when asking interviewers about plans for acquisition, these plans were hidden, often because of nondisclosure agreements during negotiations of an acquisition.

Shifting payment models, hospital consolidation, new technological and data analytic expectations, and heightened competition have altered the longstanding status quo for many independent groups around the country, and in response, the opportunity for physician shareholders to align with a partner through mergers, acquisitions, or private investment has become more compelling.

Many private practice groups are in trouble, and corporations are offering a solution. Is there a better solution? Can radiology groups work in partnership to come up with alternative solutions? Or — as the prevailing sentiment of my social media feed might suggest — will corporatization of radiology be the downfall of the specialty? Will corporate groups survive? Only time will tell if corporatization in radiology is here to stay.

Please share your thoughts in the comments section below, and join the discussion on Engage (login required).

4 thoughts on “Radiology Corporatization is Here (to Stay?)

  1. I was the CEO of a rural radiology practice that served the imaging needs of a large hospital for over 35 years. Last year, a large radiology corporation took over our contract when it expired. We (four full-time radiologists) were all offered jobs by the corporation to continue working at the hospital, but decided to move far away in part because of high rates of endemic crime and poverty in the county. I’m confident that the radiologists working there now are highly skilled and compassionate, but one thing is for certain; none of them live anywhere near the town. They don’t own property in the county, pay local taxes, send their kids to local schools, support local charities, coach local sports teams, etc. The big loser in the corporatization of radiology is the small town. Few radiologists will choose to live in distressed rural counties if they are salaried employees.

    • Thanks for your comments James. I understand that the 4 radiologists had an opportunity to leave town when their contract expired. If your independent group had survived, would any new members live in the town?

  2. Having seen the development of radiology corporatization, I can appreciate the fact that 86% of radiologists continue to view this sea change as a major negative consequence. There is only one reason why this change is happening, the idea that getting a large lump sum up front is attractive. We are mentally sold from a very young age to appreciate the idea of getting rich quick. Most of us realize that such thoughts are typically schemes and not realistic. But when the VC come knocking and wave several million dollars how can you refuse? I suggest that no amount of money is reasonable to give up control and management of one’s own situation. The new owners will always attempt to manage things. And if that doesn’t happen now, any slight downturn will see a rapid behavioral change. Hence, in troubled times, the sellers may come to regret their decision. And troubled times always happen sooner or later – it is the natural course of things to have upturns and downturns.

    I pray that the pendulum swings back towards individual ownership and management. If not, patients will suffer more and more.

    • There are some radiology groups banding together to be able to remain independent. This happens because there is a will to do so. When older radiologists near retirement are offered a large amount of money to sell to a corporation, it’s human nature to say yes. The incentive is strong. I’m very interested to see how things will play out over time.

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