| |||||||||||||||
|
Home
|
For other articles and previous issues click here. May 30, 2005 Apple
to Apples — RVU Analysis in Radiology This analytical method also helps managers measure productivity using historical data to derive meaningful benchmarks by removing subjectivity such as differences in work habits among technologists and differences in the time required to perform one exam compared to another. As a radiology manager, I have learned that I need to do frequent, efficient financial analysis. Sound analysis not only lends credibility to arguments for equipment and staffing, but also offers valuable insight into the functions within the department, isolates the cost of these various functions, and identifies areas for improvement. The Centers for Medicare & Medicaid Services (CMS) places a relative value on each procedure or Current Procedural Terminology code performed in radiology. Originally devised as part of Medicare payment reform in the 1980s, the relative value unit (RVU) also provides a tool for managers to compare one exam to another on an apples-to-apples basis. Also, the RVU allows us to evaluate myriad functions in a radiology department. For example, RVU analysis aids me in formulating a solid financial evaluation for salary cost per RVU, maintenance costs per RVU, and supply costs per RVU. This analytical method also helps managers measure productivity using historical data to derive meaningful benchmarks by removing subjectivity such as differences in work habits among technologists and differences in the time required to perform one exam compared to another. In a recent article published on Auntminnie.com, Len Levine reports that “productivity in radiology is both identifiable and quantifiable” and that “benchmarking is the process of identifying the best practices used in similar businesses, and learning how to adapt the methods to one’s own institution.” Clearly, an RVU analysis of productivity and associated costs enables managers to establish those benchmarks for their facilities. Productivity analysis has always been a challenge for radiology managers because almost every study takes a different amount of time to complete. Likewise, completion time varies among technologists. Managers who have several talkative techs on staff know Chatty Patty can take 30 minutes to complete one two-view chest that most technologists complete in 15 minutes. Measuring productivity and making the logical decisions as a result of that analysis can be tough, yet all of us need a way to compare apples to apples among the different modalities. Developing Benchmarks Radiology managers can derive productivity benchmarks by researching the RVU for each procedure. If 2,500 chest x-rays took place in 2004, then the total number of RVUs for chest x-rays would be 2,500 x 0.62 = 1,550 RVUs. Managers should calculate total RVUs for each procedure performed in the modality and then average the total number of RVUs. Now we can do a statistical analysis to derive the financial information. For instance, the CT unit located in my department at Wadsworth Rittman Hospital performed 6,598 CTs in 2004, generating 48,587.98 RVUs. The following analysis enabled me to derive RVUs per FTE, thus setting a benchmark for productivity: • Total RVUs for CT in 2004: 48,587.98; • Total FTEs: 3.5 • Average RVUs per day in 2004: 133.12 • Average RVUs per FTE in 2004: 38.03 per day To derive credible benchmarks, managers should work with a minimum of three years of data. If, after three years, the average RVUs per FTE in CT are 38, this benchmark will allow you to compare productivity between technologists and use productivity analysis to justify additional staffing. For example, a manager learns that the number of CT procedures has increased 16% over last year’s total. The manager wishes to understand how this increase has impacted staffing and whether this modality needs more staff. After calculating the average RVUs per day, the manager learns that the staff is performing an average of 46 RVUs per FTE, eight more than the benchmark of 38 RVUs per FTE. Thus, the staff is 121% productive. The manager has also heard complaints about a delay in care for patients due to longer wait times. Armed with this knowledge, the manager can approach administration with a clear financial analysis that justifies adding staff. Researching total RVUs performed per modality is rather labor intensive, yet the information managers collect is invaluable. Because using RVUs removes subjectivity and allows for a fair comparison, managers can present detailed cost information to administration. Segmenting Costs I recently conducted my own cost-per-RVU analysis for the radiology department at Wadsworth Rittman Hospital, an acute care facility licensed for 113 beds. The radiology department performs more than 40,000 procedures per year, which ought to be manageable. Example: Diagnostic Radiology • Total RVUs in 2004: 13,859.77 • Operating budget salary cost: $358,842 - Salary cost per RVU (358,842 ÷ 13,859.77): $25.89 salary cost per RVU • Operating budget supply cost: $131,324 - Supply cost per RVU (131,324 ÷ 13,859.77):
$9.47 per RVU - Maintenance cost per RVU: $4.47 • Operating budget administrative cost: $124,496 - Administrative cost per RVU (124,496 ÷ 13,859.77): $8.98 per RVU I used this data to track costs historically, reasoning that costs that had changed drastically would become “red flags” that I needed to examine more closely. The costs per RVU can also show any modality’s ability to come closer to reaching economies of scale by keeping costs down while raising productivity. Managers who can demonstrate efficiency are more likely to obtain the equipment and staffing they need to grow their departments. The Radiology Business Management Association (RBMA) collects data and produces radiology benchmarks for managers to follow. (You can obtain this information by joining the RBMA for a fee.) The RBMA publishes some benchmarks on its Web site, located at www.rbma.org. Included are benchmarks for the following: • Median salary and benefit cost: $9.78 per RVU; • Median supply costs: $4.55 per RVU; • Median equipment and occupancy expense: $5.15 per RVU; • Median administrative expenses: $4.78 per RVU; and • Median total cost: $49.65 per RVU. Analyze by Modality When performing any benchmarking activities, remember that the best benchmarks grow out of your own data. National average data such as the RMBA benchmarks are a great start, but your facility’s situation legitimately may vary significantly from national norms. If you see a disparity, investigate why it might exist, but do not assume that your facility is somehow wrong—it might prove to be, but do not blindly accept it. The best value of benchmarking is tracking the relative change in your facility’s costs from year to year. When you see a change, find the cause. Some experts believe one risk of benchmarking can be aspiring to mediocrity. If you peg your facility’s performance objective to some national average, it can be argued that you are only asking them for average performance. That may be a worthwhile initial objective, but ultimately wouldn’t you want to raise your department’s performance target to the 75th percentile—or even higher? The difficulties radiology managers face when attempting to control the departmental financial policies are complicated by such issues as limited or no control over reimbursement levels for procedures. Achieving economies of scale in medicine poses a real challenge. In the manufacturing environment, managers are able to reduce overall costs and achieve economies of scale by increasing output and improving productivity. In medicine, when output increases, so do costs. Significant variable supply costs accompany many radiology procedures; therefore, the more procedures performed, the higher the cost. It is nearly impossible to forecast future supply costs. You do your best to supply an accurate budget, but if the CT department exceeds expected growth, then managers go over budget because more contrast material was required. Because costs accompany progress, good managers are forced to find other methods of controlling costs. To keep ongoing, historical financial data (department productivity, equipment utilization, RVUs per FTE, ongoing cost breakdowns such as supply costs per RVU and administrative, technical, and maintenance costs per RVU), managers need to perform yearly financial analyses. Maintaining this information benefits managers by enabling them to spot emerging trends or red flags and lobby successfully for equipment purchases and more staff. Without systematic quantitative analysis, managers will find it difficult to clearly identify alternatives and assimilate the vast amounts of data available. For all radiology managers, the goal is sustaining growth while controlling costs. — Mindy Goldsmith, PhD, is administrative director of radiology at Wadsworth Rittman Hospital in Wadsworth, Ohio. Resources Batchelor J. 2004 AHRA sets sights on prevention, planning, and profit. September 16, 2004. Available at: http://www.auntminnie.com. Accessed October 15, 2004. Centers for Medicare & Medicaid Services. RVUs by Range of HCPCS For Nation. 2004. Available at: http://www.cms.hhs.gov. Accessed November 6, 2004. Cohen MD, et al. Activity-based cost analysis: A method of analyzing the financial and operating performance of academic radiology departments. Radiology. 2000;215(3):708-716. Forman H. Medical trends will put pressure on imaging income. Diagnostic Imaging. November 2003. Available at: http://www.dimag.com. Accessed October 21, 2004. Hanwell LL. Staff Utilization Survey. Radiology Management. July 1996. Available at: http://www.ahra.com. Accessed November 9, 2004. Health Care Financing Administration. Professional and Technical RVUs. 2004. Available at: http://www.cms.hhs.gov. Accessed October 16, 2004. Levine L. Unit-cost financial benchmarking identifies improvement opportunities for imaging centers. Radiology Consulting Group. April 19, 2001. Available at: http://www.auntminnie.com. Accessed October 28, 2004. McVey L. Putting Out the Fire. RT Image. December 1, 2003. Available at: http://www.rt-image.com. Accessed August 5, 2004. Publication of the American Psychological Association . 5th ed, Washington, D.C.: American Psychological Association; 2001. Radiologist Productivity Measurement. 2003. Radiology
Business Management Association. Available at: http://www.rbma.org.
Accessed October 27, 2004. Singer M. Cost-effective analysis in radiology.
Radiology. 2001;219:611-620. Sunshine J. Practice costs in diagnostic radiology. Radiology. 2001;218:854-865. |
 |
|
3801 Schuylkill Rd • Spring City, PA 19475 Publishers of Radiology Today All rights reserved. |