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Financial picture A stronger economy—as well as con- tinued cost cutting—may have been reflected in one of the most important numbers of all: 76.9% of the 39 prac- tices that shared financial revenue data reported year-over-year increases in revenue at the close of their most recent fiscal year. It would be unwise, how- ever, to read too much into that num- ber since that represents just 30 of the 100 practices on the Radiology 100 list. A more sobering assessment is reflected in the median number of procedures performed: Median pro- % of Facilities 1% 16.7% 2% 19% 3% 21.4% 4% 16.7% 5%/+ IT Budget as % of Total ers, particularly if those buyers are client hospitals. Imaging center ownership is an employee-intensive endeavor, and a decline in the number of centers a practice operates would trigger a decline in its number of employees. In fact, the 2015 trend away from imag- ing center ownership is reflected in a decline in the number of FTE employ- ees in two of the four practice size cohorts this year (Figure 4, page 21). In the practice-size cohorts where imaging center ownership declined sharply (> 65, from 15 to 8; < 35, from 4 to 0), the median number of FTE employees plummeted from 253 in 2014 to 139 in 2015 and from 44 to 28, respectively. The number of FTE employees increased from 50 to 63 in groups of 35 to 49 FTE radiologists; and increased negligibly, from 196.8 to 198 in groups of 50 to 65 FTE radiologists. The decline in imaging center ownership and FTE employees may signal a rise in the number of hospi- tal-focused practices that outsource all business services. The nation’s seventh largest practice uses consult- ing services but outsources all busi- ness services, including the manage- ment of its imaging center assets, to Los Angeles-based RadNet, Inc., Our top-ranking practice, RANT, employs just 50 FTE employees to support 128 radiologists. 26.2% 0 20 40 60 80 100 Figure 7. Most practices that took the survey reported that they spent 5% or more of total revenue on IT. cedures performed declined in two of the four practice-size cohorts (Fig- ure 5, page 22) despite the increase in median FTE radiologists, suggest- ing that growth remains elusive for at least some practices. There were increases in the median number of procedures performed for both the smallest and the larg- est practice-size cohorts: the former increased from 445,797 in 2014 to 490,000 in 2014; the latter increased from 1,099,142 to 1,385,000. Practices with 35 to 49 FTE radiologists saw the greatest decline, from 680,611 in 2013 to 567,765 in 2014. Practices with 50 to 65 FTE radiologists also saw a decline in their median number of procedures performed: from 873,500 to 859,349 FTE radiologists. Although all practice-size cohorts registered increases in median num- ber of FTE radiologists, only the two largest size-cohorts managed an increase in the median number of hospital contracts (Figure 6, page 22). Practices greater than 65 FTE radiol- ogists increased their number of hos- pital contracts from 15 to 17; and practiced of 50 to 65 FTE radiolo- gists increased their median number of hospital contracts from nine to 11. The smallest two cohorts each reg- istered declines in hospital contracts. For practices of 35 to 49 FTE radiolo- gists, the median number of contracts declined from seven to five; like- wise, for practices of less than 35 FTE radiologists, the number of contracts declined from six to five. Spending on IT is robust among the nation’s largest practices. Well more than half of all practices are spending 3% to 5% of revenue or more on infor- mation technology (Figure 7). Looking ahead, radiology practices face both challenges to and opportu- nities for growth. The impending roll- out of clinical decision support may further tamp down imaging proce- dure volumes beginning in 2017, but the aging of the baby boomer gener- ation and the expansion of health- care coverage—with approximately 16 million newly insured to date—are likely to fuel volume increases. One thing is certain: Consoli- dation continues to defragment the healthcare provider market. This fac- tor alone will make it more challeng- ing for the small practice to compete. Cheryl Proval is the editor-in-chief of Radiology Business Journal. | October/November 2015 | Radiology Business Journal 23