From left are Narasimhachari Raghavan, MD, Michael K. Haseman, MD, Seth A. Rosenthal, MD, and Fred Gaschen.

A number of characteristics and objectives make Radiological Associates of Sacramento (RAS) different from most private practices in radiology. Although private, RAS has modeled itself in many aspects after an academic practice. The emphasis within the company is on subspecialization, and RAS's research work marks it along with only a handful of other private practices when it comes to administering grants and running clinical trials.But most importantly for this story, RAS is one of a dwindling number of practices that has continued to offer radiation oncology treatment under the same roof--or even under the same corporate aegiswith its diagnostic and nuclear medicine divisions.

A lot of what RAS is today is the result of its history.

"I think it would certainly be more difficult to put a group like this together from scratch at this time," says RAS president, Michael K. Haseman, MD. "Diagnostic radiology and radiation oncology are such different disciplines. I think a company like this would be much more difficult to create in this day and age than it was in the 1940s."

After getting his MD at the University of Florida, Haseman completed his nuclear medicine training at Stanford in 1984, the same year he joined RAS. "I was doctor 21 in our group," he says. "Now we are at 51."

Haseman has been in practice long enough to remember when radiation oncology and diagnostic reading were all part of the same medical school curriculum. "We brought the first radiation oncology machine to northern California. Radiation oncology was in its infancy and a part of radiology. You got certified in both. Now, they have become much more sophisticated in terms of equipment and treatment modalities and have developed into separate specialties. We're an old enough group that we predated radiation oncology."

Indeed, RAS, which today is the largest private radiological practice in northern California, has been around nearly as long as has radiology itself. The company was started in Sacramento in 1917. RAS was successful enough and committed enough that it purchased the first million-volt therapeutic x-ray machine to be located west of the Mississippi. That was in 1947. The purchase launched the company's radiation oncology division. That division is now called the Radiation Oncology Centers (ROC). RAS and the ROC have grown hand in glove since the 1940s, and the doctors in RAS's two other divisions, diagnostic radiology and nuclear medicine, continue to work in harmony and partnership with the ROC doctors. There have been stresses and strains at times between the ROC partners who are treatment oriented and their diagnostic colleagues, but nobody has given a thought to a separation. That makes RAS/ROC different than most practices. It is one reason Haseman says the combination would be difficult to reinvent now. But there are many advantages to having the three divisions together. On that point RAS doctors and administrators are unanimous.

CONTRACTING

RAS today is organized as a C-type professional services corporation. The physicians who are its 51 partners own it. The total number of doctors is closer to 65, including newly hired physicians who are on the 2-year partnership track as well as some part-time doctors. Of the doctors, five are full-time nuclear medicine specialists and 16 are radiation oncologists. The doctors are only the upper piece of the RAS pyramid. The company has roughly 750 employees.

Fred Gaschen, the top administrator at RAS, is its executive vice president. He is the one who handles contract negotiations. He says having the ROC component has created flexibility when it comes to signing up payors.

"If I can offer a one-stop shop to payors, they have to deal with only one organization. That has been our trademark," says Gaschen. "We will try to put together a contract that makes good business sense for the payor as well as for Radiological Associates. We might offer different rates depending on different factors. The more you buy from me, the better price you will get. We put a package together based on the buyer's history, and we have been able to negotiate that into one contract."

Having ROC services as part of the negotiating package lets RAS fine-tune contracts by holding down fees in one area while cross-adjusting them in another. Having ROC allows for negotiating trade-offs that would not be possible otherwise, Gaschen says.

Narasimhachari Raghavan, MD, vice president of RAS and a neuroradiologist,  agrees that the ROC gives RAS negotiating leeway. "The whole concept of RAS is that we want to provide the best and widest possible package, and that has helped us a great deal as far as getting contracts. We can give a little bit here and make it up there. It makes us more attractive to contractors, and it gives management a lot of leeway."

To give some idea of how successful RAS has been in contracting, Gaschen notes that the company now has "280,000 lives under capitation." And these capitated arrangements are far from the total number of patients RAS serves. Gaschen says it is hard to say how many people all together are covered because of the complex and changing nature of contracts and coverages. "We have more than 300 contracts and/or letters of agreement," he says.

CAPITALIZATION AND STABILITY

Other advantages to the RAS/ROC union on the business side include corporate stability and the ability to capitalize the purchase of imaging machines. The company has deployed a great amount of equipment at its 18 stand-alone imaging centers, its six ROC sites, and the six hospitals for which it provides coverage. The equipment includes highly specialized imagers in addition to x-ray, not just CT, MRI, and ultrasound but positron emission tomography (PET), computer-aided detection (CAD) for mammography, stereotactic breast biopsy, skylight nuclear medicine, and DEXA scanners. On the ROC side the equipment is equally complex. It includes nine linear accelerators for external beam radiation, the most common ROC procedure. The company also owns the machines to perform intensity modulated radiation therapy (IMRT), HDR (high-dose rate) brachytherapy, an intravascular surgical procedure, PSI (prostate seed implants), and IORT (intraoperative radiation therapy), which is an infrequently done procedure combining physical surgery with radiation therapy during the surgery.

At Sutter Hospital, where one of the six ROC centers is located, the ROC doctors are on the treatment team for a gamma knife unit, which RAS does not own. Working in company with neurosurgeons and diagnostic radiologists, the ROC doctors use the 20-ton gamma knife for noninvasive radiosurgery to destroy small to medium-size brain tumors and arterio- venous malformations that might be inaccessible otherwise. The gamma knife delivers 201 ionizing beams of gamma rays to precisely target and destroy tumors and malformations up to 3 cm in size.

Seth A. Rosenthal, MD, is a radiation oncologist who has been with RAS since 1993. Rosenthal is chairman of the ROC, which is organized as an autonomous financial entity in order to track revenues. ROC does not bill; RAS bills and all revenues flow to it as the umbrella entity.

Rosenthal says the ROC has definitely benefited by being part of RAS when it comes to purchasing technology. "There is access to capital, and having a larger group, we can spread purchases over a large group of physicians. Diagnostic radiology and radiation oncology are both capital intensive, so that has been a big advantage." Purchases have been made both out of revenues from technical and professional fees and through borrowing, he adds. "We contribute to the strength of the company, and that enables us to borrow."

Rosenthal says the ROC has also benefited by spreading overhead costs over the whole company and by having the RAS administration working for it.

Rosenthal also says having the RAS/ROC partnership has brought greater stability to the whole company by allowing it to offer a broad range of services. If one sector slows or accelerates, that may offset a slowdown or acceleration in another sector. The result is a more predictable revenue stream.

Raghavan makes the same point. "You never know what the market is going to be. Some years it goes one way and other years the other way. Having the ROC component gives us a great deal of stability, and allows us to diversify."

PRIVATE ACADEMICS

The business side of RAS/ROC is important, but it is on the diagnosis and treatment side that the philosophy of the company, and ROC in particular, is most fully expressed. Raghavan summarizes this philosophy by saying, "We have an integration of service that is not easily provided outside an academic setting. We really strive to provide an academic-type center of excellence in a private practice setting, and I think it's been beneficial to us doing that."

The academic model begins with a focus on subspecialization that typifies all divisions. Even diagnostic radiologists are subspecialized, some in body imaging, some in neuroradiology, some mammography, and some in interventional and neurointerventional radiology. Furthermore, the practice is big enough that subspecialists can concentrate on their areas of expertise to a greater degree than they would be able to in a smaller practice. This has attracted many of the partners to RAS. It attracted Raghavan, who says he can spend 80% to 90% of his time on neuro-radiology, which is his area of expertise. "I'm very efficient at it," he says. "I'm good and I'm fast, and my productivity is great. When I practice the way I do, the company benefits and the patient benefits. I am in my comfort zone. The patients are better off."

Another aspect of the academic modelwhich also works to the benefit of the patients, say the doctorsis research. According to Gaschen, RAS/ROC is the largest nonacademic contributor to the RTOG (Radiation Therapy Oncology Group, sponsored by the American College of Radiology), which undertakes studies of radiologic cancer treatments. ROC doctors are also participants in several National Cancer Institute clinical trials, and have entered more than 900 patients into these trials. ROC practitioners have no publish-or-perish onus placed on them, according to RAS president Haseman, yet they have produced more than 90 research reports. "The ROC particularly has an academic slant," says Haseman. "For instance, monoclonal antibody imaging and therapy. We've been involved in protocols using antibodies dating back to the late 1980s. So, when a new radiopharmaceutical comes along, we already have years of experience. Intercoronary brachytherapy would be another example. We were involved in those clinical trials long before it was approved by the FDA."

ROC chairman Rosenthal adds, "Intravascular brachytherapy came to us when a group of cardiologists in the community asked us if we would participate in the clinical trials. As a result, our knowledge enabled us to hit the ground running when it became FDA approved." Ongoing research at the ROC includes several studies comparing the efficacy of radiation therapy to chemotherapy for certain tumors. Other studies are under way on gastrointestinal, gynecological, and genitourinary cancer treatments.

Patients at RAS/ROC also benefit from the synergy between the company's divisions. Diagnosticians are routinely involved in monitoring the results of radiation oncology treatments, for instance. Raghavan uses the example of gamma knife treatment to explain how this synergy works not only between RAS and ROC doctors, but also with independent neurosurgeons. "The neurosurgeon gets together with the radiation oncologist and the radiologist is also there. We go over the patient, we go over the film, so that the radiation oncologist has a better idea of exactly where the tumor is. Then we do the treatment planning, drawing around the vital structures and so forth. There's a great deal of integration and interaction, and it's very, very important."

REFERRALS AND RVUS

While there is a great deal of practice integration that acts to the RAS/ROC patient's benefit, surprisingly, in-house referrals between the diagnostic and treatment divisions do not happen often enough to make a significant impact on revenues. According to Rosenthal, in some cases where ROC centers do not coincide with the diagnostic outlets, ROC patients are referred for diagnostic follow-up to non-RAS practitioners. To do otherwise would impose too great a travel burden on patients, Rosenthal says. Similarly, ROC's customers, its referring physicians, are not encouraged to use RAS diagnosticians, although they are not discouraged either. The ROC doctors are quiet on the matter.

"We at the ROC get our referrals because we work with referring physicians," says Rosenthal. "Many of them may not even be aware of the relationship between ROC and RAS. It's not like there is a central RAS office. No one would call my office for an MRI scan. Our referrals are very clustered. We get referrals from medical oncologists, surgeons, and other specialists, not from primary care physicians."

The issue of professional tension between diagnostic and treatment specialists occurs at RAS, but apparently not to the point that it is disruptive. "As we've gotten bigger and bigger," says president Haseman, "it has become a little more complicated as to how you define work. There are some interdivisional stresses in that regard, and even within the divisions with some subspecialists, some think they are working harder than the other guy. That is something we have to deal with."

RAS has attempted to deal with the problem by comparing relative value units (RVUs) between its practitioners to see where the divisions line up in terms of revenue per doctor. But the RVU software cannot translate time spent with patients in an exact equivalence to time spent reading film in terms of productivity, Haseman says. "We set standards, and if a division fell below them, they would have to come to the board and submit a plan to meet the standards. But, fortunately, we have never fallen below those standards. Our RVUs per doctor have grown every year since we began tracking them."

Haseman says that recently the ROC's RVUs have not grown as fast as diagnostic's, but he notes that this is part of a long-term cyclical pattern. "During a time when a particular procedure like an MR scan is very well reimbursed, we are able to pump money into buying new scanners. But then something profitable comes along in our ROC division, like IMRT, and the relative revenue between the divisions fluctuates."

Because it is in a geographically desirable spot, RAS has never had much trouble recruiting practitioners, say its doctors. But like many practices, it does have trouble recruiting technicians. Says Rosenthal, "It is a big problem with radiation therapists and dosimetrists. It's a big issue on our agenda, and we are reviewing our benefits package." Overall, though, he adds, the ROC as part of RAS probably has "better human resources than if we were just a single specialty group."

To RAS and ROC, the ability to offer payors a breadth of services, an academic-style focus on clinical practice, more than offset the difficulties.

"When you are happy doing what you do, a lot of good things happen," says vice president Raghavan. "It's all in the context of allowing professional freedom, practice freedom. When you are happy, you provide a better service."

George Wiley is a contributing writer for Decisions in Imaging Economics.