Pamela M. Harlem, MBA

For many institutions and radiology practices, projecting growth in services simply means applying the historic growth rate to the coming year(s). There are three factors to consider in forecasting growth in radiology modalities:

1. Referring practice patterns. Which referring practices are anticipating growth in outpatient visits? What is projected growth in inpatients and emergency department visits?

2. Technologic trends. How are national trends for growth in each modality likely to be played out on the local level, irrespective of other factors? What impact will upgrading and/or adding new equipment have on demand? Are operational improvements under way that will substantially increase capacity?

3. Population/patient demographic changes. What patient populations are growing in the service area? Which are shrinking?

The historic growth rate is meaningless in today's radiology, where changes in technology are increasing demand dramatically at the same time that capital and labor resources are constrained. In such an environment, the historic growth rate of a department will substantially under-represent the actual and potential growth in examination demand. Radiology departments must plan strategically and can create a strong case for the resources required to meet demand by using a three-step process.

• Step One. Determine what that demand would be if resources were not constrained.

• Step Two. Calculate the resources required to meet the projected demand. Nationally, the trend is an increase in volume and an increase in the resources to meet that volume.

• Step Three. Build a financial justification for the additional resources needed to meet the inevitable increase in demand.

This three-step strategic approach requires a paradigm shift for many radiology departments, from a reactive planning process to a proactive approach to service delivery. This article focuses on the first step by offering a model for forecasting demand.

PREPARING DATA

The demand projection model begins with a spreadsheet of the most recent year's modality examination data. Consider breaking down modality-level volume by patient type and patient source. Patient type refers to adults and pediatrics. For radiology departments that service both adult and pediatric patients, patient type is a useful delineation. Patient source refers to the origin of the examination requisition. Although breaking down patient source by the referring

practice or physician is feasible, a more practical option for most departments, and the one used in this article, is to break down volume by inpatients (I/P), outpatients (O/P), and emergency department (ED). Insofar as these volumes can be attributed to specific equipment units, the robustness of the projection model is greatly enhanced.

Figure 1. Example of data spreadsheet used to assess current CT volume.

Figure 1 represents an example of how the data spreadsheet might look for CT examinations.

FACTOR 1: REFERRING PATTERNS

Trending projected examination volume for radiology modalities is most heavily correlated to changes in the practices that refer patients for those services. Typically, changes in referring practice patterns and volume have the greatest impact on CT, diagnostic x-ray, MR, and ultrasound, but analysis needs to be undertaken for all modalities.

Inpatients: Increases or decreases in the daily census will impact radiology. Changes in medical or surgical practices, or in the mix of medical and surgical inpatients, will have an impact on the demand for various modalities. In general, a one-to-one change in modality volume can be anticipated with respect to inpatients. If adult inpatient volume for your institution is expected to grow by 5%, then radiology inpatient volume will grow accordingly.

Outpatients: Modality utilization varies by specialty; eg, oncology utilizes CT heavily whereas orthopedics more heavily utilizes general diagnostics and MRI. Growth in the specialties can be given a weighted average in each modality. So, to give a simple example, if 80% of MRI outpatient demand is from orthopedics, and 20% from other practices, which are expected to grow by 3%, then MRI outpatient examinations will grow by a weighted average of the two.

Emergency Department: As with inpatients, the impact of growth is directly proportional: anticipated growth in ED visits will grow the demand for radiology modalities at the same rate.

FACTOR 2: TECHNOLOGIC TRENDS

Radiology is a rapidly evolving field of medicine. Once considered solely a diagnostic tool, radiology now includes interventional procedures and advanced technologies that make its diagnostic capabilities critical and standard-of-care for patients in any health care setting. This technologic revolution in radiology has the ability to affect radiology examination volume, regardless of whether any change in growth is predicted vis-A-vis referring practices or demographic shifts. CT, MR, and ultrasound are projected to have the greatest technologic-based growth [AQ: figures and references, please]. The Radiology Consulting Group has identified two technologic forces that impact changes in examination volume over time: technologic utilization and technologic capacity.

Technologic Utilization: New diagnostic and treatment interventions increase demand for some modalities and make other modalities less efficacious. The result is that CT, MRI, PET, and to a lesser extent, ultrasound are projected to continue to grow significantly in the coming years, while diagnostic x-ray, for example, is not anticipated to have growing technologic utilization.

Technologic Capacity: Examination volume will increase with the installation of upgraded or additional equipment in an environment with appointment availability backlogs and/or poor patient throughput due to overutilization of current equipment or outdated equipment. Staffing equipment to optimize the equipment throughput also, essentially, increases capacity. This impact is most felt in digital technologies such as CT and MRI. Fortunately, these modalities also yield the most attractive return-on-investment in radiology. Determining your department's technologic capacity may make all the difference on a financial justification model between additional resources or the status quo.

FACTOR 3: DEMOGRAPHIC CHANGES

In an inpatient setting, growth projections in radiology are more closely correlated with growth in referring practices than with growth in the incidences of diseases and conditions for which radiology departments provide diagnosis and treatment. In other words, demographic changes have the least influence in the demand projection model. The only caveat to this assertion is if the service area is anticipating a dramatic change in demographic makeup. Because the model accounts for changes in referring practices and technology, an institution with minimal change anticipated in its service area's demographic makeup does not need to quantify that demographic change in the model.

Figure 2. Example of how ED adult CT examination volume can be projected utilizing the volume projection model.

VOLUME PROJECTION MODEL

Referring back to our original volume chart, Figure 2 provides an example of how examination volume might be projected for 1 year for a CT service:

Column D is based on the previous year's volume; in this case, the base year.

Column D (Year one) = Base Year + (Base Year x Column A) + (Base Year x Column B) + (Base Year x Column C)

For each subsequent year, Column D is based on the previous year's total volume (eg, year two is based on year one volume, not the base year). Therefore, emergency department adult volume for year one would be calculated like this:

Year One = 9400=0.03(9400)+0.03(9400) = 10,293

This formula can be applied to any service line in the radiology department. Undertaking this exercise will help a facility plan and prepare for the challenges and opportunities outlined by projected growth figures. Future articles in this series will describe how to calculate the resources required to meet the projected demand; and how to build a case to acquire the technology necessary to meet the demand.

Pamela M. Harlem, MBA, is manager of consulting services, Radiology Consulting Group, Boston.