Size is a challenge for radiology practices, imaging center chains,and hospital networks

Bigger is better, goes the old adage, and ever since the Europeans settled in this big beautiful land, that thought has taken root in our collective consciousness, and it continues to be prevalent, even though we know that it is not necessarily so.

Consider the concept of the physician practice management (PPM) companies of the late 1990s: big, publicly held rollups of physician practices nationwide. Although one could argue that it was the publicly traded aspect of these groups that undermined them, their size and geographic scope definitely were not conducive to communications and governance.

Just last month, we saw the chapter on PPMs finally come to an end when Primedix of Los Angeles, now operating as Radnet, bought Radiologix, the last PPM standing. Radiologix was not known in recent years as a PPM, and was more interested in operating imaging centers than it was in practice management. There were not many—if any—physician practices remaining in that organization, which was as anxious to shed the practices and concentrate on running imaging centers as the physicians were to get out. Radiologix had a roller coaster of a run and a dignified end by business standards these days, and it has finally passed on to the big resting place in the sky. Time to turn the page.

Size undoubtedly played a role in the demise of yet another California behemoth, the Long Beach-based 60-person Memrad practice, but the end was not nearly as clean. One client hospital is reportedly operating with a radiology clinical staff cobbled together from some of the former practice members and locum tenens. The rest of the practice has dispersed, scattered from San Pedro to Pomona. Memrad's practice management company, RPM, also is no more. Gregory Kusiak, MBA, is president elect of the Radiology Business Management Association, practice manager for The Hill Medical Corp—a Pasadena practice, president of a billing and practice management company in Arcadia, and a long-time observer of the California radiology scene. He sums up the curse of big like this:

"When you are trying to earn income for distribution from fees generated by the work of individuals, then it's always a cautious equation between how much of the income goes directly to them versus how much is available to be distributed to the broader entity. If the broader entity provides access to synergy whether in the form of market power, purchasing power, or ease of employment (people to cover for you), then you can tolerate a larger gap between the income you generate and the income that comes directly to your pocket.

"Now, if you get a significant gap, then the people generating the money are saying, 'Wait a minute, I could have this all to myself if I wasn't part of this behemoth.' If you look at accounting and law firms, they have a well-established pattern of bringing in junior woodchucks at a rather low income and working them half to death. The excess of their earning is available for the distribution to their partners. You have a very hard time doing that with physicians. That's the large challenge of any group that tries to put itself together over a large geographic distribution."

A happier tale is featured in "Integration in Indianapolis," the story of a merger between an academic and a private practice and how that new entity formed the foundation for the shared governance of three dissimilar hospitals with excellent results, thanks to sharp and effective management.

Big has its benefits, to be certain.

But big also carries a curse.

Cheryl Proval
Editorial Director