Prior to 2007, diagnostic imaging was driven by the excitement of technology, the vision of entrepreneurship, and all with no end in sight. Even the threats of the Deficit Reduction Act of 2005 (DRA) cuts were met with disbelief. No one really believed that such cuts would happen in this dynamic, explosive medical sector. Then it happened. The DRA cuts did come into effect on January 1, 2007, and we are seeing the effects of the first foreclosures and closures of imaging facilities.

At the same time, there are rumors within CMS that more cuts in reimbursement to diagnostic radiology are being considered. The explosive growth we all loved during the late 90s and early 2000s drew a lot of attention to the huge spike in costs that this growth caused. It was noted that the cost of diagnostic imaging in our country had surpassed that of pharmacy as early as 2005. All of a sudden the "cost cutters" became very focused on diagnostic imaging as a place to save a lot of money.

At the same time, state legislators in several states began writing bills that, if passed, will have very negative effects on PPOs and would threaten the future of the radiology stand-alone and wrap networks.

Have you seen the White Paper on Radiation Dose in Medicine? This paper was published just a few weeks ago by the American College of Radiology (ACR). It states that "to put the issue in perspective, the current annual collective dose estimate from medical exposure in the United States has been calculated as roughly equivalent to the total worldwide collective dose generated by the nuclear catastrophe at Chernobyl. Therefore, one can assume, using International Commission on Radiological Protection risk factors and other data cited above, that this annual collective dose may likely result in an increase in the incidence of imaging-related cancer in the US population in the not too distant future."

This information is important, and the white paper was a smart and necessary thing for the ACR to publish. But this information will necessarily cause more government and hospital regulation for imagers and cause patients to stop and think before they just agree to be exposed to high-dose examinations. Moreover, out-of-pocket expenses rose by 150% in the United States last year. They certainly will think more about that for radiation exposure. We will see a consumer-driven marketplace in a flight to quality.

Radiology benefits management is booming because of all of these drivers. Keeping unit cost down, keeping unnecessary tests down, and keeping medical radiation down. This is an industry that is here to stay because managed care and CMS cannot do this without experts. The key is teaching the payors who the real experts are.

Cherrill Farnsworth, CEO and president

All of this coming together at a point in time will cause strong cultural shifts in diagnostic imaging. It's almost as if there is a bull's-eye painted on the industry for targeted cuts, suspicious patients, additional regulations, and eliminations of services.

What could the new distribution model of diagnostic imaging look like? Well, we can be sure it will cause a strong buying or building opportunity for those with access to capital who want to build and own nationwide chains of hundreds of radiology centers that would have strong clout with managed care and CMS. Many believe that these imaging clinics and departments will cause a reorganization of the delivery system in radiology that is built on efficiency and buying power. Those that have access to capital and vision will be the players in these new companies. In order to develop the margins needed to keep the invested capital coming, and grow such large companies rapidly, they will buy in bulk, use state-of-the-art RIS systems and PACS, and swipe cards for payment. They will utilize remote reading radiologists to do the lion's share of the radiology professional component while having a skeleton clinical staff in the centers.

Of course, the outpatient imaging field will have fewer players. The cottage industry that we saw last year will gradually go away as the small and highly leveraged players can't compete. The large, well-run chains may be the platform for the new growth and be able to raise the capital to make fast moves to buy or to build. The facts are the US health care system cannot sustain the cost trends in imaging and efficiency is being forced into our industry rapidly. It started with CMS, but is moving throughout the insured population.

This, paired with new information on medical radiation-induced cancers, is really powerful. The newly educated consumer will not be in asking for more medical radiation very often. I know all of you that read this journal are aware of the macro and micro economics that drive our world. What happens when several of these drivers change all at once will be really interesting. And by the way, the change doesn't have to be bad. It is inevitable, and will be good as long as we get ready for it, embrace the change, and thrive in the exciting new environment.

Cherrill Farnsworth is chief executive officer of HealthHelp Inc, Houston. For more information, contact .