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Reinvestment in CT 2009

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Philips CT MarketingPhilips Healthcare

Reinvestment in CT 2009


Historically, CT scanning has been a high-margin business. However, current economic pressures and decreasing reimbursement mean that this once comfortable cushion is shrinking. Furthermore, the volume of CT exams performed nationwide is expected to experience less growth going forward, especially over the next 2 years, than what would be expected based on past growth.


Due to current economic pressures and decreased reimbursement, CT providers must rethink their strategies. CT procedure volumes are expected to grow only between 2% and 3% per year over the next 2 years.


Given these challenges, Sg2 recommends that health care providers adapt their strategies and focus on extracting all potential value from their existing investments in CT scanners. As a provider, your organization must selectively reinvest in your CT program by carefully implementing select training protocols and targeted upgrades that will maximize the utility of your assets. For example, providers must improve efficiency and work flow over the short-term to survive the current economic climate. Further, to enable long-term growth, providers must plan to implement hardware or software upgrades to enable improved work flow or add new clinical applications. Such upgrades should generate future return by addressing the needs of the changing market.


To fund these recommendations, Sg2 suggests that providers allocate a budget for CT upgrades into their operational budgets, not their capital budgets. This will allow the provider to continually reinvest in its CT program, with funds that are not competing against other capital items in a stressed capital budget.


The organizations that differentiate their CT business in the evolving marketplace will maximize the return on their investments in CT technology through continual upgrades, training and work flow optimization.

National CT volumes forecast

As calculated using Sg2's proprietary Impact of ChangeĀ® (IoC) model, 46% growth in CT volumes is expected over the next decade. This growth will be fueled by key factors such as an aging population, new clinical applications and technology maturation. This growth will, however, be tempered by market realities such as the impact of the economy and changing policy.


The figure below displays how Sg2 has adjusted its IoC forecasting model to better account for the economy and shifting policy (without this adjustment the model forecasts 71% growth, as shown by the blue line). For example, growth in CT volumes (red line) is expected to remain slow for the next 1 to 2 years due to the ongoing recession. After this period (Arrow 1), increased employment and key initiatives of President Barack Obama's health care plan, such as expanded coverage and increased coverage options, should fuel growth. However, recently publicized, more aggressive and widespread policy for health care reform is aimed at reducing health care spending and eliminating inefficiencies. Sg2 forecasts that by 2014 these factors could begin to slow growth in CT volumes (Arrow 2).


Will your CT business thrive in challenging times? Is your organization prepared to increase its utilization of its existing assets in CT technology and implement targeted upgrades? Sg2 predicts that those organizations that actively adapt to the changing market through continual reinvestment in their CT business will be well positioned to solidify their revenues as well as capture growth going forward.
 CT outpatient procedure volume forecast for the US market (2008-2019)
CT outpatient procedure volume forecast for the US market (2008-2019)

Operational and facilities impact

Navigate the Imaging Value Chain

In the current market, imaging facilities must improve operational efficiencies, work flow and productivity to grow revenue. To help imaging providers better address areas where they can add value or increase efficiencies, Sg2 has developed the imaging value chain shown below. Each stage in the value chain is represented by an arrow and addresses each step in the imaging process, from receipt of the order to final delivery of the report. Your organization should utilize the value chain to search for solutions to improve each step in the imaging process. Within each section following this section, Sg2 provides strategies targeted at different steps in the value chain that will help your organization maximize your CT utility.

 Imaging value chain
Imaging value chain


Maximize the number of daily CT exams to drive incremental revenue

Your organization can increase its number of available patient slots per day to increase volume. The first step in accomplishing this is improving scheduling practices (step 2 in the imaging value chain). This can be a challenge because different scheduling conventions will be needed for inpatients, outpatients, emergency department (ED) patients and pediatric patients; the minimum necessary time slots and the equipment needed will differ among these patient populations. To account for these differences, Sg2 recommends adapting scheduling practices so that similar patient types (eg, inpatient, outpatient, pediatrics and ED) are scanned on the same device.


Next, Sg2 recommends using your system's data to calculate your nonscanning time per day for a given CT or purchasing software tools that can be loaded onto your CT scanner for that purpose. This will help gauge incremental revenue opportunities. It will also help guide efforts to schedule and scan more patients per day. Use these data to reduce scheduled time slots to the minimum length of necessary time and to allot the minimum necessary amount of scheduling time for inpatient, ED and pediatric cases.

 Active scanner time (Blue) vs inactive scanner time (Gray)
Active scanner time (Blue) vs inactive scanner time (Gray)


To monitor your progress, regularly download the actual schedule of performed exams and compare this with the initial schedule from the same day. Identify factors that cause inconsistency between the 2 schedules, such as transport issues (which affect steps 2, 3 and 4 in the value chain), interdepartmental communication (which affects steps 1, 2, 3 and 9 in the value chain) and emergency cases. Iteratively perform this process to allow your organization to revamp its work flow practices and perform more CT exams per day.


Sg2 Tip: A good rule of thumb for a "typical" CT outpatient procedure is that 1 new patient per working day represents ~$75,000 in additional annual revenue.*


*Calculations are based on reimbursement rates of ~$300 per exam, multiplied by 1 exam per day, 5 days per week, over 50 weeks per year. Source: Centers for Medicare & Medicaid Services (CMS). Hospital Outpatient Prospective Payment System, 2009.


Reduce exam time for your high-volume and high-revenue procedures

By reducing exam time (step 6 in the value chain), especially for your high-volume, high-reimbursement procedures, your organization can increase revenue. As mentioned previously, your vendor can provide software tools for purchase that will allow you to download utilization data. Use these tools to access your system's utilization data to monitor average exam duration and work flow and iteratively track your progress in improving each. In addition to analyzing utilization data, search for forums, such as online message boards or symposiums, through which your organization can compare CT utilization and share "best practices" with other imaging providers. Aim for the utilization of each of your CT scanners to be comparable to leading CT businesses.

 Screenshot of measures of exam time by procedure
Screenshot of measures of exam time by procedure


Pay special attention to the exam times for your high-volume procedures, since they have a large impact on revenue. To accomplish this, identify the most frequently performed procedures at your organization and list them in the Revenue-Volume grid provided on the next page. To guide you, example CT procedures have been placed in the table. Note the exams located in the upper-right and upper-left quadrants. For these exams, identify physical constraints, snags in the patient education process (steps 4 and 5 in the value chain) and deficiencies in staff training that could be eliminated. Consider establishing training protocols geared toward increased efficiency in these procedures. Remember, if your organization can reduce the total time for each of these procedures, the time saved will be multiplied.
 Revenue volume grid
Revenue volume grid


Finally, also pay special attention to the exam time for your highest-revenue procedures. Is an unnecessarily long exam time or inefficient work flow causing your organization to perform fewer high-revenue procedures than the national average? To determine this, compare your procedure mix to the US average; a sample of the national procedure mix is listed in the "National Procedure Mix" table that follows. The most common procedures in this list are likely to fall in the upper 2 quadrants of your Revenue-Volume grid. Next, compare your most frequent procedures to a ranking of the most highly reimbursed procedures; a sample of this list is provided in the "Highest-Reimbursement Procedures" table on the following page. Use your procedure mix and exam time data as cues to search for snags in work flow or inefficiencies that may be decreasing the number of highly reimbursed procedures, such as CTA, performed by your organization.
 National procedure mix and list of highest reimbursement procedures
National procedure mix and list of highest reimbursement procedures


Market high-growth and high-revenue CT procedures

A CT business must have a strong patient base in order to set the imaging process in motion and even make discussions about the imaging value chain relevant. Successful marketing within your organization, to referring physicians and to the surrounding community can help strengthen this patient base. Even if your organization's marketing budget is small, there are opportunities to acquire dedicated marketing kits and other information that your organization can repurpose to market your CT business. Sg2 recommends focusing your organization's marketing efforts on high-revenue, high-growth CT procedures. For example, CTA is the fastest-growing, most highly reimbursed CT procedure, and the ability to perform CTA is an important component of your organization's capabilities. If your organization has the appropriate scanner, contrast injector and advanced visualization software or is planning to upgrade to these capabilities, market these capabilities. Use your vendor's marketing templates and educational materials, and cater to referring physicians. Offer scheduling priority, report customization and educational materials to primary care and specialist referring physicians. Also note the procedure mixes of the highest-volume referring physicians who contribute 80% of your exams. Target each of those physicians and tailor marketing efforts to them. Highly targeted marketing could help your organization to capitalize on CTA or the potential of other high-growth, highrevenue procedures.

Staffing impact


Let your CT technologists do their job

In order to optimize the use of your existing CT platforms, your clinical and nonclinical staff must know their roles and perform them well. Staff extenders should perform exam prework, receive the patient, explain the exam, escort the patient, answer patients' questions and discharge the patient. Technologists should spend their time performing step 6 in the imaging value chain, scanning. A multitasking CT technologist who performs administrative tasks or support tasks hurts your revenue; a CT scanner does not generate revenue when it is not scanning.


A multitasking CT technologist does not help your revenue. Your highest-paid employee should be performing CT scans, not doing administrative tasks or paperwork.


Clearly define the responsibilities of each of your employees, train them in these responsibilities and quantitatively monitor their performance. Repeat this process iteratively. Staff extenders should learn to complement your most-valued employees, your technologists, and enable your technologists to spend their time scanning. Your technologists should be educated to better understand the full capabilities of each scanner. Your organization should build in mechanisms or look for upgrades that can be purchased to allow technologists to continually increase their efficiency.


Consider redeploying your CT technologist to increase revenue

At first glance, this notion seems counterintuitive. However, a case study at Massachusetts General Hospital, Boston, MA, has shown that substantial additional revenue can be generated by adding a technologist to the schedule to support work flow. This study showed that adding a technologist can decrease scan time (step 6 in the value chain) from 25 to 15 minutes. At 85% capacity this could increase the annual number of patients by over 13,000. Two additional technologists at 85% capacity could reduce scan time to 10 minutes and add over 23,000 annual patients. Finally, the study also suggested that impact would be even more favorable if utilization was increased beyond 85%.

 Effect of additional technologists on number of patients scanned
Effect of additional technologists on number of patients scanned


Though this study was performed at a large academic hospital, these data have implications for a broad range of providers, from critical access centers, to outpatient facilities, to community hospitals and beyond. In the case of Massachusetts General Hospital, it was estimated that a single additional technologist could grow revenue by $1,250,000 to $2,500,000, and 2 more technologists could increase revenue by $3,500,000 to $4,000,000. As such, Sg2 highly recommends that your organization explore the potential benefit of redeploying technologists to maximize on-scanner time. Most organizations should not expect such a staggering revenue increase, yet redeploying technologists should help to extract substantial added value from your existing CT scanners.


Incorporate technologist education and training into your vendor relationship

Anytime a new CT device is purchased, a device is upgraded or a new protocol is implemented an appropriate training and educational program should be implemented. But this is not the only time to educate your staff. More than likely, your staff could increase efficiency and improve work flow on specific procedures with regular updates and training from the vendor. In the current market, imaging providers should view this as an integral part of their relationship with their vendors, and vendors are becoming increasingly accustomed to fulfilling this role.


On days in which upgrades are implemented or training programs are performed, your typical work flow will be slowed. Sg2 provides a number of recommendations for imaging providers to keep work flow slowdowns to a minimum. First, work closely with your vendor's application specialists to learn what volume of patients and what types of patients should be scanned during training days. Next, work closely with your scheduling team to schedule a continuous block of that specific type of patients during nonpeak business hours. Finally, stagger training programs to occur on nonconsecutive days that typically have the lowest volume.

Financial impact

Parallels with other high-technology businesses with high capital costs suggest that an annual investment of 5% to 8% of revenue should be budgeted toward targeted upgrades and building your CT program. Considering that a typical CT scanner generates in excess of $1.4 million annually in revenue, $70,000 to $112,000 per year should be allocated. Sg2 recommends that about half of this amount should be set aside for direct investment in refreshing your CT equipment with hardware and software upgrades and improving your CT business. This concept is often difficult for hospitals to execute. Consider making performance improvement and technology refreshment a component of the operating budget rather than a capital expense. If you lease your scanner, consider building the technology refreshment component directly into the lease.


Parallels with other high-technology businesses with high capital costs suggest that 5% to 8% of revenue should be budgeted annually to build your CT program.


Adding clinical applications can provide significant revenue

Capital budgets are shrinking, but your organization may have the capacity to upgrade your CT capabilities by purchasing new clinical application software and hardware. This can expand the repertoire of available services provided by your CT scanning business. Importantly, the question that your organization must ask is: Does this make financial sense? To determine this, estimate demand and identify the physicians who will be referring patients. If the expenses involved in providing the service are primarily software, workstation hardware, education and marketing, it is relatively straightforward to determine whether this application will be profitable.

 Investment payback periods for comm hospital with a 16-slice scanner or higher and a 3-D workstation
Investment payback periods for comm hospital with a 16-slice scanner or higher and a 3-D workstation


Capital budgets are shrinking, but your organization may have the capacity to upgrade your CT capabilities by purchasing new clinical application software and hardware. This can expand the repertoire of available services provided by your CT scanning business.


Advanced applications are poised to improve work flow

Do your radiologists sit at a dedicated computer workstation or at the CT scanner workstation to view and process exams? Advances in thin-client software allow such tasks to be performed anywhere with a standard personal computer and Web-browsing capabilities. Upgrading to thin-client applications will allow multiple users to simultaneously perform complex rendering, image manipulation, measurement and report generation on complex data sets, even from remote locations. Your organization can acquire report generation applications and applications such as speech-recognition software and computer-aided detection (CAD) that can interface with thin-client applications to decrease turnaround times. Work with your vendor to determine which of these will interface well with your system.


In the current market, however, some providers may prefer to target less-costly, alternative workstation upgrades. For example, some providers may not be able to afford to upgrade to thin-client software or may have limited network capabilities. Those providers should explore software and hardware upgrades to their existing workstations. Such upgrades can still improve processing power, increase the speed of image manipulation and rendering, improve measurements and facilitate faster report generation at a smaller cost than the implementation of thin-client capabilities. Sg2 recommends working with your vendor to determine which upgrades are right for you.


Account for downtime during upgrades

Upgrades to your CT scanner may include a new accessory, such as a power injector. They may also include software and hardware enhancements to improve work flow or productivity, as well as enhancements to education and marketing programs. For example, work flow enhancements include: new computer hardware to speed image reconstruction and analysis; workstation software; improved x-ray tubes; a new user interface; thinclient software; and advances in networking to permit easy file-sharing with referring physicians and better communications with the hospital's electronic medical records, billing and picture archiving and communication system/radiology information system (PACS/RIS) platforms.


In any of these cases, work with your vendor to plan for the amount of time that your CT scanner will be nonoperational. The amount of time may be dependent on the type of upgrade you have chosen. For instance, for minor upgrades such as software enhancements your organization may need to plan for a few hours of nonscan time. For major upgrades, such as hardware enhancements or the installation of a new unit, your organization may need to plan for days or even weeks of nonscan time. Make plans to minimize your amount of nonscan time on the upgraded device, while continuing to scan using alternate mechanisms. Have a contingency plan for diverting studies to a different department, mobile unit or affiliated facility. Further, obtain a firm commitment from your vendor for the amount of time your CT scanner will be down.


Redeploy older technology to other sites of care

In today's challenging economy, your organization should focus efforts on extracting value from your existing assets. Your organization may have invested in different types of CT technology and may have more than 1 scanner. Because inpatients, ED patients and outpatients have different demands, having separate CT suites for each of these patient populations may make sense. As new technology is acquired for the outpatient center, ask yourself the following question: Can the older systems be moved to different locations to meet the needs of our different patient types? When your organization upgrades or replaces a CT scanner, always consider the potential indirect, downstream effect that this could have on the enterprise.





1. Allocate funds for CT maintenance and upgrades into your operational budget.

  • Adopt a mechanism to ensure that these monies are available.
  • Expect to spend between 5% and 8% of annual revenue to build your CT program, with about half of these funds being used to refresh your CT technology.
  • Make regular upgrades part of the operating plan-reduce surprises and organizational pain by recognizing that regular upgrades are part of the "business" of CT.


2. Use available software and training tools to improve work flow.

  • Work flow improvements may take the form of optimal scheduling or reduced exam time and are multiplied in your high-volume procedures.


3. Choose upgrades and service enhancements that are consistent with your clinical priorities. 


4. Consider moving scanners into other locations and segregating them by application.

  • Where possible, provide separate suites for outpatient, emergency department and inpatient work.

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Mar 19, 2009

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