How Radiology Departments and Centers Can Navigate Medical Inflation?
Written By Mahmoud Barakat
Associate CEO
Radiology departments and centers are navigating through the challenging waters of medical inflation, much like a sailing boat in rough seas. With inflation rates at their highest in three decades, every industry is feeling the impact. Patients are struggling with rising costs for everyday purchases (including healthcare), while hospital and diagnostic imaging center executives face escalating expenses and shrinking profit margins.
“We are calling this a perfect storm because it is all coming together at the right time to hit us when we have all this volume, and we are struggling with these capacity challenges, downward reimbursements, and while, inflation is going up,” said Richard Heller, MD, RSNA Board member.
Radiology is often seen as central to healthcare, with advances in technology expanding its role in both diagnosis and therapy. The number of procedures is increasing. A study by the Harvey L. Neiman Health Policy Institute found that spending on diagnostic imaging rose by 35.9% between 2010 and 2021.
According to the study, between 2010 and 2021, nominal spending on medical imaging in the U.S. increased by $17.48 billion. This overall increase consisted of a $10.94 billion (22.5%) increase due to nominal price growth, a $3.60 billion (7.4%) increase due to higher use of medical imaging per capita, a $1.97 billion (4%) increase due to relative changes in use across imaging modalities, a $1.68 billion (3.5%) increase due to demographic changes in the population.
Rising Healthcare Costs and Medical Inflation
According to PwC, the cost of treating patients is rising. The healthcare industry is under pressure from high inflation, rising wages, and other costs, compounded by clinical workforce shortages. Health payers are negotiating pricing with hospitals while provider profit margins continue to erode. Health plans are also feeling the squeeze from higher median prices for new drugs as well as increasing prices for existing drugs. Medical inflation often follows a similar but delayed pattern to general inflation. Milliman reports that annual medical inflation tends to be 1.7 percentage points higher than general inflation on average.
Labor Costs and Workforce Shortages
Radiology is particularly impacted by labor costs due to staffing shortages of highly trained and qualified subspecialized radiologists. With fewer radiologists available, centers may need to offer higher salaries, better benefits, and improved working conditions to attract and retain skilled professionals. This competition drives up labor costs, making it more challenging for hospitals and centers to maintain profitability.
Rising Costs of Systems and Supplies
Rising costs for imaging, office, and medical supplies are driven by inflation, severe supply chain disruptions, and elevated expenses for systems like PACS and raw materials. For instance, the cost of paper has seen significant increases.
Addressing the Challenges
Healthcare facilities must minimize internal costs and increase profit margins despite the drastic reduction in the availability of subspecialized radiologists. Rising costs make healthcare systems unsustainable without significant investment to maintain high diagnostic standards and quality, resulting in high costs per report. The growing gap between high demand and supply of subspecialized radiologists exacerbates the problem.
Leveraging Teleradiology Services
Optimizing and automating radiology workflows with Rology’s FDA-cleared teleradiology technology is crucial. Traditional radiology workflows often rely on costly systems (such as PACS and VPNs) and manual processes, leading to bottlenecks and increased labor costs. That’s why teleradiology can step in.
Key Strategies:
- Zero-Setup Costs and Efficient Pricing: Rology offers a zero-setup cost teleradiology platform with a flexible pay-per-report model, helping reduce overall costs.
- No Need for PACS: Hospitals can operate without the need for expensive Picture Archiving and Communication Systems (PACS), reducing capital expenditure.
- Fast Turnaround Time (TAT): Rology’s fast TAT and high medical accuracy rates help minimize patient no-shows and improve patient satisfaction.
- Automated Patient Engagement: Rology provides online and instant access to radiology reports and DICOM images, improving patient engagement and reducing no-show rates.
- Expanding Service Offerings: Offering a broader range of diagnostic services and leveraging Rology’s subspecialized radiologists can attract new patients and generate additional revenue.
- Quality: Monitoring and reporting quality metrics through the Rology platform (with a 99.89% accuracy rate) helps to demonstrate a commitment to high-quality care.
By improving patient experience, optimizing workflows, and expanding service offerings, radiology departments can navigate the challenges of medical inflation, maintain financial stability, and continue to provide high-quality care.