You are the administrator of an established orthopedic surgery practice. Due to higher demand for MRI services resulting from increased population and the relocation of many employers to the local community, the practice is considering a new service for provider-based delivery–a portable MRI, for example. As an administrator, justify the reasoning behind provider-based delivery and develop a complete launch plan, including a budget and consideration of environmental factors. You must determine how data will be used to support the new service, and consider human resources issues affecting this new program.
The practice has these issues to consider:
- The local population’s payer mix consists of managed care and Medicare patients. Recently, in an effort to reduce health care costs, many managed care companies have reduced the payment for MRI services. At the same time, the practice is facing increasingly stiff competition from other, lower-priced MRI providers. The main advantage of your orthopedic group is its ability to provide high quality medical services that other providers can not match.
- This practice needs to plan for the recruitment and hiring of an experienced radiologist and other highly skilled technical staff to start the MRI services. The tight employment situation makes finding qualified personnel a challenge. Also, after hiring the appropriate staff, it is critical for the administrator to think proactively in order to motivate the staff and use an appropriate appraisal and reward system.
- If the orthopedic surgery practice decides to provide MRI services, the following financial data need to be considered:
- Cost of purchasing an MRI machine: $1,200,000
- Annual cost of hiring new radiologist to provide professional service: $500,000
- Annual maintenance and warranty: $30,000
- Additional office space to accommodate MRI: 5,000 SF; rent is $20/SF
- Hiring four additional technical staff at $60,000 per FTE
- Other operating expenses: $50,000
- Projected number of MRI procedures per year: 10,000