My first Backtable episode about the rad shortage, the job market, and PE in radiology was back in 2023.
I’m back on Backtable this week with a wide-ranging conversation about the job market, teleradiology, updates in the world of radiology private equity, etc etc. Always fun to chat with Ally and Mike, they’re awesome. Though, for the record, while I appreciate their kind introduction, I do not condone and categorically reject any overly charitable label that contains or alludes to the phrase “thought leader.”
Some articles for the show notes that are relevant to our discussion:
- The PE lies that inspired the creation of a new job board
- More reasons why I made Independent Radiology specifically to support private practice
- All about the new Aetna vs RP lawsuit (which itself also includes links to the posts about the UHC vs RP lawsuit that settled last year)
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Hospital Stipends vs Higher Rates
During the show, Ally asked about groups getting paid more by hospitals via stipends (i.e. call-pay/service fees/whatever-you-want-to-call-it) versus a guaranteed per-RVU rate (the latter is often direct pay per study with the hospital doing their own billing but can also be a bump after billing to an agreed-on rate to account for unpaid care/payor mix/shortfall from market rates).
I suggested that for many smaller groups approaching these conversations with hospitals for the first time, a stipend is probably easier. It’s predictable, there are easy precedents the hospital understands (e.g. other call pay), and it doesn’t usually require seismic contract or billing changes.
The reality is, I think, of course, a bit more nuanced. It depends on whether the pay increase is added on to an existing contract and long-standing relationship or part of a new contract negotiation, the size of the group, and the size/volumes of the hospital.
To reiterate, a call stipend or radiology service fee may be much more palatable to some hospitals when added to a preexisting contract as it doesn’t require changing anything else and just falls in line with the preexisting idea of call pay. For a group, it also has the benefit of providing a floor such that even if volumes aren’t high, the group still gets paid for being willing to cover after hours.
However, a per-RVU rate will likely make much more sense for a new hospital coverage paradigm in our current era of radiology contract musical chairs where a group is guaranteed that each case is paid at a good rate and doesn’t need to concern itself with billing reimbursement, bad debt, and other headaches. You read a case, you get paid a predictable rate. This may be especially good when a group’s contracts are not strong with payors and protects against downward reimbursement pressure. It’s also what a lot of the recent teleradiology contracts have been, which doubly makes sense given they are not local, may not have existing local payor contracts, and are often aggregating multiple hospitals together into one feed and spreading the work around.
Some hospitals may also be happier to pay fractionally for the work they’re actually getting than a separate fee for access (but I suspect they are most happy just spending less). Pay per RVU could still be a problem if there is a bad casemix with large numbers of plain films etc. I haven’t personally heard of many hospitals paying per-case on a modality basis, which is something relatively common in the outpatient world, but that doesn’t mean it isn’t happening.
In some ways, you can consider a service fee to have a floor that guarantees a certain level of income despite variable volumes, and a high per RVU rate as a guarantee of fair reimbursement in the setting of high/growing volumes. They also aren’t mutually exclusive.
The reality is that money is fungible, so what really matters for a group’s bottom line is more the actual pay itself than the exact mechanism. It’s not hard to look at your current RVUs and average reimbursement per hour or shift, add in a proposed stipend, and then do the simple math to figure out the effective pay per RVU. Yes, getting paid more per RVU directly is more straightforward. It scales easily with growing volumes, whereas a stipend may need to be increased if more staffing is needed in the future. Again, a small practice trying to remain competitive and putting one person on call at a time is a different beast than a large conglomerate with a large night team that is staffing based on an aggregate of multiple hospitals.
Each one is optimized for a different kind of hospital, a different kind of relationship, and a different kind of future. For groups going to their hospital and negotiating, the real best method is whatever the hospital is willing to do and still gets you the reimbursement you need for recruitment and retention. A credible threat of walking is the best leverage.
The most salient point is that groups can no longer provide services at a loss and still expect to be able to pay competitively in the market.