The document provides an analysis of a radiology practice including initial observations, recommendations for improvement, and procedure volume statistics. Key findings include a lack of formal marketing and financial planning, opportunities to improve operations and billing through automation and analytics, and year-to-date growth in overall procedure volume compared to previous years. Recommendations address enhancing marketing, evaluating strategic partnerships, implementing financial controls, upgrading technology, and monitoring metrics to optimize performance.

1. Radiology Practice Analysis
Observations, Analyses, and
Recommendations

2. Table of Contents
• Imaging Center Initial Observations
• Procedure Volume Analysis
• Capacity and Utilization Analyses
• Billing and Collections Analysis
• Financial Analyses
• Marketing and Referrals Analysis
• Physicians’ Productivity Analysis
2
7/24/2011

3. Imaging Center
Operations
Initial Observations
7/24/2011 3

4. Observations - Marketing
• No formal marketing plan exists.
• No marketing budget exists.
• Marketing efforts have been limited of late.
• Marketing information is fragmented and difficult to
compile and analyze.
• Marketing materials need to be refreshed and re-
stocked.
4
7/24/2011

5. Observations – Strategic Initiatives
Hospital Joint Venture
• Information needs to flow more freely.
• Detailed financial analysis is required before moving
forward.
• Organizational and legal structures require analysis.
• Identification and analysis of alternative business
models is required.
• Blueprint for the future needs to be developed.
5
7/24/2011

6. Observations – Accounting & Finance
• A/P and basic accounting functions appear to be
functioning efficiently and effectively.
• No formal budgeting process exists.
• Policies need to be enhanced and communicated.
• Financial controls need to be reviewed and
improved where necessary. (Purchasing)
• Financial information silos exist.
• Financial analysis is difficult due to information access
constraints.
• Remote accounting function poses logistics and
control issues.
6
7/24/2011

7. Observations - Billing
• It appears the billing operation is operating effectively
despite lack of automation.
• Collections as % of charges outperform industry
standards.
• Billing reports are limited in scope and content.
o A/R reports are rudimentary
o Lack of detail by modality, carrier, and study
• Billing and collections metrics are non existent.
• Collections performance warrants scrutiny.
o Collection % and A/R performance seem high by industry
standards. (Could be due to a high write off %)
• No denial management mechanism is evident.
• Lack of automated billing interfaces may be a cause
for concern. (Charge collection process is a manual
one.)
7
7/24/2011

8. Observations - Operations
• Procedure volume up in all modalities vs. prior year.
• Most modalities have excess capacity.
• Scheduling/front desk systems & processes require
review & analysis. (6Σ)
• Phone system/scheduling processes requires scrutiny.
• RAD report delivery process could be improved. (use
of website and RIS/PACS)
• Ongoing staffing issues need to be addressed.
• Duplicate techs in MR and CT
8
7/24/2011

9. Observations – Information Technology
• RIS system lacks functionality.
o Inadequate management reporting capability.
o Lack of metrics and analytical capability.
o No interface to billing. (manual)
• Website needs to be updated & refreshed.
• Easier exchange of information via e-mail, shared
directories & schedules is needed.
• Current PC hardware requires upgrade.
• Analytical and management applications are non
existent.
9
7/24/2011

10. Marketing Recommendations
• Establish a marketing budget
• Update marketing materials
• Review mktg. activity, proc. volume, & referral
statistics
• Develop marketing plan
o Target specific referring physicians and specialties
o Target specific modalities and studies
o Target specific advertising venues
• Improve referral tracking process
• Develop metrics to track marketing efforts
10
7/24/2011

11. Strategic Initiatives Recommendations
• Obtain financial information from hospital
o RAD billing and collections by modality, provider,
and procedure
o Pro forma financials for JV
• Develop alternative JV business models
o Legal model
o Financial model
o Operating model
• Perform analysis of various alternatives &
make recommendations
11
7/24/2011

12. Finance & Accounting Recommendations
• Develop annual budget process
• Review current processes and controls
• Evaluate and modify if necessary
• Develop periodic reporting mechanisms
• Obtain financial accounting system access
in remote locations
• Develop cash flow, revenue, expense, etc.
metrics
• Develop an activity based costing model
• Move the accounting function to the
operations center
12
7/24/2011

13. Billing Recommendations
• Develop billing & collections metrics
• Work with billing company to improve reporting
process
• Develop mechanism to monitor denials
• Develop periodic billing audit process
13
7/24/2011

14. Operations Recommendations
• Review front desk operations
o Evaluate current procedures
o Evaluate operational performance (6Σ)
o Develop call metrics and standards
• Develop capacity & utilization matrix &
monitoring process by modality
• Evaluate optimum staffing model
• Evaluate phone system capabilities
o Meet with telecom to evaluate options
o Improve telephone capabilities if warranted
• Evaluate IR Front Desk & Operational
Procedures
14
7/24/2011

15. Information Technology Recommendations
• Update websites
• Update PC hardware and software
• Improve information delivery, aggregation, and
delivery capabilities
• Obtain managerial and analytical software
• Meet with IS vendors. to evaluate enhanced
capabilities
15
7/24/2011

16. YTD Procedure Volume Analysis
16

17. Daily Procedures (M - F)
165.00
162.30
160.00
155.15
155.00
151.78 151.73 151.39
150.32 149.68
150.00
145.51
144.38
145.00
141.93
141.16
140.00 139.17
135.00
130.00
125.00
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

18. Monthly Volume Comparison
2007 Mthly Vol. 2008 Mthly Vol. 2009 Mthly Vol. Linear (2009 Mthly Vol.)
4,000
3,547
3,500 3,406 3,439 3,416
3,393 3,334
3,225 3,202 3,201
3,156 3,067 3,141 3,148 3,158
3,263
3,076
2,998 3,020 3,009 2,989
3,000 2,957
2,821 2,784
2,706 2,752
2,667
2,587 2,682 2,573
2,528 2,529 2,558 2,523
2,514
2,500 2,402
2,091
2,000
1,500
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

19. % Growth in Procedure Volume
50.00%
45.88%
40.00%
30.00%
23.62%
20.00%
15.25%
9.72%
10.00%
0.00%
2007 v 2006 2008 v 2007 2009 v 2008 Annualized Growth

20. YTD Highest Growth Areas
Modality 2009 Growth Rate
PET CT 25.84%
Ultrasound 24.17%
MRI Imaging Center 10.03%
Total MRI (includes leased slots) 8.02%
Mammo 7.58%
CT 7.31%
Overall YTD Growth vs. Prior Year 10.09%
20

21. Projected Growth
50.00% 45.88%
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.25%
15.00%
10.05%11.06% 9.52% 8.70%
10.00% 8.00% 7.41% 6.90% 8.80%
5.00%
0.00%
21

22. General Observations
• Procedure volume growth continues at a significant
pace.
• Annual growth rate projected at 10.05%
• Annualized growth since inception = 23.73%
• Regression analysis projects continued growth
22

23. Analysis
• Current month procedure volume declined from
prior month due primarily to:
o Holiday
o Power outage
o Only 22 work days
• PET CT and Ultrasound continue to exceed the
average growth rate.
• Women’s imaging continues to be a high growth
area.
• Long term trend analysis predicts continued growth
through 2015
23

24. Conclusions
• Outpatient imaging continues to be a growth area.
• Additional time slots for MRI, PET, and women’s
imaging would most likely be profitable.
• Marketing efforts should be focused on Women’s
Imaging, IR, and the Vein Center as well as
traditional high tech modalities and studies.
24

25. Capacity & Utilization
Analysis

26. US Capacity & Utilization
Capacity Avg. No. Avg. No. % Excess Avg. $$ Gross
Room Daily No. Cost of
(Avail. of of Utilizatio Capacit per Profit
Times Revenue FTEs FTEs
Slots) Patients Studies n y Study (Loss)
US 1
Mon 8 - 4 16 15.40 23.50 96% 0.60 $ 102.26 $ 2,403.11 2.0 $ 761.85 $1,641.26
Tue 9 - 8 22 8.50 14.17 39% 13.50 $ 102.26 $ 1,448.68 2.0 $ 761.85 $ 686.83
Wed 8 - 8 24 12.25 16.21 51% 11.75 $ 102.26 $ 1,658.07 1.5 $ 609.48 $1,048.59
Thur 8 - 4 16 11.50 16.71 72% 4.50 $ 102.26 $ 1,709.20 1.5 $ 609.48 $1,099.72
Fri 8 - 4 16 7.50 10.00 47% 8.50 $ 102.26 $ 1,022.60 1.0 $ 406.32 $ 616.28
Sat 8 - 4 16 6.20 8.50 39% 9.80 $ 102.26 $ 869.21 1.0 $ 406.32 $ 462.89
Totals 110 61.35 89.10 55.77% 48.65 $ 9,110.88 $3,555.30 $5,555.58
US 2
Wed 1 - 4 8 7.5 7.5 94% 0.50 $ 102.26 $ 766.95 0.5 $ 330.14 $ 436.82
Thur 1 - 4 8 1.00 1.00 13% 7.00 $ 102.26 $ 102.26 0.5 $ 330.14 $ (227.88)
Totals 16 8.5 8.5 53.13% 7.50 $ 869.21 $ 660.27 $ 208.94
Grand Total 126 69.85 97.60 56.15 $ 9,980.09 $4,215.57 $5,764.52

27. Annual CT Volume by Day
600
536
497
500
431 427
394
400
300 246
200
100
0
Mon Tue Wed Thu Fri Sat

28. Daily Average CT Studies
17
16 15.64
15
14.36
14
13
12.20
12
12.22
12.08 12.00
11
10
9
8
7 7.03
6
Mon Tue Wed Thu Fri Sat Weekly Total

29. Billing and Collections
Analysis

30. YTD Billings and Receipts
$1,600,000
$1,396,119
$1,400,000 $1,349,566
$1,200,000
$1,055,011
$1,000,000
$800,000
$624,562
$559,028 $530,102
$600,000
$400,000
$200,000
$-
January February March
Billings Receipts Linear (Billings) Linear (Billings) Linear (Receipts) Linear (Receipts)

31. % Change Current Month vs. Prior Year Month
11.38%
12.00%
10.00%
8.00%
Procedures
Billings
6.00%
4.50% Receipts
3.48%
4.00%
2.00%
0.00%
Procedures Billings Receipts

32. Aetna
2010 Payer Mix USHC
0.34% HMO
RAYTEL
0.22% 0.02% 0.23% 5.97%
Aetna PPO
6.76%
Amerihealth HMO
0.21%
One Call
Personal Choice Amerihealth PPO
0.28%
17.28% 6.42%
Motor Vechile
1.30%
Blue Shield
Medicare 13.47%
17.32%
Bravo Health
0.45%
Crozer Aetna Capitation
Keystone Health Plan East 6.26%
6.14%
Keystone Mercy Crozer Keystone
0.00% Healthpartners Capitation
0.00% Evercare Coventry Commericial 9.66% Cigna
0.42% 0.39% 4.97% 1.89%

33. Financial Analyses

34. YTD Actual and Projected Revenue by Quarter
$1,958,339.85
$1,904,025.12
$1,897,734.58
$1,856,000.92
1st quarter 2nd Quarter 3rd Quarter 4th Qtr Projected

35. Revenue by Source
$7,616,100.46
$242,400.00
Sum of Total $1,244,859.70
$6,232,607.26
$174,451.53
$1,904,025.12
$60,600.00
Sum of 4th Qtr Projected $311,214.93
$1,558,151.81
$43,612.88
$1,897,734.58
$61,200.00
Sum of 3rd Quarter $295,195.22
$1,523,552.57
$46,012.89
$1,958,339.85
$59,400.00
Sum of 2nd Quarter $309,060.40
$1,644,333.48
$42,027.41
$1,856,000.92
$61,200.00
Sum of 1st quarter $329,389.16
$1,506,569.39
$42,798.34
$- $1,000,000.00$2,000,000.00$3,000,000.00$4,000,000.00$5,000,000.00$6,000,000.00$7,000,000.00$8,000,000.00
Total MRI Block Lease Medicare Lock Box/Elect/Self Co Pays & CCs

36. MRI Center Profitability Analysis
Avg.
Studies
2010 Projected Reimbursement Projected Profit
Expenses
1997 $575.76
With RAD W/O RAD
Projected Revenue: $ 1,149,509.04
Actual Expenses w/o RAD $583,221.28 $1,149,509.04 $ 1,149,509.04
Accounting Expense $ 7,860.95
Bank Charges $ 3,000.00
Business Liability Insurance $ 3,000.00
Radiologist Expense (1/2 FTE) $271,465.23 $ 868,547.45 $ 597,082.23
Total Expenses w/RAD $868,547.45
Gross Profit w & w/o RAD $ 280,961.59 $ 552,426.81
Gross Profit Margin (EBIDTA) 24% 48%

37. Joint Venture Ownership Alternatives Analysis
Financial Implications of Various Growth and Ownership Models
Variable Growth Fixed 8% Growth Fixed 3% Growth
% Ownership 5 Yrs Net $$ 10 Yrs Net $$ 5 Yrs Net $$ 10 Yrs Net $$ 5 Yrs Net $$ 10 Yrs Net $$
10% $ 681,188.79 $ 2,029,967.49 $ 919,653.68 $ 3,815,665.89 $ 509,325.89 $ 1,590,789.76
90% $ 6,130,699.09 $ 18,269,707.37 $8,276,883.16 $34,340,993.04 $4,583,933.02 $14,317,107.82
Total $ 6,811,887.88 $ 20,299,674.86 $9,196,536.84 $38,156,658.94 $5,093,258.91 $15,907,897.57
20% $ 1,362,377.58 $ 4,059,934.97 $1,839,307.37 $ 7,631,331.79 $1,018,651.78 $ 3,181,579.51
80% $ 5,449,510.31 $ 16,239,739.89 $7,357,229.47 $30,525,327.15 $4,074,607.12 $12,726,318.06
Total $ 6,811,887.88 $ 20,299,674.86 $9,196,536.84 $38,156,658.94 $5,093,258.91 $15,907,897.57
30% $ 2,043,566.36 $ 6,089,902.46 $2,758,961.05 $11,446,997.68 $1,527,977.67 $ 4,772,369.27
70% $ 4,768,321.52 $ 14,209,772.40 $6,437,575.79 $26,709,661.26 $3,565,281.23 $11,135,528.30
Total $ 6,811,887.88 $ 20,299,674.86 $9,196,536.84 $38,156,658.94 $5,093,258.91 $15,907,897.57
40% $ 2,724,755.15 $ 8,119,869.94 $3,678,614.74 $15,262,663.58 $2,037,303.56 $ 6,363,159.03
60% $ 4,087,132.73 $ 12,179,804.91 $5,517,922.10 $22,893,995.36 $3,055,955.34 $ 9,544,738.54
Total $ 6,811,887.88 $ 20,299,674.86 $9,196,536.84 $38,156,658.94 $5,093,258.91 $15,907,897.57
50% $ 3,405,943.94 $ 10,149,837.43 $4,598,268.42 $19,078,329.47 $2,546,629.45 $ 7,953,948.79
50% $ 3,405,943.94 $ 10,149,837.43 $4,598,268.42 $19,078,329.47 $2,546,629.45 $ 7,953,948.79
Total $ 6,811,887.88 $ 20,299,674.86 $9,196,536.84 $38,156,658.94 $5,093,258.91 $15,907,897.57

38. Marketing & Referrals
Analysis

39. Referrals by Quarter
8,100
7,966 7,986
7,918
7,900
7,772 7,703
7,700
7,500 7,515
Referrals
7,459
7,300
7,100
6,900
6,737
6,700
6,500
2007 Q 4 2008 Q 1 2008 Q 2 2008 Q 3 2008 Q 4 2009 Q 1 2009 Q 2 2009 Q 3

40. Top 20 Referring Physicians - 1st Qtr to Prior Yr 1st Qtr
350 336
329
319 QTR 1 - 09 QTR 1 - 10
308
300 283
271
263
250 231
225
200
191 192
200 181 183
175 168 179 170
153
167 170 143 141 137
150 131 125 124 121
106 99 103 103
100 88 91 8793 85
76
54
50 37
-
REF REF REF REF REF REF REF REF REF REF REF REF REF REF REF REF REF REF REF REF
DOC 1 DOC 2 DOC 3 DOC 4 DOC 5 DOC 6 DOC 7 DOC 8 DOC 9 DOC DOC DOC DOC DOC DOC DOC DOC DOC DOC DOC
10 11 12 13 14 15 16 17 18 19 20

41. Ref. Phys. Office Visits
Referrals Increased 158 74.88%
Referrals Decreased 50 23.70%
No change 3 1.42%
Total Physcians Visited 211 100.00%

42. Physicians’ productivity
Analysis

43. Physicians Productivity by RVU & Proc. Vol.
35,000
FY 2009 Physicians' Productivity
31,340
35,000 33,180
30,000 31,340
30,000 29,219
25,000
25,000
20,159
20,000
20,000
15,000
15,000
10,000
6,532
10,000
5,000
5,000 0
KR
BT
KM
JM
LB
EJ
JS
IW
KN
JH
LC
JK
ER
JB
PS
SG
JH2
SS
AG
CK
CB
(blank)
AW
AF
DS
HH
HR
GS
RT
-
Sum of Procedures Sum of Work RVU
Sum of Procedures Sum of Work RVU

44. Practice Statistics
Physician
Days Worked RVU/Day Procs/Day Revenue/Day
Productivity
Total 4,347.20 1,398.75 1,857.21 $ 69,676.14
Minimum 99.50 39.74 44.08 $ 1,949.30
Median 183.00 53.57 76.51 $ 2,764.62
Maximum 210.00 80.21 119.14 $ 3,411.30
Average per FTE 193.21 62.17 82.54 $ 3,096.72

45. Industry Comparison
Six Months Data
Days SERL
Physician Work RVU RVU/Day Procedures Procs/Day Total Revenue Revenue/Day
Worked FTEs
Total 4,347.20 25.50 244,707.81 1,398.75 318,196.00 1,857.21 $12,117,877.32 $ 69,676.14
Arithmetic Mean 173.89 9,788.31 55.95 12,727.84 74.29 $ 484,715.09 $ 2,787.05
Median 183.00 10,133.34 53.57 12,049.00 76.51 $ 502,499.71 $ 2,764.62
Minimum Value 99.50 4,232.31 39.74 6,084.00 44.08 $ 207,600.58 $ 1,949.30
Maximum Value 210.00 13,756.17 80.21 20,624.00 119.14 $ 651,814.06 $ 3,411.30
Average per FTE 193.21 10,875.90 62.17 14,142.04 82.54 $ 538,572.33 $ 3,096.72
Industry Standard per FTE 7,136.00 9,671.00
Variance % 34.39% 31.62%

46. RVUs Per FTE Comparison
14,142
16,000.00
14,000.00
10,876
12,000.00
9,671
10,000.00
7,136
8,000.00
4,471
6,000.00 3,740
4,000.00
2,000.00
-
Work RVUS Procedures
SERL Industry Std. Variance