Nationwide, radiology groups are approaching hospitals and asking for massive subsidies to maintain their radiology coverage. Much of the time, hospital administrators and CEOs balk and would prefer to drag their feet or try to replace the group rather than pay market rates for radiological services. These hospitals end up paying double or even triple for worse coverage with some of the same radiologists—while those radiologists end up making much more money with decreased nights, weekends, and noninterpretive duties.
So why then, time and time again, do CEOs choose the worst option? From their perspective, it actually makes perfect sense.
Imagine a scenario where you have discovered a potentially catastrophic problem with someone’s home, like the roof is going to collapse. You approach the owner and inform them of the situation and that you can fix the roof for $10,000. In order to convince this homeowner to fork over the cash for their own good, you need to convince them of the following:
- The roof is unstable and is going to collapse at any moment.
- You can fix it cheaper and better than someone else—or nobody else can fix it.
- The damage from a collapse is greater than the $10,000 it will cost to fix it.
Returning to radiology services, you have to convince your hospital administration that:
- There is an imminent radiology meltdown.
- Replacing services would cost more and offer poorer services, or more likely, there is no replacement.
- The damages from lacking radiological services are far-reaching and incredibly expensive.
When groups who have come to terms with the market first face an obstinate administration, their first thought is: Well, perhaps we just need to educate the hospital on the state of the market; surely then they will pay us what is necessary. Unfortunately, it is incredibly difficult to convince hospitals with certainty of all three points above.
For the sake of argument, let’s say you have an amazing set of data, a strong, talented negotiator, and a wise hospital administrator who is hearing things from their colleagues about the radiology market. You have somehow convinced the hospital that every single one of the above points is undeniable.
Many hospital administrators will still refuse. Why?
First, while hospital administrators are becoming more and more aware of the threat posed by radiologists willing to fiercely negotiate and walk away, many are still banking on this shortage being temporary. They are willing to delay as long as they possibly can in the hopes of the market normalizing. Believe it or not, some hospital administrators who have already had a radiology meltdown will revert to this short-term thinking once they erroneously believe they have stabilized the service.
Second, since we are talking about yearly stipends, the longer they wait to pay you, the less money they have to pay you. If you are asking for $5 million a year and they take six months to respond, they have just saved $2.5 million. It is in their best interest to drag their feet as long as possible—especially if they believe, as many do, that this shortage is temporary.
Third, every single hospital CEO has to answer to someone, be it a board or a regional CEO. It is a lot easier to request $15 million to salvage a melted-down radiology group in an emergency than $5 million to prevent a meltdown from happening. Even if you have convinced the CEO of the three points above, they will have to convince their boss. What are the chances their boss also agrees?
Lastly, CEOs are human beings with emotions, egos, and finite funds. Some simply cannot afford it. Others will lash out in anger—”Even surgeons do not treat me like this! These basement-dwelling radiologists think they can get $5 million? Over my dead body.” They would cut off their noses to spite their faces.
Long story short, you can force the hospital to submit RFPs, hire outside consultants, show them MGMA averages, etc. More often than not, it will not move the needle enough. There is only one thing that will force them to pay attention: giving notice of termination. Then sit back and bat down bad offers. No matter what happens, especially if your group is already on the verge of collapse due to understaffing, they will need your labor to continue. Except now, you will set the rules.
The author is an anonymous physician.
