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Financial

Management in
Radiology
Copyright © 2004 by American Healthcare Radiology Administrators

All rights reserved.

Library of Congress Cataloging-in-Publication Data


Financial management in radiology/edited by Mel Allen and Sheila Sferrela.
p. cm.
ISBN X-XXXXXX-X-X : $XX.XX
1. Hospitals—Radiological services—Administration
[DNLM: 1. Radiology—organization and administration.]
Pending
Pending
Pending

American Healthcare Radiology Administrators grants permission for photocopying for limited personal
or internal use. This consent does not extend to other kinds of copying, such as copying for general
distribution, for advertising or promotional purposes, for creating new collective works, or for resale. For
information, address American Healthcare Radiology Administrators, 490-B Boston Post Road, Suite
101, Sudbury, MA 01776.

Orders and Customer Service: (800) 334-2472 or (978) 443-7591

American Healthcare Radiology Administrators (AHRA) is the premier association for imaging profes-
sionals. Since 1973, the organization has led the industry in information, education, and professional
support.

Its programs–including its journal, Radiology Management; on-site coding, electronic imaging, and imag-
ing center conferences; surveys; and substantive annual meeting and exposition– establish standards of
excellence throughout the profession.

In addition, AHRA’s Certified Radiology Administrator (CRA) program is the first and only professional
credential tailored specifically for radiology administrators. The CRA is designed to elevate professional
standards, enhance individual performance, and recognize administrators who demonstrate knowledge
essential to the practice of radiology management.

The AHRA Education Foundation supports the membership and radiology professionals in the US and
abroad by granting scholarships and conducting research that enhance the effectiveness of imaging and
healthcare disciplines.

Current Procedural Terminology (CPT) is copyright 2004 American Medical Association. All Rights
Reserved. No fee schedules, basic units, relative values, or related listings are included in CPT. The
AMA assumes no liability for the data contained herein. Applicable FARS/DFARS restrictions apply to
government use.

CPT® is a trademark of the American Medical Association.

Editorial assistance and graphic design by Magnificient Publications, Inc. of Bethesda, Maryland.
Foreword

Although it’s been several years since I joined the ranks of the AHRA members
emeritus, certain important values of the AHRA have always stuck with me. In
particular, I have always marveled at how much professional development means to
those who toil in the trenches of radiology management.

After my retirement from healthcare in 1998, I moved on to teach business and


marketing education classes at my local high school. I mention my mid-life move to
public-school teaching because my initial expectation when I became a K-12 educa-
tor was that teachers would be as committed to the notion of professional develop-
ment as my former radiology colleagues.

An erroneous assumption! I found a variety of resistant responses among several of


my new teaching colleagues when it came to the matter of professional development
and continuous improvement. I could certainly understand—and even empathize,
to some extent—in light of the very real limitations of time and money that public
school teachers generally face. However, I hearkened back to those years I spent
in the AHRA when radiology managers from all sizes of institutions and budgets
voluntarily gathered at a variety of educational seminars and events in order to learn
and share in the excitement of learning.

Which brings me to my point.

The pages of this book represent more than the collective wisdom of today’s leaders
in the business of radiology. Granted, you will not be disappointed for the time you
will spend reading and rereading the contents before you. Having edited a similar
work more than 10 years ago in a tiny volume titled Current Concepts in Radiology
Management, I know how valuable such a reference can be.

More importantly, this text serves to once again demonstrate that AHRA mem-
bers willingly seek out professional development on a grand and continuing scale.
The creation of this text equally testifies to a special commitment that the AHRA
continuously makes to its members. The AHRA is truly an association of lifelong

Financial Management in Radiology 3


learners and consummate professionals, willing to provide what is necessary and
essential to promote excellence among all who are responsible for radiology man-
agement in the daily operation of their professional lives. It is a model for other
professions, both within and outside the healthcare industry.

This book is for you because—together—


because—together—you and the AHRA set that standard!

Howard W. Schwartz, FAHRA

Financial Management in Radiology 4


Acknowledgments

A project of this magnitude succeeds only because of many people who are generally
behind the scenes. We extend our sincere appreciation to Berlex Laboratories, which
provided an unrestricted educational grant in support of this textbook, for allowing
our dream to become a reality. More than 40 AHRA members became authors, of-
fering their knowledge and expertise as they wrote and rewrote content. In addition
to the authors, more than 50 AHRA members reviewed draft outlines, tables of
contents, or chapters. AHRA staff members were instrumental in the coordina-
tion and management of this project, including Christine Tuttle, Kathy Delaney,
Karen Guy, and Kathryn Keeler. Lastly, we thank Magnificent Publications, Inc., of
Bethesda, Maryland, for its excellent service, and for making seemingly impossible
deadlines work.

Sheila M. Sferrella, MAS, RT(R), CRA, FAHRA


Mel L. Allen, MBA, RT(R)(N), CRA, FAHRA
Mary S. Reitter, MS

Financial Management in Radiology 5


Introduction

During the 2002 AHRA Annual Meeting and Exposition, the American Health-
care Radiology Administrators (AHRA) announced the beginning of its most am-
bitious initiative ever, the development of the Certified Radiology Administrator
(CRA) program. That news and the announcement that Eastman Kodak Health
Imaging had agreed to support the program with a $1 million grant over the next
5 years were greeted with a standing ovation by the more than 1,100 radiology ad-
ministrators present.

As AHRA engaged hundreds of its members over the next 18 months to develop
the program, it became apparent that there was a clear and distinct body of knowl-
edge in radiology administration; yet, it also became evident that the way radiology
administrators learned their craft was not well defined. There were no seminal ref-
erences that aspiring radiology administrators could turn to when developing the
knowledge and expertise that would better qualify them for management positions.
Experienced radiology administrators who were taking on new responsibilities most
frequently networked with colleagues through AHRA’s electronic mailing list and
at conferences and seminars and turned to textbooks in other fields for the new
knowledge needed for success. AHRA’s journal, Radiology Management, proved to
be the one consistent and readily accessible resource offering a wealth of timely and
actionable radiology administration information.

The authors of Financial Management in Radiology represent a cross section of ra-


diology administrators and other experts in freestanding and hospital-affiliated im-
aging centers; academic, community, and rural hospitals; and radiologist practices.
The book addresses important topics for radiology administrators regardless of the
setting in which they work, ranging from the myriad ethical dilemmas that occur in
radiology to budgeting and measuring productivity.

In Part I, Fundamentals, the focus is on understanding financial statements and the


standards that guide financial reporting.

In Part II, Generating Revenue, payment sources, pricing and contracting, maximiz-
ing reimbursement, and collections are addressed.

Financial Management in Radiology 6


In Part III, Controlling Costs, budgeting options and strategies are reviewed, with
examples and means of measuring productivity.

In Part IV, Planning for the Future, aspects of equipment selection and new busi-
ness development are discussed.

In Part V, Other Organizational Issues, staying on the right side of the law, by using
corporate compliance planning and resolving ethical dilemmas, is addressed.

As imaging technology continues to evolve with new means of predicting and


preventing illness and disease, radiology will remain the cornerstone of effective,
accurate, and timely diagnosis and treatment. Ever-present pressures to manage
healthcare costs will mount, and it is critical for radiology administrators to develop
expertise in financial management of the services they provide. Financial Manage-
ment in Radiology is an important tool in the radiology administrators’ tool kit and
an invaluable reference over time.

Sheila M. Sferrella, MAS, RT(R), CRA, FAHRA


Mel L. Allen, MBA, RT(R)(N), CRA, FAHRA
Mary S. Reitter, MS

Financial Management in Radiology 7


Contributors

Mel Allen, MBA, FAHRA, CHE, BSRT(N)


Senior Manager, Strategic Enterprise and Government Business Group
Philips Medical Systems
Shawnee Mission, Kansas
Mel Allen is a senior manager with the Strategic Enterprise and Government Busi-
ness Group of Philips Medical Systems. Before joining Philips, Mel worked in
healthcare management at another corporation and held a radiology administration
position at an academic teaching hospital for over 15 years. Mel has been an active
member and Fellow of the American Healthcare Radiology Administrators and has
held a variety of positions with the organization, including national vice president,
editor of Radiology Management, and finance director. Mel Allen has a bachelor’s
degree in radiological science, a master’s degree in business, and is currently working
on his JD in law. Mel is also a certified healthcare executive through the American
College of Healthcare Executives and is a registered radiologic technologist with
certifications in both radiography and nuclear medicine.

Mary S. Reitter, MS
Executive Director
American Healthcare Radiology Administrators
Sudbury, Massachusetts
Mary S. Reitter has served as executive director of the American Healthcare Radiol-
ogy Administrators since 1997. Prior to joining AHRA, Mary was vice president at
the Brain Injury Association in Washington, DC. She received her master’s degree
from the University of North Carolina–Chapel Hill.

Sheila M. Sferrella, MAS, RT(R), CRA, FAHRA


Radiology Administrator
Lehigh Valley Hospital
Allentown, Pennsylvania
Sheila M. Sferrella joined Lehigh Valley Hospital and Health Network in 1997
as the administrator of the department of radiology. She manages radiology ser-
vices at 5 sites, overseeing a staff of over 200 employees. Sheila has received numer-
ous awards for the development and implementation of projects in radiology. Most

Financial Management in Radiology 8


recently, Sheila implemented a RIS/PACS system across the network with major
work process redesign in the department. Sheila also led two major redesign proj-
ects at Lehigh Valley Hospital. She served as team leader for the Diagnostic Care
Center Project, combining 7 different departments into one space. Sheila’s team re-
designed work processes, space, and the service model; created a “wow” experience
for patients, physicians, and staff; and, with high Press Ganey patient satisfaction
scores, developed an ideal patient encounter. Sheila also served as team leader for
the Discharge Bed Turnaround Team, one of the Growing Organization Capacity
projects. She helped to redesign work processes to reduce bed turnover time from
more than 3 hours to 60 minutes. Prior to joining Lehigh Valley Hospital, she had
been director of radiology, respiratory care, and physical therapy at Pennsylvania
Hospital, Philadelphia. Other experiences include director of diagnostic services at
Germantown Hospital, supervisor of the department of radiology at the Univer-
sity of Maryland Medical Systems, and consultant for the Veteran’s Administra-
tion Hospital, Baltimore, Maryland. A graduate of the University of Maryland, she
earned a master’s degree in administrative science from Johns Hopkins University.
Sheila is a fellow and member of the American Healthcare Radiology Administra-
tors, where she served as president from 2001-2002. Sheila received AHRA’s Gold
Award in 2003, the organization’s highest honor. She has written numerous pub-
lications and given many presentations in the field of radiology including PACS,
voice recognition, tech-aides in radiology, in-house imaging service programs, and
capital planning.

Frank A. Barby, MBA, BS, CRA


Administrative Director of Imaging Services
Covenant Health System
Waterloo, Iowa
Frank A. Barby retired from the US Navy after 23 years of service, largely in the
submarine fleet as a hospital corpsman, and concluded the last 8 years as a health
physicist and radiology administrator in the Medical Service Corps. Since then,
Frank has been a radiology manager and director at 2 hospitals. After having been
hired as the radiology manager in Sun Valley, Idaho, he was soon promoted to the
director of ambulatory services. In 2001, Frank moved to Yuma, Arizona, and served
as the director of diagnostic imaging and radiation safety officer at Yuma Regional
Medical Center. He is now the administrative director of imaging services for Cov-
enant Health System in Iowa. Frank has an MBA from Brenau University and two
bachelor’s degrees in healthcare related fields.

Financial Management in Radiology 9


Victoria Bedel
RIS Solution Marketing Manager
AGFA HealthCare Informatics
Allison Park, Pennsylvania
Victoria Bedel currently serves as the North America RIS solutions marketing
manager for Agfa HealthCare. She has over 15 years of radiology management ex-
perience, as well as 6 years in IT, specific to application support, implementation,
and evaluation. During her career, Vickie has worked in a variety of positions within
the University of Pittsburgh Medical Center Health System and for Radiologix, Inc,
as the electronic clinical information project manager. Vickie’s professional pursuits
include publishing and lecturing for both the American Healthcare Radiology Ad-
ministrators and the Society for Computer Applications in Radiology on various
radiology-centric topics. Vickie is a past board member of AHRA, and earned her
fellow status in July 2002 from AHRA. She currently sits on the editorial board
for Radiology Management. Vickie has also attended the University of Pittsburgh
School of Health and Rehabilitation Sciences in pursuit of her master’s degree in
health information management.

Lesley P. Blumberg, MHA


Pavilion Imaging Manager
St Mary’s Hospital and Medical Center
Grand Junction, Colorado
Lesley P. Blumberg is the pavilion imaging manager for St Mary’s Hospital and
Medical Center in Grand Junction, Colorado. She has a master’s degree in health
administration from the Medical College of Virginia Campus of Virginia Common-
wealth University.

Robert P. Brice, BSRT(N), ARRT, CNMT


Director of Radiology,
St Mary’s Regional Medical Center
Enid, Oklahoma
Robert P. Brice is currently the director of radiology at St Mary’s Regional Medi-
cal Center in Enid, Oklahoma. He is a 1982 graduate of Marymount College of
Kansas with a bachelor of science degree in pre-med (biology), and a 1983 graduate
of Wesley Medical Center Nuclear Medicine Technology School, Wichita, Kansas.
Previously, he was the team leader in nuclear medicine, CT, and MRI at Integris
Bass Baptist Hospital in Enid and the director of radiology at Enid Regional Hos-
pital at the time of its closure. Mr Brice is married with five children and resides in
Enid, Oklahoma.

Financial Management in Radiology 10


Maureen Brooks, CPC, CHC
Practice Manager
MEMRAD Medical Group
Long Beach, California
Maureen Brooks’ responsibilities include supporting 63 radiologists working in 9
hospitals in the Los Angeles area. She has worked in the healthcare industry for
25 years, and has participated in career advancement programs to insure her ten-
ure in the healthcare management field continues to be productive. Ms. Brooks is
a certified procedural coder from the American Academy of Procedural Coders, a
certified healthcare compliance officer from Health Care Compliance Association,
and is a member of the American Healthcare Radiology Administrators, Radiology
Business Managers Association, American Academy of Procedural Coders, Medical
Group Management Association, and Health Care Compliance Association. She
has been a lecturer at educational conferences regarding practice management and
HIPAA compliance, American Roentgen Ray Society, and AHRA.

Angela Colbert
President
Grapevine Imaging and Pain Management Center
Grapevine, Texas
Angela Colbert is president and co-owner of Grapevine Imaging and Pain Man-
agement Center, a full service outpatient diagnostic imaging center located in the
Dallas-Fort Worth area. Angie’s 16 years of experience have included all aspects of
managing and directing multi-modality diagnostic imaging centers. Her particular
area of expertise is in the operational aspect of running a facility, with special em-
phasis on the billing and collection of medical accounts.

Karen Damon, BSRT(R)


Consultant
The enVision Group, Inc
Naples, Florida
Karen Damon is a consultant with the enVision Group, Inc, providing coding, com-
pliance, and reimbursement expertise to meet today’s healthcare business challenges.
As a clinical professional of 30 years, Ms Damon has held positions of department
administrator, consultant, quality facilitator, and technologist.

Financial Management in Radiology 11


Cherrill Farnsworth
CEO and Chairman of the Board
HealthHelp
Houston, Texas
Cherrill Farnsworth has founded 6 entrepreneurial ventures. Nationally recognized
for her achievements, she received the 1992 KPMG Peat Marwick High Tech En-
trepreneur of the Year Award, was a finalist in the Merrill Lynch/Ernst & Young
Entrepreneur of the Year search, and was the recipient of the 2002 Ernst & Young En-
trepreneur of the Year Award. Under her progressive leadership, her latest company,
HealthHelp, was named to Inc.’s list of the 500 fastest growing private companies
in the United States for 2000. This is the fourth time that Ms. Farnsworth has had
a company named to this prestigious list of entrepreneurial organizations. In 2000
and 2001, HealthHelp was named to the Houston 100, a list of the fastest growing
companies in Houston. Ms. Farnsworth is a regular speaker at business and healthcare
symposia and is considered a national expert on changing healthcare regulations. Since
1984, Ms. Farnsworth has been a regular spokesman for radiology management and
reform for numerous healthcare associations. She is the founding executive director of
the National Coalition for Quality Diagnostic Imaging, a highly successful grassroots
political action committee in Washington, DC, focused on preserving Medicare reim-
bursement for radiology’s technical component; she is also a member of the National
Quality Forum, which was formed by the US Senate in response to the Institute of
Medicine’s report on medical mistakes; and she is a member of the board of directors
of the American Association of PPOs. In addition to these accomplishments, Ms.
Farnsworth has served a 5-year tenure on the faculty of the Radiologic Society of
North America and is on the editorial advisory board of Decisions in Diagnostic Imag-
ing. A graduate of Butler University, Ms. Farnsworth received her degree magna cum
laude and has served on the school’s board of trustees.

David R. Fox, MBA, BS, CRA


Administrative Director of Radiology
Baptist Health System
Little Rock, Arkansas
David R. Fox graduated from the University of Central Arkansas with a bache-
lor’s degree in science before completing his nuclear medicine technology training
at Baptist School of Allied Health in 1993. David went on to complete his MBA
from Oklahoma City University in 1999. He is an active member of the American
Healthcare Radiology Administrators, American College of Healthcare Executives,
and Society of Nuclear Medicine, and he is a certified radiology administrator.

Financial Management in Radiology 12


Stephen R. Gaines, MSHCM, BSRT(R), CT, CRA
Administrative Director of Radiology
University of Texas Medical Branch
Galveston, Texas
Stephen R. Gaines has been in the radiology business for over 20 years. He was a
radiologic technologist and CT technologist for many years before progressing into
management. He is registered in radiography and computerized tomography, has a
bachelor’s degree in management and a master’s degree in healthcare management,
and is a certified radiology administrator. He has served as director of radiology for
a large medical group in Memphis, Tennessee; assistant and associate director at
Vanderbilt University Medical Center in Nashville, Tennessee; and is currently the
administrative director of radiology at the University of Texas Medical Branch in
Galveston, Texas.

Fred Gaschen, MBA


Executive Vice President
Radiological Associates of Sacramento
Sacramento, California
Fred Gaschen has held increasing levels of authority within the healthcare industry
over the past 30 years, with particular emphasis in the diagnostic imaging and ther-
apy industry. Currently he is the executive vice president of Radiological Associates
of Sacramento, a position he has held for the past 8 years. During that time period
Mr. Gaschen has taken RAS to its current status as the largest privately-held imag-
ing provider in the nation, servicing a community with a population of 1.9 million
through 18 imaging centers, 6 radiation oncology centers, and 6 hospital locations,
with 68 physicians and over 800 employees. Different from most radiology groups,
RAS owns the technical component of the services it provides including 13 MRIs,
9 linear accelerators, 8 CTs, 6 nuclear medicine cameras, 1 PET, 26 X-ray units, 22
ultrasounds, 17 mammography units, etc. RAS has been a pioneer in bringing new
services to the medical community, from the first million-watt linear accelerator in
1946, to CT in the 1980s, to PET in 1992, and to radio frequency ablation in 2002.
Mr. Gaschen is a frequent lecturer on radiology contracting, strategic planning, mar-
keting, utilization, and business operations, having presented at both national and
regional conferences of the AHA, RSNA, RBMA, MGMA, NMA, and AHRA, to
name a few, and was voted the AuntMinnie.com “Radiology Executive of the Year”
in 2003.

Financial Management in Radiology 13


Richard Helsper, MBA, RT
Vice President of Operations
Clarian Health Partners
Indianapolis, Indiana
Richard Helsper has over 25 years of experience in radiology in both private and
academic hospitals as well as outpatient imaging centers. Having divided his career
in between California and North Carolina, he left Duke University as director of
radiology operations in 2003 to accept a vice president role with Clarian Health
Partners and settled in Indianapolis where he has strategic and operational respon-
sibilities for numerous departments in Clarion’s 3 flagship hospitals and ambulatory
surgical centers. Mr. Helsper is a national speaker, has had numerous articles pub-
lished, serves on several boards, and is very active in education at all levels to enable
both children and adults realize their maximum potential.

Karen Herczeg, MBA, MS, BS


Project and Business Manager
University of Rochester
Strong Memorial Hospital–Radiology
Rochester, NY
Karen Herczeg is a relative newcomer to the healthcare industry. In just over 2 years
as project and business manager at the University of Rochester Strong Memorial
Hospital radiology department, she has made a substantial impact on both finan-
cial results and capital expansion. Prior to joining Strong, Karen held a variety of
positions at the Eastman Kodak Company, including research scientist, develop-
ment engineer, and worldwide financial analyst for customer service. Karen received
bachelor’s and master’s of science degrees in electrical engineering from Purdue Uni-
versity, and an MBA from the University of Rochester, William E. Simon Gradu-
ate School of Business Administration. She is a member of the engineering honor
society Tau Beta Pi, business honor society Beta Gamma Sigma, and of course, the
American Healthcare Radiology Administrators.

Keith Hornberger, DHA, MBA, BSRT, ARRT(R), FACHE


Principal
HealthFirst Management Group
Charlotte, North Carolina
Keith Hornberger received his BSRT and MBA from the University of Missouri
and his doctoral degree from the Medical University of South Carolina. He has
served as a director of radiology, as an assistant/associate administrator and execu-
tive vice president at hospitals, as senior vice president and chief operating officer

Financial Management in Radiology 14


of a health system, and as a consultant to hospitals and health systems. He has also
served on the adjunct faculty at Webster University and as adjunct assistant profes-
sor at the University of Kansas.

Frances K. Keech, MBA


Assistant Professor/Director of the Nuclear Medicine Program
Massachusetts College of Pharmacy
Boston, Massachusetts
Frances K. Keech received her MBA from Simmons College in Boston. Prior to
her present position, she served as director of billing compliance, quality improve-
ment specialist, and chief technologist, Nuclear Medicine Division at Dana-Farber
Cancer Institute, also in Boston. She is an active member of the state chapter and
national Society of Nuclear Medicine, has written numerous articles, and is a fre-
quent speaker.

Patricia Kroken, FACMPE, CRA


President
Healthcare Resource Providers, LLC.
Albuquerque, New Mexico
Patricia Kroken is a principal in Healthcare Resource Providers, LLC, located in
Albuquerque, New Mexico. A former radiology practice manager, Pat has been a
consultant to radiology groups and billing companies for the past 4 years. In ad-
dition to her work with the Health Insurance Portability and Accountability Act
(HIPAA), she utilizes an operational approach to process improvement for various
types of radiology business problems.

Luis O. Marquez, MBA, MPH, RT(R)(CT), CRA


Administrative Director, Medical Imaging
Southern Ohio Medical Center
Portsmouth, Ohio
Luis O. Marquez is the administrative director for medical imaging at Southern
Ohio Medical Center. Luis received his bachelor of science degree from Fort Hays
State University, a master of public health degree from Wichita State University, and
an MBA from Regis University. He is an active member of the American Healthcare
Radiology Administrators and American Society of Radiologic Technologists, and
is a certified radiology administrator.

Financial Management in Radiology 15


Margaret J. Meehan, MBA
Director of Finance & Quality Management and Education
Department of Radiology
Massachusetts General Hospital
Boston, Massachusetts
Margaret J. Meehan is director of finance and quality management and education
in the department of radiology at Massachusetts General Hospital. Her expertise
includes physician compensation, billing audits, financial analysis and management,
and strategic planning. Ms. Meehan has held positions with a provider, a major
payor, and government agencies, giving her breadth of experience with pricing.

Denise Merlino, MBA, FSNMTS, CNMT


President
Merlino Healthcare Consulting Corp.
Stoneham, Massachusetts
Denise Merlino is a nuclear medicine technologist who has worked in healthcare
for more than 20 years. She was the administrative director of diagnostic imaging
at Lahey Clinic Medical Center and the associate director for payor relations and
payor marketing at BMS Medical Imaging. Ms. Merlino is an active member, and
now coding advisor, for the Society of Nuclear Medicine (SNM) and has held vari-
ous leadership roles in the SNM Technologist Section. She is an expert on nuclear
medicine coding and is a frequent presenter at nuclear medicine coding and reim-
bursement seminars.

Roberta J. Miller, BA, RT(R)(M), CRA, FAHRA


Radiology Administrative Director
The Toledo Hospital
Toledo, Ohio
Roberta Miller has over 36 years of experience in radiology in both community-
based and academic hospitals. The majority of her career has been in administrative
roles based at the Medical College of Ohio and currently at The Toledo Hospital.
Bobbi has been a national speaker and has authored several articles as well as a train-
ing manual for mammographers. She has been an American Healthcare Radiology
Administrators member since 1986 and has served in many capacities, including the
board of directors and most recently, the Radiology Administrators Certification
Commission.

Financial Management in Radiology 16


Melody W. Mulaik, MSHS, CPC, CPC-H, RCC
President
Coding Strategies, Inc
Melody W. Mulaik is the president and cofounder of Coding Strategies, Inc. Mel-
ody’s areas of expertise include billing and collections, medical coding, revenue en-
hancement, front-end hospital operations, management engineering, medical school
relations, and operations improvement. Melody is a nationally-recognized speaker
on many topics including interventional radiology coding, internal auditing program
development, radiology coding compliance, correct nuclear medicine coding, docu-
mentation, and other healthcare compliance issues. She is a frequent speaker for
the American Healthcare Radiology Administrators, AAPC, HBMA, The Coding
Institute, Decision-Health, and HCPro. Melody has authored numerous radiology
publications and was recently published in RT Image, Imaging Economics, Advance
for Imaging and Oncology Administrators, and AuntMinnie.com. Melody is the prin-
cipal of CSI’s reference guides including: Comprehensive Diagnostic Radiology, Cod-
ing Guide for Interventional Radiology, and Advanced Coding Guide for Interventional
Radiology.

Penny Olivi, MBA, BSE, CRA


Senior Administrator
Radiology Department
University of Maryland Medical Center
Baltimore, Maryland
Penny Olivi is senior administrator of the radiology department at the University of
Maryland Medical Center in Baltimore. She has many years of experience in radiol-
ogy education and administration in academic and community hospital settings. Ms
Olivi holds an MBA from York College of Pennsylvania and a bachelor’s degree in
education from Towson University in Towson, Maryland.

Brian Olsovsky, RT, CT


Director of Radiology
Cuero Community Hospital
Cuero, Texas
Brian Olsovsky is a graduate of Citizen’s Medical Center’s School of Radiologic
Technology in Victoria, Texas, a 2-year private program that accepts 4 students each
year. He graduated in 1997 and began to crosstrain in CT and other special pro-
cedures. Brian’s promotion to director of radiology was an exciting opportunity for
him at such a young age. He has since assumed responsibility for equipment pur-
chasing and strategic planning of diagnostic imaging. He stays abreast of the many

Financial Management in Radiology 17


legislative changes in our profession now and for the years to come. In his spare time,
Brian enjoys hunting and ranching. With his wife, Brandi, he spends most of his
time on his South Texas ranch living life to the fullest.

Dorothy Peare, BA, RT(R)(M), CRA


Diagnostic Imaging Director
Community Hospital of Ottawa
Ottawa, Illinois
Dorothy Peare is the director of diagnostic imaging at Community Hospital of Ot-
tawa. She has 15 years of leadership experience in operations management, staff re-
cruitment and supervision, budgeting, policy and procedure development, corporate
compliance, and Federal, state, and accreditation regulations. She received her bach-
elor’s degree in business administration from Lewis University. Dorothy became a
certified radiology administrator in August 2004, is registered in radiography and
mammography, and has a license from the Illinois Department of Nuclear Safety.

Richard Powers, CRA, RT(R), EMT-D


Administrative Director, Medical Imaging
Clifton-Fine Hospital
Star Lake, New York
Richard Powers has over 30 years of experience in radiology, with a majority of the
time spent in radiology administration. He was trained in the US Navy, serving
for 6 years, but has spent most of his career in rural New York state hospitals. He
became a certified radiology administrator at the inaugural examination. His most
recent position is in a critical access hospital in Star Lake, where he is also the facility
compliance, privacy, and security officer. He is a member of the board of examiners
for the Baldrige National Quality Award and is also active in local and regional ad-
visory boards for emergency medical services in northern New York state.

Roger Rhodes, CHE, FAHRA


Regional Vice President of Imaging Services
Covenant Healthcare
Milwaukee, Wisconsin
Roger Rhodes works as regional vice president of imaging services for Covenant
Healthcare in Milwaukee, Wisconsin. He has a master’s degree in health services
administration from the University of St. Francis in Joliet, Illinois, and is a dip-
lomate of the American College of Healthcare Executives. Rhodes also serves as
editor-in-chief of Radiology Management, the journal of the American Healthcare
Radiology Administrators.

Financial Management in Radiology 18


Joyce Siamon, MHSA
General Manager
Pathology Consultants, PC and Northwest Pathology Services
Eugene, Oregon
Joyce Siamon earned her master’s degree in health services administration from the
George Washington University. Having spent most of her career in radiology ad-
ministration in northern Virginia, Ms. Siamon helped establish the imaging divi-
sion of a specialty hospital in Montana and currently serves as general manager for
Pathology Consultants, PC and Northwest Pathology Services in Eugene, Oregon.

Christine Stead, MHSA


Senior Management Consultant, Clinical Transformation
Superior Consultant Company
Ann Arbor, Michigan
Christine Stead has more than 14 years of experience in healthcare, including over
4 years in professional management consulting, 5 years of cardiac catheterization
experience at a large academic medical center, and 5 years as a research associate in
thoracic surgery. Ms Stead is a senior management consultant in the clinical trans-
formation practice at Superior Consultant Company. She has led several perfor-
mance improvement engagements and continues to lead engagements in cardiology
and radiology PACS. Her professional consulting experience includes financial
turnaround and strategic planning for a healthcare organizations ranging from
small community hospitals to large integrated delivery systems. Ms Stead leads the
clinical transformation practice in metric development and assists with strategic di-
rection for this practice. Ms Stead has done focused work in the following service
areas: emergency departments (most recently as the project manager for an EDIS
implementation for a west coast system and has led several performance improve-
ment ED engagements); cardiovascular services (most recently leading 2 cardiology
PACS assessments and a cardiology IS strategic planning engagement); surgical
services (including 2 performance improvement engagements in the past year); and
diagnostic imaging (especially in PACS assessments).

Leland B. Taylor, Jr, MBA, RT(R) ARRT


Director of Radiology
Missouri Delta Medical Center
Sikeston, Missouri
Leland B. Taylor, Jr, graduated from Jefferson Regional Medical Center School of
Radiologic Technology in June 1985 and received an award for academic recogni-
tion. He then received his bachelor of science degree from the University of Central
Arkansas in 1992 and an MBA from the University of Arkansas at Little Rock in

Financial Management in Radiology 19


1998. He has been working at the director’s level since 2000. He has been married
for 2 years to Melissa, and says his son, Braydon Mitchell, is the greatest gift his wife
has given him.

Cam Teems, CPC, CPHIMS


Healthcare Consultant
Atlanta, Georgia
Cam Teems is a national healthcare consultant with experience operating physician
groups and providing national consulting to hospitals and physician networks. Her
experience spans many specialties and delivery systems. Cam began her career as
director of marketing and business development for The Hughston Clinic in Co-
lumbus, Georgia, then a 52-physician orthopedic group. She has been a practice
administrator for an integrated imaging center and a senior consultant for two na-
tional healthcare consulting firms. She specializes in assisting physician practices in
revenue enhancement through the addition of alternative ancillary revenue sources
and the redesign of collection processes. Cam has authored Assessing and Improving:
The Patient Encounter and Assessing and Improving: Billing and Collections for the
American Medical Association. She is also a freelance writer for Radiology Adminis-
trator’s Compliance & Reimbursement Insider and Mammography Regulation Report.

Theodore Williams, Jr, MA, BA, RT(R)


Theodore Williams, Jr, has over 34 years of experience in the field of radiology. He
is a graduate of the Johns Hopkins Hospital School of Radiologic Technology in
Baltimore, Maryland. He received a bachelor’s degree in political science and public
administration from the University of Baltimore and holds a master’s degree in sys-
tematic theology and ethics from St Mary’s Seminary and University in Baltimore.
Mr. Williams has held various positions as chief technologist, manager of diagnostic
radiology, and director of operations and customer service at the Johns Hopkins
Hospital.

Financial Management in Radiology 20


Table of Contents

Foreword ............................................................................................................................... 3

Acknowledgments ........................................................................................................5

Introduction .......................................................................................................................6

Contributors .......................................................................................................................8

Part 1: Fundamentals
1. Understanding Financial Statements ........................................................................... 25

Part 2: Generating Revenue


2. Billing and Coding ............................................................................................................... 41
3. Payor Sources ........................................................................................................................ 89
4. Pricing and Contracting...................................................................................................135
5. Collections ............................................................................................................................ 157

Part 3: Controlling Costs


6. Budgeting ............................................................................................................................. 171
7. Measuring Productivity ................................................................................................... 193

Part 4: Planning for the Future


8. Developing a Pro Forma ..................................................................................................205
9. Capital Equipment .............................................................................................................219
10. Developing a Business Plan ........................................................................................... 235

Part 5: Other Organizational Issues


11. Establishing a Corporate Compliance Plan .............................................................. 267
12. Ethical and Political Issues ..............................................................................................293

Index .................................................................................................................................... 317

Financial Management in Radiology 21