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Radiology Outsourcing

Outsourcing is a very important factor in our economy today. Modern companies know that for their non-core competencies, they need to seek specialists. Outsourcing delegates the non-core operations from internal production to an external entity specializing in that particular operation.

Outsourcing in hospitals is becoming more and more popular. The most common services that are outsourced are non-medical tertiary services that include catering, cleaning, laundry, logistics, technical facility management, etc. In recent years, however, hospitals have started to outsource medical services, so-called “secondary services”, which include laboratory, pathology as well as radiology services. Some hospitals have even outsourced entire service lines such as cancer centers, outpatient surgery or ophthalmology. Structured and operated effectively, outsourcing can produce significant benefits while enabling hospitals to focus limited resources and management efforts on other areas. The challenge of responding to constant technological advancement, labour shortages, and increasing customer service expectations in the face of declining reimbursement, managed care, capital constraints, and outpatient competition are compelling hospitals to consider outsourcing. Moreover, the daunting financial and operational challenge of transitioning radiology from an analogue world to a digital one makes management and funding of radiology even more of a challenge for hospitals.

Potential Models Regarding radiology

There are several models for structuring an outsourcing arrangement. The appropriate model will depend on the organization’s financial, operational, and political dynamics and on the specific goals. Common models are:

  • Management contract: AADS have an agreement with delineated management responsibility and authority while the hospital retains ownership and employees. AADS are compensated on a management fee basis with or without additional performance targets and incentives.
  • Leased department: AADS enter into an arrangement to provide the entire technical radiology operation, including employees, rent, supplies, billing agent, and marketing. However, the department must still be integrated with and operated within hospital licensure and regulatory requirements. This model may or may not include technical asset or facility ownership through an additional agreement.
  • Joint venture: AADS and the hospital enter into a joint venture to own and operate some component or all of the technical radiology services within and potentially outside the hospital. AADS has a separate agreement with the joint venture for management of technical services. It may include a third party for financing and other services.
  • Sale of department: AADS purchase the assets and ongoing business of the radiology technical operation from the hospital and provide the service on a contractual basis.
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