Published by ImagingBiz
Written by Matthew Strother and Justin Mowrey
The diagnostic-imaging industry continues to face significant reimbursement headwinds as a result of recent Medicare reimbursement cuts. Industry-specific cuts recently enacted include the Multiple Procedure Payment Reduction (MPPR), which was introduced in the 2012 Medicare Physician Fee Schedule (MPFS) and expanded in the 2013 MPFS, and the increased equipment-utilization rate (used to calculate Medicare reimbursement) contained in the American Taxpayer Relief Act (ATRA), passed in January 2013.
These industry-specific reimbursement cuts, not to mention any potential overall health-care cuts related to the automatic budget cuts of March 1, 2013, or to the sustainable growth rate formula, will present the industry with a very challenging reimbursement environment, over the next couple of years. Many of our clients hoping to acquire (or having recently acquired) an imaging center have asked us how these reimbursement cuts will affect the revenue, cash flow, and (ultimately) value of the target entity. The answer to this question depends on three factors: the target entity’s payor mix, its procedure mix, and its ability to realize operating-expense efficiencies to mitigate the effect of reimbursement cuts.