Over the last year, I’ve been invited to give several talks on my experience helping build an IR OBL practice from the ground up. I realized that I haven’t spent much time on this blog actually talking about the OBL and what that means for our field. Anyone who knows me knows that I am very passionate about OBLs!
What is an OBL?
An OBL is an Office-Based Lab, otherwise known as an Office-Interventional Suite. In order to truly understand what this means, we need to dive a bit deeper into the lingo. In the United States, where this Monkey works, our government defines multiple service sites with differing reimbursement schedules. The Centers for Medicare and Medicaid Services (CMS) sets forth the schedules for how we as physicians get paid. When it comes to interventional radiology, there are four sites of service that you need to be familiar with:
- Place of Service 21 (Inpatient Hospital)
A facility, other than psychiatric, which primarily provides diagnostic, therapeutic (both surgical and nonsurgical), and rehabilitation services by, or under, the supervision of physicians to patients admitted for a variety of medical conditions.
- Place of Service 22 (Hospital Outpatient)
A portion of a hospital’s main campus which provides diagnostic, therapeutic (both surgical and nonsurgical), and rehabilitation services to sick or injured persons who do not require hospitalization or institutionalization. (Description change effective January 1, 2016)
- Place of Service 24 (Ambulatory Surgical Center)
A freestanding facility, other than a physician’s office, where surgical and diagnostic services are provided on an ambulatory basis.
- Place of Service 11 (Office)
Location, other than a hospital, skilled nursing facility (SNF), military treatment facility, community health center, State or local public health clinic, or intermediate care facility (ICF), where the health professional routinely provides health examinations, diagnosis, and treatment of illness or injury on an ambulatory basis.
Most IRs practice in a hospital setting (21 or 22). Some may find themselves in 24 (centers doing outpatient dialysis work). As you can see, the description for Place of Service 11 (Office) is rather vague. Basically it’s a place where you can see patients and do procedures which is not a hospital or an ambulatory surgical center. And I am telling you in no uncertain terms that this is the future for our field.
Why Are OBLs Important For IR?
It all comes down to money. As I have laid out in my prior posts, most IRs are hospital based because most IRs work in the context of radiology departments which exist to serve their largest contracts which are hospital systems. The economics of radiology groups are such that high volume imaging can be lucrative. Interventional radiology on the other hand, while potentially lucrative for the hospital, tends not to be lucrative for the physician providing the service. More often than not, one can generate far more revenue interpreting cross sectional imaging per unit time than they can generating revenue from interventional radiology procedures. As such, interventional radiology is often not the focus of program development within most inpatient settings.
The OBL, and to some extent as well the ASC, changes the game for IR. Through office reimbursement schedules, the IR is now able to generate significantly more revenue for their procedures than they would if they were performing a procedure in a hospital.
As a simple example consider the embolization code for uterine fibroid and prostate embolization, 37243. Most device manufacturers provide reimbursement data annually. This same information can be found on the CMS website, but it is usually presented in a more visually appealing way through the device companies. Here it is from Cook Medical:
As you can see, if you do a UFE in the hospital, the facility is typically reimbursed $10,0492.94 (average Medicare rates), but the fee for the physician is $593.17. Compare this with the global fee of $9,933.37 which can be collected in a physician owned office. You can see why a radiology group who contracts with a hospital may not be too interested in their IRs doing a high volume of these types of procedures! Likewise, you can see how owners/operators of OBLs can do quite well if they can keep their costs under control.
Why Aren’t OBLs More Common?
OBLs are becoming more popular. While more IRs are moving into this space, there hasn’t been as much traction as there has been for our colleagues in vascular surgery and cardiology. I think there are a few key reasons for this:
- Opportunity Cost
In the hospital setting, IRs tend to be treated as low revenue generators. This is why most IRs in private practice spend a significant proportion of their days contributing to diagnostic radiology reads. You don’t make over $500,000+ annually doing lines and tubes with the occasional embolization. You make it because your group generates significant revenue from high volume diagnostic work and will share in that revenue because you as an IR provide a true value for the hospital which in turn helps the radiology group maintain its contract. It’s actually a great synergy from a business standpoint, however it is typically tough to grow a robust high volume IR practice due to competing financial interests.
The way radiologists with hospital contracts make money is by appeasing the almighty hospital. If the group decides to open their own office and potentially take cases away from the hospital, that may not go over so well with the hospital. As such, many radiology groups will not want to take this risk, even though it can be very lucrative. And the ones that do open an OBL tend to do so in markets where the hospital may not be as big and scary or there may not be other groups in town that can come in and compete for the imaging contract.
- Lack of Referrals
Most IRs obtain referrals from other physicians and advanced practice providers within their hospital system. These days, many hospitals are employing their physicians which is decreasing the pool of independent physicians. As such, it is becoming increasingly difficult to get patients referred from outside of the healthcare system which makes running a free standing OBL challenging in many markets. It can still be done, but requires a level of hustle and dedication which many will not want to embark on, considering the opportunity cost (point 1). As a historically technical field, it is hard to market our services. Getting self-referrals can be very challenging unless one is a true expert in the disease state and it would be awfully naive of us to admit that we can manage all the conditions we treat holistically without the support of colleagues who spend the majority of their time treating certain types of patients (urologists, gynecologists etc).
- Pseduoexclusive Contracts
Many states require physicians to either have hospital privileges nearby or have a transfer agreement with a nearby hospital as a prerequisite to even open an OBL. The problem is most radiology groups have exclusive contracts with healthcare systems which prevent outside radiologists from obtaining hospital privileges or possibly transfer agreements. What’s so infuriating about this is the same radiology groups that prevent other radiologists from obtaining privileges do nothing to stop cardiologists, vascular surgeons, nephrologists or interventional pain physicians from using interventional radiology rooms to do cases that they in theory could do. Hence, the term “pseudoexclusive.” So basically, even if you really wanted to get into this OBL game, you may not be able to if your state requires hospital privileges to do so. I’ll go into more detail about pseudoexclusive contracts and how it has personally affected me another day.
Why are OBLs The Future?
There are so many hurdles to getting into the OBL setting. Why would I think they are our future?
Again, it comes down to money. As a country, our healthcare expenditures are out of control. And we all know that it is significantly cheaper for society when cases are done in the office instead of the hospital. Insurance companies will obviously want to pay less for a given procedure if given a low cost alternative site of service.
Patients like the OBL setting. It is convenient and more personal. Parking is often free! And in our current COVID world, many patients would love to avoid the hospital.
The OBL is an environment where the three main parties (physicians, patients and payers) are aligned. It is no wonder that there has been significant growth in this market over the last 10 years.
Specifically for interventional radiology, OBLs are so attractive because the majority of the high revenue services we can provide can safely be done in the outpatient setting. The OBL allows us to divorce ourselves from the economic safety net of hospital based diagnostic radiology and allow us to use our clinical skills and wonderful technology to provide in-demand services for common conditions: venous disease, arterial disease, benign prostatic hyperplasia, uterine fibroids, osteoarthritis and more. In the process, we can not only shape our work lives to utilize the high end clinical and technical skills we worked so hard to acquire, but we can do so in a way which is beneficial to the healthcare system, the patient and our own bottom lines. Who wouldn’t want that? More to come…