This report originally appeared in the October 2010 issue of DOTmed Business News

Bills. For people everywhere, it’s almost a curse word. For hospital accounting departments dealing with bills is a daunting task, especially with new rules and regulations continually cropping up. It’s easy to understand how hospitals and private practices can become overwhelmed with invoices for all of their services, but using a diagnostic service organization can help providers cut costs and whittle down paperwork. DSOs are becoming more popular as health care facilities look to cut costs but maintain quality care for their patients.

According to a recent report published by Choice Health Care Partners, a national physician practice advisory group, DSOs will continue to increase their U.S. market share over the next few years.

“Rather than being an option, practices are forced, given what’s going on [in the economy and with reimbursement rates], to look at numbers and seek options to stay afloat,” says Avi Soffer, CEO of University Nuclear and Diagnostics, a DSO for nuclear cardiac imaging. “DSOs, which were optional, are becoming a go-to solution to combat the issues.”

A DSO basically takes over a facility and assumes the responsibilities and costs of operations, condensing all the necessary tasks into just one invoice for the hospital to deal with. The key to saving money, explains Soffer, is consolidating the labor.

UND was able to save one Georgia-based client nearly $300,000 annually, or 37 percent. The DSO took over services that include personnel, isotopes, log maintenance, license updates, equipment calibrations, radiation safety officer services, equipment logs and calibration, patient scheduling, pre- and post-test patient education and ICANL certification

Cardiology practices are frequently turning to DSOs, says Soffer, largely because of poor reimbursements for tests, like nuclear stress testing, and expensive lab costs. He points out that cardiology labs, which rely heavily on nuclear testing, need help from a cost-saving DSO.

While the market for DSOs is growing, there aren’t necessarily more organizations out there. The CHCP report suggests consolidation in the industry as bigger DSO groups acquire complementary organizations that will help them offer complete services to their clients. For example, a DSO specializing in nuclear testing may bring on nuclear camera service companies for comprehensive services.

“As a DSO, a good organization can take on many, many practices on a national basis,” says Soffer.

Hospitals stand to gain the most by turning to a DSO, Soffer says. He points out that they can save millions by turning to a third party for help. While practices can face the same challenges as hospitals, they can make decisions quicker, without the burden of hospital boards.

The client perspective
The chief of cardiology at Jackson North Hospital in Florida and brother of Avi Soffer, Dr. Ariel Soffer, turned to a DSO — UND — to strengthen his nuclear cardiology lab.

“[The nuclear lab] happens to be the number one revenue source but also the number one cost outside of HR,” says Ariel.

He points out that before the days of poor reimbursement payments, a strong nuclear lab would do well and didn’t really look at the costs.

“Now that reimbursement has dramatically been reduced, costs become a big issue,” he says. “There are a lot of moving parts within [a nuclear lab].”

By hiring a DSO to take care of the inner workings of his lab, Ariel says costs are down and patient satisfaction is up.

“We found that by ‘insourcing,’ we can control major costs and focus on getting more patients…seen and put into the lab as opposed to worrying about the subtleties of the cost structure,” he says.

While the number one perk of using a DSO in a nuclear lab is the cost savings, says Ariel, the runner-up is the “ease of use.” The DSO companies take care of everything, from technicians to service.

“The [DSO] is motivated to be efficient,” he explains, otherwise it would lose the account.

“It is just a beautiful thing,” Ariel says.