EP485: Imaging Costs 6% to 11% of Plan Sponsor Spend: How Direct Contracting Can Save Money and Improve Access, With Cristin Dickerson, MD

Welcome, Relentless Health Value listeners. Today on the show, we’re talking direct contracting for imaging. Imaging costs can be in the range of 6% to 11% of total plan sponsor spend, and you can figure that out if you have the data to add up the imaging charges themselves plus contrast charges plus professional services, facility fees, etc.

For a full transcript of this episode, click here.

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But let me ask you this: Why would anybody direct contract for services such as imaging? This “Why bother despite the significant cost?” is not some kind of rhetorical question, by the way, even though to longtime listeners it might feel like it. And to make this even more rhetorical, let’s just forget about TPAs (third-party administrators) for the moment and disregard what Elizabeth Mitchell, CEO of PBGH, said to me about some of them who may or may not be skimming 30% off the top of plan spend (Take Two: EP436).

Let’s just forget about that now and just discuss one other foundational point that has to be locked in to justify why direct contracting is a solution. Are there actually cost differences between different clinical organizations or quality differences for that matter? Is that true? Is that the case? Do cost differences exist?

Let me tell you about this, I’m gonna say, pretty upsetting but also pretty revealing conversation I had the other day with a friend of mine—someone who is a professor at a top university. So, a smarty by any definition but also a normal civilian. Healthcare is not her day job, as it is not mostly the day job of many plan sponsors, people in HR.

So, it came up. (I swear I don’t launch into healthcare industry diatribes at random dinners with random people—or not that often, at least.) But anyway, healthcare costs came up; and I found myself talking about all of the stuff going on with NewYork-Presbyterian. That DOJ investigation had dropped earlier that day. And also, they have a hospital up the street from actually where we were having dinner.

Now recall that part of that DOJ investigation (and there’s a couple of class action lawsuits afoot), but part of that whole thing, what is being alleged, is Presy charging way more for knee replacements and colonoscopies etc. Like, charges double or sometimes three times as much as other local hospitals or ASCs (ambulatory surgery centers), with the same quality.

And my friend, she bursts out, “Come on!” She says this really aggressively, actually, like she’s saving me from a conspiracy theory. She says, “It is not possible that one hospital would be able to charge that much and others so much less. The market would even it out. No one would go to the expensive place.”

In that moment, I took off my tinfoil hat and laid it gently by my side. No, my heart broke. Let me tell you. Just that morning, I had been helping a friend of the family whose kid got cancer; and I was helping them not lose their house to majorly inflated medical bills.

These are the people who are harmed by anticompetitive contracts, by plan sponsors getting trapped into discount-based contracts with conspicuously missing net prices. This is not a “no harm, no foul” arrangement from any given patient’s point of view, what is being alleged in that DOJ investigation.

So, I’ve been ruminating over the “why” here, as in why this person and others indubitably like her, why are they so aggressively opposed to reality? Is it just that … it does actually sound illogical on its face because, yeah, it kind of does.

Or, for sure, it could be the age-old story that those who are healthy and well resourced enough are well and truly insulated. They aren’t sick, and they have good enough insurance—at least so far—and enough in their bank account to cover their deductible.

But I don’t know. I’m still reflecting. I’m confident that many of you have encountered similar situations. What did you do?

But I will tell you one thing that I am very sure about. It was in that moment that I appreciated you, Relentless Health Value listeners, and all of you who have spent the time and the energy and came face-to-face with these really unappealing realities. You have followed the dollar as it travels through this labyrinth that is a feature, not a bug.

Because you all know the folks who are struggling to meet rent and, at the same time, paying their share of $5000 MRIs when down the street there’s just-as-high-quality imaging for $300 or $500.

And as we all know, it’s anticompetitive contracts that often prevent those of us who do get it to steer and tier and educate members. And this is why the show today about direct contracting is so important, because direct contracting can help make sure that members get a fair price.

Okay … I’m back on track now. Sorry. It’s been a rough week.

My conversation today with the one and only Dr. Cristin Dickerson delves into the merits of direct contracting for imaging, and the conversation emphasizes the significant savings that this can offer, given that imaging, again, constitutes 6% to as much as 11% of plan sponsor healthcare spending.

What I think is interesting (slight sidebar here) is, you know, Al Lewis talks about in that episode (EP464) how ER spend has crept up to around 6% of your average plan sponsor’s total spend. And, I don’t know, maybe it’s just the 6% callback that maybe wants to say this.

But don’t forget a big point that Al made in that ER show and that I underlined in the ER through line episode (EP477) that came right after that Al Lewis show. And also this comes up in the pod (EP438) with John Lee, MD, who is an ER doc. The more a plan sponsor tries to control imaging or diagnostic, in general, spend, the more patients wind up going to the ER because either they realize or are told that if they wanna just get to the bottom of what’s going on with their bodies without getting caught in prior auth rigamarole, they should just go to the ER.

So, paradox and just another example of how what could seem very logical on its face, you know, control costs this way actually leads to higher costs. Anyway, as you listen to the show that follows, I also would think about what Jonathan Baran talked about in the flywheel show (EP483, Part 1) from a few weeks ago, how a plan sponsor can save, again, double digits when they buy good healthcare as their prime directive, not buy discounts or try to math their way into a solution that just adds even more mystery and more middle people.

Direct contracting is certainly a way to think about that, and it is something that certainly Jonathan Baran mentioned.

Shows to listen to or reflect upon adjacent to this one:

Brennan Bilberry (EP395) about anticompetitive contracts, and there’s also a Summer Short about why they are so intractable.

Vivian Ho, PhD (EP466) talking about what drives up premiums. Spoiler alert: It’s costs driven by big, consolidated health systems.

We had Kimberly Carleson on recently (EP480) echoing many of the themes you’ll hear in the conversation that follows.

Also the show with Dave Chase (EP484) talking about figuring out whether your TPA and/or benefit consultant is truly working for you. Wow, that matters.

My guest today, Cristin Dickerson, MD, as I have mentioned several times, is the founding partner of Green Imaging, a physician-led radiology network, pioneering affordable, high-quality medical imaging for patients, employers, and health plans nationwide.

Green Imaging (round of applause now) has grown to be an $18-million company. Love it when you hear a doing well by doing good story.

I also very much appreciated Dr. Dickerson offered a very, very lovely donation to support the work of this podcast. Thank you to her and Green Imaging for this.

This podcast is sponsored by Aventria Health Group and also Green Imaging. If you’re a plan sponsor, please give them a call.

Also mentioned in this episode are Green Imaging; Elizabeth Mitchell; Purchaser Business Group on Health (PBGH); Al Lewis; John Lee, MD; Jonathan Baran; Brennan Bilberry; Vivian Ho, PhD; Kimberly Carleson; Dave Chase; Keith Passwater; Havarti Risk; Andrea Cockrell; Houston Business Coalition on Health (HBCH); Peter Hayes; Anthony Ciaccia; Dawn Cornelis; Cynthia Fisher; Justin Leader; Cora Opsahl; Preston Alexander; Kurt Christie; Claire Brockbank; Andreas Mang; Chris Deacon; Stanley Schwartz, MD; and ZERO.health. 

You can learn more at Green Imaging and follow Dr. Dickerson on LinkedIn.

Cristin A. Dickerson, MD, is the founding partner of Green Imaging. She is a graduate of the University of Texas (UT) Medical School at Houston, where she was elected to Alpha Omega Alpha Honor Medical Society. Dr. Dickerson completed her radiology residency at UT Houston, where she was a chief resident, with extensive training in cancer imaging at MD Anderson Cancer Center.

Dr. Dickerson practiced for 13 years at the Diagnostic Clinic of Houston, where she served as a two-term president of the 50-physician clinic and oversaw a self-funded health plan. 

She founded Green Imaging in 2011 to provide affordable, high-quality medical imaging for uninsured and high-deductible patients in Houston and rapidly expanded the company to provide services throughout most of the United States and to employer-sponsored health plans. She loves being able to provide quality services to patients who otherwise couldn’t afford them and delivering significant imaging cost savings to patients with healthcare coverage and their employers without compromising quality. 

09:52 Who has figured out that direct contract imaging is a great avenue to saving money?

11:12 EP475 with Peter Hayes.

12:39 What are the barriers to getting started with direct contracting imaging?

15:33 EP480 with Kimberly Carleson.

15:36 EP285 with Dawn Cornelis.

16:45 EP457 with Cynthia Fisher.

17:39 EP433 with Justin Leader.

18:03 EP452 with Cora Opsahl.

18:05 EP484 with Dave Chase.

18:12 What do you do when TPAs become a barrier to direct contracting?

20:47 Why going through a TPA actually makes direct contracting more complicated.

22:16 EP482 with Preston Alexander.

25:01 Instagram video on insured rate versus cash rate.

25:26 EP425 with Marshall Allen.

25:52 EP453 with Claire Brockbank.

26:02 EP419 with Andreas Mang.

26:29 How is the “down the hall” mentality a barrier to direct contracting?

31:25 EP395 with Brennan Bilberry.

32:25 Why is it important to change member behavior?

Recent past interviews:

Click a guest’s name for their latest RHV episode!

Elizabeth Mitchell (Take Two: EP436), Dave Chase, Jonathan Baran (Part 2), Jonathan Baran (Part 1), Jonathan Baran (Bonus Episode), Dr Stan Schwartz (Summer Shorts), Preston Alexander, Dr Tom X Lee (Take Two: EP445), Dr Tom X Lee (Bonus Episode), Dr Benjamin Schwartz, Dr John Lee (Take Two: EP438), Kimberly Carleson