High tech, high cost
by Glenn RittCape Cod Healthcare spends millions to stay competitive and meet growing demand. Dr John Osmond remembers when he was a radiology resident in 1972. Back then, a patient with symptoms of a brain lesion would be hospitalized for three or four days and subjected to a battery of tests, from X-rays to invasive and painful procedures such as angiograms, spinal taps and arteriograms.
Today, the same patient would undergo a 30-minute painless MRI, or maybe only a two-to-three-minute CT scan.
Thirty years ago, that patient’s test results might have been mailed to a remote expert for diagnosis, a process that would take precious days – or longer if the X-rays were lost. Today, that same specialist could log on to his laptop computer from any location, access the Internet by secure password and instantaneously study 16 different scans of the brain while simultaneously consulting with doctors in Falmouth or Hyannis.
At Cape Cod Healthcare, this modern-day scenario carries a definitive price tag: about $10 million for acquisition of state-of-the-art radiological and related communications equipment at its two hospitals. The question facing administrators, insurance companies and ultimately consumers is whether that cost is worth it.
Almost any study into why private health insurance premiums have risen more than 60 percent in the last four years will focus on the cost of medical technology, along with prescription drugs, malpractice insurance, uninsured patients and cuts to Medicare and Medicaid.
"Over the past three decades, advances in medical technology have had a considerable impact on the delivery, outcome and cost of health care," concluded a recent study by Blue Cross/Blue Shield. "Changes in medical technology accounted for about 20 percent to 40 percent of the yearly rise in health-care spending in the late 1990s," it noted.
"It is essential that these technologies be used wisely where they yield the greatest benefits. If not, they will simply drive up health-care costs without improving health-care quality. That, in turn, will increase the number of Americans without health insurance," the Blue Cross/Blue Shield report cautioned.
Yet a careful look at the business decisions made by Cape Cod Healthcare to upgrade its radiological department suggests that blaming technology for health inflation may be too simple, and perhaps even unfair.
a careful look at the business decisions made by Cape Cod Healthcare to upgrade its radiological department suggests that blaming technology for health inflation may be too simple, and perhaps even unfair.
The capital costs of the new technology are steep, indeed. But hospital administrators argue that this expense can be paid for over three years, primarily through cash flow. That is because the new equipment can sharply reduce the individual cost of a patient case, compared with old technology and obsolescent, time-consuming procedures. The challenge for Cape Cod Healthcare, as with any hospital, is whether the new technology will be used wisely, as Blue Cross/Blue Shield hopes, or unnecessarily overutilized.
More to the point, Cape Cod Healthcare is facing a very challenging strategic future that places huge pressure on it to grow or wither. In this scenario, the cost of purchasing new LightSpeed 16 computerized tomography, along with PACS – the photographic archiving and communications system – is considered less than the cost of perpetuating old equipment.
Why? The competitive landscape.
A 90-to-100-bed hospital like Falmouth might be considered a rural facility if it were located in the middle of Iowa. But it is situated in the shadows of Boston hospitals that all market the same LightSpeed CT scans. And it must vie as well with private, cost-efficient companies such as Shields MRI.
Beyond this direct competition, the demand for state-of-the-art equipment and facilities is growing as fast as the Cape’s population of wealthy retirees. Coming from suburban and urban locations, these newcomers not only expect the best health care, but also are likely to utilize medical technology more frequently because of their advancing age.
"They demand the best. They come from New York and Boston and Hartford," said one physician. "They tell us, ‘I am used to this equipment, and I expect it.’ To keep them here and not have them go to Boston, we have to meet the demand."
Not only must Cape Cod Healthcare vie for patients, it also must compete for the best medical talent, who are lured to the Cape in part for the lifestyle but also because they are able work with the best equipment money can buy.
To understand all this, meet Dr. Robb Hoehlein, a radiologist at Falmouth Hospital, and Bart Toensing, administrator of Cape Cod Healthcare’s PACS. Both were highly recruited, and each could be working at almost any hospital.
"I would be hard-pressed to find better equipment elsewhere, other than at a tertiary treatment hospital like Mass General," said Hoehlein. Put simply, to be the best radiologist he can be, he needs the most competitive technology. And without a physician with his credentials, patients might choose to go elsewhere.
Phillip Aulwes is director of radiology at Cape Cod Healthcare. He recruited Toensing, whose PACS specialty is in huge demand nationally. "It was very hard to find someone with the level of expertise that Bart has," he said. "There is huge demand and less supply, so retaining him is a challenge" dependent on maintaining a technological edge.
"This equipment is hugely important to compete," said Hoehlein.
What this equipment accomplishes is mind-boggling even to the radiologists themselves, especially veterans like Osmond, whose father and grandfather practiced the same specialty.
Today, for example, high-speed CT scans can provide surgeons with such a precise roadmap of a clogged artery that they can send overnight instructions for a custom-manufactured stent that will fit perfectly, Osmond explained. Compare that with the traditional method of invasively operating to inspect the artery, then adjusting a standard stent while the patient remained on the operating table for a prolonged and more dangerous period.
The General Electric-produced LightSpeed scan produces up to 16 images or slices at six times the speed of previous-generation technology being retired at Cape Cod Healthcare. These slices can be electronically manipulated by radiologists so that physicians can inspect multiple angles of a bone, organ, tumor or tiny blood vessel. Views never before possible can be achieved by digitally eliminating parts of the skeleton that might interfere with a particular angle, or by extending around a metal hip or knee.
Meanwhile, patients need be involved for as little as two or three minutes. After that, the single exposure can be manipulated by computer, reducing the danger of radiation while providing picture quality 10 times better than ever before, said Hoehlein.
The high-speed scanner also can snap an image of a patient’s heart both at rest and in motion, significantly aiding a cardiologist in diagnosing heart disease. And it is much more capable of aligning identical scans over time to measure the growth of a tumor through three-dimensional analysis.
Hoehlein also is using the CT scan for to detect possible causes of pain. He can much more precisely and easily isolate a disk problem or identify the cause of hip pain. "Many hip replacements are unnecessary," he said. "Hip pain may be caused by other parts of the body, the back or knee. Now I can evaluate causes throughout the body via one scan."
For a patient, the process is rapid and painless. He or she lies on a table and is slowly moved through a giant doughnut-shaped machine, far thinner than the familiar tubular MRI. The CT scan captures slices of the body, transmitting thousands of images to the computer. The LightSpeed16, as its name implies, snaps 16 slices with every revolution. Cape Cod Healthcare also is purchasing less expensive equipment that scans eight slices per revolution, which produces the same quality images, but not as rapidly.
Financing a new generation of scanners at Falmouth Hospital
So why spend all this money now for state-of-the-art radiology technology?
Cape Cod Healthcare’s total investment of $10 million for PACS and CT scan equipment, infrastructure and training is based on several factors:
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The need for added capacity as its patient population grows by number and age (22 percent in the last decade);
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The competitive marketplace; and
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The marketing instinct to provide the highest standard of care.
The CT scan and PACS investments are not occurring in a vacuum, either. Cape Cod Healthcare is in the midst of a $28 million capital project to build a four-floor tower at Cape Cod Hospital that will instantly accommodate 60 more patient rooms and have the capacity to provide an additional 60 patient rooms in the future.
Meanwhile, in purchasing two new CT scanners just for Falmouth Hospital – one through a lease, the other by philanthropy – Cape Cod Healthcare also has had to evaluate the distinct value of that Upper Cape facility to the overall system. Patients in that community are as inclined to head off-Cape for medical attention as they are to visit Hyannis for specialized radiology care.
Looking ahead to fiscal 2005, the old scanner at Falmouth was projected to approach 88 percent capacity, or 14,153 scans, said spokesman David Reilly. That represented a ceiling to growth just as demand was increasing. "The new scanner technology provides Falmouth Hospital with the ability to capture new market share related to new technology," said Reilly.
But CT scanners in Falmouth would prove insufficiently productive without the PACS system located in Hyannis.
For better or worse, Cape Cod Hospital, with about 225 beds, handles upward of 150,000 X-rays, CT scans and MRIs annually. That is an output akin to a hospital system with 800 to 900 beds, said Aulwes, who has a business background and holds a masters degree in radiology science.
This volume – which is growing every year – has made the old system of films filed and stored sometimes miles away from the hospital and its attending physicians increasingly burdensome, time-consuming and expensive. (Half the system’s films are stored in Providence, R.I., requiring a constant flow of couriers.)
Now, a $1 million server and work station – about 0.2 percent of Cape Cod Healthcare’s annual budget – provides a digital study via software for $5 each, compared with the old film system at $8 per study.
That $3 savings per scan, based on current volume, means the $1 million investment will pay for itself in about two years, Aulwes said, with at least three more years of projected use after that.
That calculation is only part of the productivity story, said Aulwes. Digital images stored in a server, with redundancy, virtually eliminates the possibility of lost images or film damage, as occurred routinely with old X-rays.
Beyond that, time is saved in many ways. At a most basic level, a physician need not come to the radiology lab to inspect a scan. She can call it up in her office miles away or at home after dinner. And teams of physicians could collaborate from multiple computers to evaluate a common image at one time.
"In 2001, only 3 percent of hospitals had PACS," said Aulwes. "Now, adoption is peaking and more hospitals have it than do not," he said. "We are right where we should be for a community hospital."
Which is another way of saying that Cape Cod Healthcare can’t afford not to be there.
Glenn Ritt Glenn Ritt is editor and co-publisher of Cape Business Publishing LLC. He is the former publisher of Cape Cod Community Newspapers and editor of The Bergen Record in New Jersey. 
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