There is a widely published report that Medicare will cut payments for analog x-ray studies in 2017 and that it will begin to cut payments for CR as well, starting in 2018.  It is clear that reimbursement rates for film studies will drop by 20% in 2017, but it is also reported that the initial rate cuts for CR will be 7% in 2018 and increase to 10% cut in 2023.  

An article by Brian Casey of AuntMinnie.com points out that according to a 2013 IMV study, fixed analog general x-ray rooms made up just 1% of the installed base at U.S. hospitals, down from 5% in 2010.  So the impact of Medicare’s decision is minimus for hospitals.  However, the percentage of small practices still using film is higher.

Although CR sales, according to this article, are just 6% of new “digital sales” in 2015, CR still makes up 51% of the digital install base in US hospitals, and again, I would venture it is a much larger percentage in the non-hospital market. 

A drop of 7% in the reimbursement rate for CR in 2018 would be very significant and might lead salespeople to panic.

Do we need to hit the panic button just yet?

panic-buttons

A 7% drop is really significant and could be significant motivation to stop sales of CR systems and move everyone to DR.  That’s certainly what some of the equipment vendors seem to be inferring in emails I’ve read from them.  It’s certainly a great strategy on their part.

For the large clinic and hospital market, this decision by the US government really means they need to budget for a change, but where does this leave the small x-ray user?

Yes, private insurers may also drop their reimbursements, but they may not.  I won’t be surprised to soon hear about lawsuits or amendments to this decision.  Yes, 7% is a lot for current CR users but 20% is a lot more for the remaining film users.  And remember the price of DR is going to drop during the next few years…and I would believe that this announcement creates the typical conditions we have seen in the past to make those prices drop even faster.

If there is one thing everyone can count on, it’s that this opportunity given to our industry to sell a lot more DR systems will quickly result in pressure on manufacturers and dealers to drop prices. And so go the profit margins again.  I foresee $15,000 or perhaps even $10,000 wireless panel “end-user” prices within two or three years.

So, go ahead and panic or take advantage of a great selling opportunity for CR’s…pre-owned CR’s.

Move your small users to CR technology now and give them time to 1) avoid the 20% reimbursement reduction and 2) wait for the lower DR prices we all know are coming.

If you spend a little time putting pencil to paper (or fingers to an Excel spreadsheet) you should be able to come up with financial analysis that will show your small x-ray clients the benefits of moving to CR (pre-owned) now.

Whether you rent or sell the CR to clients, it should really cost them no more than what they are now paying for their film and chemistry.  And as of 2018, they will be keeping 13% more of the reimbursement than they would have if they had stayed with film.  In fact, they are keeping perhaps 93% of their original x-ray revenues since they won’t be shutting down their x-ray rooms and the associated income they generate. By the time they are ready to move to DR, the cost of that alternative will have dropped so much that they may even be financially ahead by having first gone to pre-owned CR.  AND…the technology will be even better.

Here’s the icing on the cake.  Where are you going to get many of these pre-owned CR’s (besides from brokers like me….310.471.8900 ext 300)?

You get them from the clients who it really makes sense should upgrade to DR now.  They will be so pleased when you give them a trade-in value for the technology they were happy to use yesterday but now must set aside for financial reasons.

One can argue that sales of new CR units may continue to decline, but your clients with CR’s should not panic…and neither should you.  For the small practice market, a good pre-owned CR system is still a sensible option.  If anything, this Medicare announcement will drive buy-back prices of CR systems lower and create opportunities for your last film clients to move to digital.

Summary:  It’s time to plan and act.  It’s not time to panic.

Please find the full AuntMinnie article or just click here:  http://www.auntminnie.com/index.aspx?sec=sup&sub=xra&pag=dis&itemId=113334