Costing in Radiology and Health Care: Rationale, Relativity, Rudiments, and Realities

Abstract

Costs direct decisions that influence the effectiveness of radiology in the care of patients on a daily basis. Yet many radiologists struggle to harness the power of cost measurement and cost management as a critical path toward establishing their value in patient care. When radiologists cannot articulate their value, they risk losing control over how imaging is delivered and supported. In the United States, recent payment trends directing value-based payments for bundles of care advance the imperative for radiology providers to articulate their value. This begins with the development of an understanding of the providers' own costs, as well as the complex interrelationships and imaging-associated costs of other participants across the imaging value chain. Controlling the costs of imaging necessitates understanding them at a procedural level and quantifying the costs of delivering specific imaging services. Effective product-level costing is dependent on a bottom-up approach, which is supported through recent innovations in time-dependent activity-based costing. Once the costs are understood, they can be managed. Within the high fixed cost and high overhead cost environment of health care provider organizations, stakeholders must understand the implications of misaligned top-down cost management approaches that can both paradoxically shift effort from low-cost workers to much costlier professionals and allocate overhead costs counterproductively. Radiology's engagement across a broad spectrum of care provides an excellent opportunity for radiology providers to take a leading role within the health care organizations to enhance value and margin through principled and effective cost management. Following a discussion of the rationale for measuring costs, this review contextualizes costs from the perspectives of a variety of stakeholders (relativity), discusses core concepts in how costs are classified (rudiments), presents common and improved methods for measuring costs in health care, and discusses how cost management strategies can either improve or hinder high-value health care (realities). ^© RSNA, 2017 Online supplemental material is available for this article.