Running Head: BUSINESS PLAN 1

Women’s Diagnostic Center Business Plan

Catherine Alvarez

Siena Heights University

LDR 609 - Health Systems Management

Professor Fick

October 29, 2013

BUSINESS PLAN 2

Women’s Diagnostic Center Budget Plan

Executive summary

Grosse Pointe Women's Diagnostic Center is an outpatient center, providing the highest

quality. We are a Breast Imaging Center of Excellence. This certification from the American

College of Radiology (ACR) recognizes breast imaging centers that have earned accreditation in

mammography, stereotactic breast biopsy, automated breast ultrasound and ultrasound guided

breast biopsy. In November of 2011, The U.S. Food and Drug Administration (FDA) approved

the first digital breast tomosynthesis (DBT). The timing is right for purchasing the recently

approved DBT because it is state of the art equipment and there few competitors in our service

area to meet the market needs. This is an alternate imaging modality that has shown high

sensitivity to dense breast tissue and is similar to CT in that images are captured in slices.

Services we provide. The Grosse Pointe Women’s Center provides the following women’s

diagnostic services:

Digital mammography

Breast ultrasound

Automated Breast Ultrasound (ABUS)

Non-surgical breast biopsy technology- Stereotactic breast biopsy

Dexa bone densitometry

An outstanding staff which includes a board certified fellowship-trained, dedicated breast

Radiologist

Customers we serve

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The service area is the Grosse Pointes that comprises of five small communities called

the Pointes. (“Suburban Stats,” 2013) listed the demographic population for women in the

Grosse Pointes including Grosse Pointe Woods, Shores, Farms, City, and Park total 19,832

women. (The Michigan Department of Community Health [MDCH], 2013) stated the number of

invasive female cancers of the breast and deaths are significantly higher in Wayne County

outside of Detroit than the state rate, a study from 2005-2009 (p.137).

The American Cancer Society (ACS) states there is a 1 and 8 risk of women developing

breast cancer in their lifetime, it attacks randomly. There is no way to prevent breast cancer,

however if found early 98% will survive the five year survival rate. This makes screening the

best tool against the fight for breast cancer. Breast density is a strong independent risk factor for

developing breast cancer. Dense breasts have been linked to an increased risk in breast cancer.

ACR stated, “Approximately 10% of the women have entirely fatty breast tissue, 80% have

either heterogeneously dense breast or breasts with scattered areas of fibroglandular density, and

10% have extremely dense breasts.” (“Breast Density,” 2013) ACS (2013), results found, “The

risk for developing breast cancer is four to six times greater for women with dense breast” (p.12).

Cancers detected in women with dense breast are larger, higher grade and more frequently node

positive with poorer prognosis. The risk of developing an interval cancer is greater in dense

breasts. ACR states, significant screening problem for patients with dense breasts are the

following:

The sensitivity of screening mammography drops from 85% to 65% in women

with dense breasts

More than 33% of breast cancers are not mammographically visible in dense

breast tissue

According to the findings of Checka, Chun, Schnabel, Lee, and Toth (2012),

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Distribution of Mammographic Density by Age Groups

74% of women 40 to 49 years of age

57% of women in their 50’s

44% of women in their 60’s

36% of women in their 70’'s (p.2)

Service definition

Digital Breast Tomosynthesis. This new imaging modality is going to revolutionize breast

imaging with better visualization. There is a reduced recall rate with fewer false positives. Using

standard 2-D for diagnostic imaging exams can be time consuming and can negatively affect

patient flow. DBT can avoid further testing and call backs for diagnostic exams thus providing

less anxiety for patients. The radiologist can see the tissue better because of the reduction of

superimposed tissue allowing the radiologist to see around overlapping structures thus improved

clarity. Mammography has always held a standard of being extremely low dose. The dose of

radiation is still below the standards set by the MSQA using the combo mode that is the 2D and

the 3D tomosynthesis in the same day. A little more dose a lot more information and still a safe.

Products and services

The digital breast tomosynthesis acquires a series of images in the following way:

Tube moves in a 15 degree arc

15 low dose images are acquired

1 image at each degree

Four second scan time

Images are reconstructed into 1 mm slices

In combo-mode imaging, the 2D and 3D are taken in the same compression

No additional positioning for the patient while patient is still in compression

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The service is offered in the mammography room and the device is attached to the existing

Hologic Dimensions 2D mammography machine. The hours of service will be the same Monday

through Friday 8 a.m. to 5 p.m.

Competitors

There are four other breast centers in the Grosse Pointe area and none of these centers

offer the digital breast tomosynthesis mammography machine. I conducted a phone interview

with Nort Upson, a sales representative, who works for the distributor Grand X-ray that supplies

Hologic equipment. Competition in southeastern Michigan is limited to two organizations. The

McLaren Macomb hospital has one machine currently in use and their next machine is scheduled

for installation on Monday, October 28, 2013. McLaren Macomb is fifteen miles away from

Grosse Pointe. Their market has increased over ten percent since the purchase of the

tomosynthesis unit. The other organization is Karmanos Cancer Center Institute which is

approximately thirteen miles from the Grosse Pointes owns one tomosynthesis machine. Troy

Beaumont has the Hologic Dimensions 2D and is in position to add an upgrade to their machine,

but to date has not purchased one. Currently, McLaren and Karmanos are the only organizations

in southeast Michigan that are using breast tomosynthesis. McLarens and Karmanos advantage

over their competitors is women will go where the service is offered. The national average has

been at least a 10 percent increase in patient load. (N. Upson, personal communication, October

24, 2013) There are no risks or regulatory issues concerning offering this service only advantage.

The marketing theme is for women to be aware if they have dense breast. Use this strategy and

offer the service in the community for women. This is a service that offers state of the art FDA

approved breakthrough technology that will increase cancer detection and save lives.

Target Market

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Market Overview. The four major market segments are included the following list:

Age- 40 baseline or women younger who need mammogram for clinical reasons

Upon personal request for women who want DBT for their screening mammogram

Density type- Bi-RADS type 3, over 51% dense breast tissue for screening/diagnostic

mammogram

Referral from physician for clinical reasons, a diagnostic mammogram

The ACR supports an FDA mandate that dense breast tissue notification be included in the

mammogram report. Women need to ask their physicians what is on their mammogram report so

they are aware. There is a national awareness by the advocacy group “Are You Dense.” They

are dedicated to informing the public about dense breast tissue and its significance in the early

detection of breast cancer. In the state of Michigan, House Bill No. 4260 has been introduced

requiring mandatory breast density notification to women. Under this bill, woman having a

screening mammogram must be notified that dense breast tissue can increase the risk of

developing breast cancer and can obscure cancerous findings on mammography. The bill also

requires that the ACR’s BI-RADS density classifications are on the mammogram report so

women can be informed by their physicians if they might need other breast imaging in addition

to the standard mammogram. (Brinks, Lyons, Hovey-Wright, Slavens, Segal, Dillon, Lamonte,

Abed, MacGregor, Lipton and Oakes, 2013)

The following list is the ACR’s density classifications:

BI-RADS Type 1: < 25% glandular almost entirely fat

BI-RADS Type 2: 25-50% glandular scattered fibro-glandular tissues

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BI-RADS Type 3: 51-75% glandular aka “heterogeneously dense”

BI-RADS Type 4: >75% glandular

Dense breast are defined as BI-RADS type 3 and 4.

Market needs. Our target customers are women with dense breast which is forty percent of

the population, women with personal history of breast cancer and women who have clinical

findings. Volumes are likely to increase as the population ages. Today's women are more

educated and judge the quality of care by advanced technology. Patients expect the latest

technological advances and will drive out of their community to get the service. Digital breast

tomosynthesis is the latest FDA approved breast imaging equipment available. DBT is a 3D

imaging modality that is a separate procedure and is performed at the same time as the 2D digital

mammogram under compression, combo mode. The system produces images that represent thin

slices of the breast allowing radiologist to view slices 1 mm at a time. Multiple images of the

breast are acquired at different angles during a sweep of the x-ray tube which allows radiologists

to see around overlapping structures. DBT has a higher cancer detection rate. The improvements

in clinical performance, compared to 2D mammography, are significant.

Strategy and implementation

Marketing plan and overview. The marketing strategy is simple; it is differentiating our

service from the competitors. Provide extensive outreach in the community about the

tomosynthesis imaging service. Satisfied customers are our best marketing tool, word of mouth.

Our reputation will stand on its own. Our own primary care physicians (PCPs) and OB/GYNs

will be notified of this next generation technology. In addition we will use the following sales

channels and advertising options.

Sales channels. The following is a list of targeted potential referring physicians:

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Targeting Obstetricians/Gynecologists

General Practitioners

Family Practitioners

Internists

General Surgeons

Oncologist

Marketing activities. The following is a list of marketing tools that could be used:

Press release to local TV news to highlight new service

Web sites

Direct mail flyers to people in the community including postcards

Phone advertising(while on hold) when calling organization

Health fairs/Other sponsorship activities

Brochures will be distributed to physician offices

Preview slides at movie theaters

Billboards

This positions our organization to be leaders in the fight against breast cancer. We can offer

the women in our community and surrounding areas quality care. Since marketing has their own

budget, the administrative team in radiology will communicate and collaborate with them. A

future goal would be to expand market reach to the surrounding areas because of the limited

availability in region for tomosynthesis imaging.

Strategic fit

The service relates to the organization's strategic plan to be best in class service and to be

a dominant force in Michigan. The organization has the financial strength to fund clinical

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services. We are known as a national leader in delivering high quality service to our patients. The

service would allow the organization to be a leader in the industry in the region. We are well

positioned to add this service because we already own the Hologic Dimensions 2D. The 3D

tomo addition to the unit would be considered an upgrade and is much less expensive. Grosse

Pointe Women's Center could be the pilot and eventually the upgrade could be added system

wide to other mammography departments.

Organization

The Radiology Department will be responsible for directing this service. This is the most

appropriate because The Women's Diagnostic Center is part of the Radiology Department. The

steps for the patient cycle are already in place and are the same steps required for getting a

routine screening mammogram. There will be no need for extra staff at this time because our

patients that require the 3D imaging service will use the room with the upgrade and all other

patients will use the traditional Hologic Dimensions 2D room. Mammographers’ routine duties

include looking at past mammogram and the reports prior to exams. The Bi-RADS score will be

on the last year’s mammogram report in case the patient does not know her breast density.

Patient flow is as follows:

1. Patient registers in Women's Diagnostic Center with receptionist

2. Mammographer calls patient to dressing rooms.

3. Exam is taken

4. Patient is finished

Using tomosynthesis would make the work flow more efficient compared to calling patients back

after a screening mammogram to take additional views for a diagnostic mammogram. This

service will offer improvements in both screening and diagnostic evaluations.

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Financial summary

Financial highlights. State of the art equipment allows a facility to save time and cut

costs without sacrificing quality patient care. The costs for operating a breast center are relatively

fixed so increased patient volume is key. With fewer time consuming diagnostic call backs the

tomosynthesis will provide more efficient patient flow thus higher volumes. The funds needed

to purchase one Hologic Dimensions digital breast tomosynthesis unit are:

$135,000 for purchase of the digital breast tomosynthesis equipment upgrade

CPT codes are still being worked out, approximately six months to year out

Most organizations on are charging a Miscellaneous Code for approximately $50 for the

3D portion of the exam and seeing a 30 to 40% reimbursement

Average charge for a digital 2D exam is approximately $100

The source for the capital funds will be obtained through the Radiology Department. New capital

items typically carry a one-year warranty which Grand X-ray offers. The business will return to

stronger profits and gross margins after the acquisition.

The operating budget is for the Women’s Diagnostic Center only. It excludes costs such

as heat, electricity, lease, and telephone. These are all fixed cost for the total budget. The new

capital project does not affect these costs materially. Receptionist and ultrasound technologist are

from another cost center.

The new upgrade on a standalone basis with one mammographer will have a profit of

$485,000 in the first year. In addition, to these profits this upgrade will provide more efficient

work flow which creates more patient volume in the Women’s Center. Also, profits will go up

after the first year due to higher reimbursements and expenses related to the acquisition will have

been fully paid. The only fixed cost in the future related directly to the new machine is the salary

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of one mammographer. The remaining staff in the Women’s Center is a fixed cost unrelated to

the new upgrade. See complete department financials on the next page.

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Capital & Operating Budget AssumptionsInvestment in Upgrade 150,000$ Supervisor Salary 75,000$ Mammographer Salary 60,000$ Full Time Nurse Salary 75,000$ Radiologist Salary 250,000$ Basic Charge (Pre-Upgrade) 100$ New Fee for Clients (40% of Upcharge Reimbursement) 118$ Total New Fee - After CPT Code is Changed 150$ Sterotactic Biopsy 500$ Bone Density Scan 250$ Weeks Per Year 52

Annual Operating BudgetSalesNew Machine Sales - First 6 Months 305,500 New Machine Sales - First Going Forward 390,000 Standard/Old Procedure Sales 520,000 Sterotactic Biopsy 390,000 Bone Density Scans 832,000 Total Estimated Sales 2,437,500$

SalariesSupervisor 75,000 Mammographers 180,000 Full Time Nurses 75,000 Radiologist 250,000 Total Salary Costs 580,000$

SuppliesSterotactic Sterile Trays 117,000 Cleaning Wipes (10 Per Week) 2,080 Gloves (3 Boxes Per Week) 1,404 Miscellaneous Supplies 1,000 Total Supplies 121,484$

Annual Net Profit 1,736,016$

5-Year Return on Capital Year 0 Year 1 Year 2 Year 3 Year 4 Year 5Initial Investment (150,000)$ Annual Profit 1,736,016$ 1,736,016$ 1,736,016$ 1,736,016$ 1,736,016$ Total (150,000)$ 1,736,016$ 1,736,016$ 1,736,016$ 1,736,016$ 1,736,016$

Internal Rate of Return (IRR) 1157%

Year 1 Proceeds (Net of Investment) 1,586,016$ Year 1 Net Present Value (15% Discount Rate) 1,379,144$

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Implementation plan

The department director along with the manager of the imaging center must have a

strategy for acquiring capital equipment. Capital equipment takes place in stages, first the

women’s department manager looked at a needs assessment; the manager went to the director

with a request for information, request for proposal, and evaluation to get information and

proposals from Grand X-ray. The department director can directly participate in all phases but in

this situation since it is a small capital investment the process was delegated to the manager of

the Women’s Center. Initially, during the needs assessment there was input from direct users

such as the radiologist and mammographers, and the Women’s Center department management.

The final decision was made by the director of Radiology. The goal was a smooth acquisition

and installation process. Progress will be monitored throughout implementation with some face

to face meetings, mostly group emails that are essential for sharing input, and phone contact. As

the date got closer to installation, communication between the manager and Grand X-ray was on

a regular basis either through phone or e-mail. The only vendor for Hologic, Inc. in the state of

Michigan is Grand X-ray. The purchase is an upgrade to existing equipment making the

purchase agreement and process efficient and swift.

Timetable. The following identifies the process and plan to achieve the desired goal:

August 26, 3013. Manager of Women’s Center contacted Grand X-ray for purchasing

quote for upgrade to Hologic Dimensions Tomosynthesis.

September 3, 2013 Date submitted. Objective for new service: Manager of Women’s

Diagnostic Department submitted business plan to obtain executive approval from the director of

radiology for purchase for an upgrade to the Hologic Dimensions 2D mammography machine.

This is the tomo portion and is much less expensive.

September 27, 2013. Date approved.

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September 30, 2013. Manager of Women’s Center contacted Grand X-ray to set notify of

approval of project and set installation date.

October 2, 2013. Grand faxed sales agreement to Director of Radiology to sign. Signed

and returned. All administration team emailed and notified of responsibilities.

October 4, 2013. Manger of Women’s Center contacted representative from Grand and

an installation date was set.

January 6, 2014. Installation date, Grand will be installing equipment.

January 6, 2014. Supervisor of Women’s Department will adjust schedule will be for

the week for installation and applications training.

January 8, 2014. Schedule two days for application training for technologist

January 8-10, 2014. Schedule 8 hours training for radiologist and physicist

January 13, 2014. Medical Physicist provided proof the facility that all tests passed

January 14, 2014. Manager of Women’s Center submits to ACR the complete new

application and the Equipment Evaluation results

January 15, 2014. Clinical use begins

January 20, 2014. ACR approved. ACR will notify the FDA within two business days

that an accreditation application has been accepted

Regulations

MQSA Requirements prior to patient use. The American College of Radiology

Mammography Accreditation Program, (2013) requires the following:

The medical physicist must provide the facility with the written results of the Equipment

Evaluation showing that all required tests have passed. The facility, usually the manager

has submitted the complete new unit application (with the Equipment Evaluation results)

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to the ACR. Once approved, the ACR will notify the FDA (or the state certifying body)

within two business days that an accreditation application has been accepted for the new

unit. These facilities are not required to wait for a response from the ACR to begin

clinical use of the new unit since they are operating with a current MQSA certificate.

However, the Center for Medicare and Medicaid Services (CMS) will not reimburse for

examinations performed on an FFDM unit until the FDA has received notification that

your new unit has applied for accreditation. (p.7)

Once clinical use begins, the manager will be gathering information, monitoring activities and

performances to make sure the objectives are being met. The manager will continue to meet with

all stakeholders involved to look at the process and see if any improvements are needed. The

manager will make necessary adjustments so the department will meet success.

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References

Breast Cancer Facts and Figures 2013-2014. (2013). Retrieved from American Cancer Society:

http://www.cancer.org/acs/groups/content/@research/documents/document/acspc-

040951.pdf

Breast Density. (2013). Retrieved from American College of Radiology: http://www.acr.org/NewsPublications/~/media/180321AF51AF4EA38FEC091461F5B695.pdf

Brinks, Lyons, Hovey-Wright, Slavens, Segal, Dillon, Lamonte, Abed, MacGregor, Lipton &

Oakes, (2013, February 14). House Bill No.4260. Retrieved from Legislature Michigan

Government:

http://www.legislature.mi.gov/documents/2013-2014/billintroduced/House/pdf/2013-

HIB-4260.pdf

Cancer in Michigan, 2009 updated 2013 An Assessment of the Cancer Burden in Michigan.

(2013). Retrieved from Michigan Department of Community Health:

http://www.mdch.state.mi.us/pha/osr/Cancer/CancerInMichigan2009.pdf

Checka, C., Chun, J., Schnabel, F., Lee, J., & Toth, H. (2012). The relationship of

mammographic density and age: implications for breast cancer screening. American

Journal of Roentgenology, 198(3), W292-W295.

Suburban Stats Grosse Pointe. (2013). Retrieved from Suburban Stats:

http://suburbanstats.org/population/michigan/how-many-people-live-in-grosse-pointe

The American College of Radiology Mammography Accreditation Program:. (2013). Retrieved

from The American College of Radiology:

http://www.acr.org/~/media/ACR/Documents/Accreditation/Mammography/

MammoFAQ.pdf

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