Running head: BUSINESS PLAN

Business Plan
Bernard Godfrey
Siena Heights University
Professor Fick

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Cover Sheet

Cardiac Monitoring and Medication Pump Service for MRI Patients.

August 2016
Bernard Godfrey BS RT (R) (CT) (MR)
Saratoga Hospital
Saratoga Springs, NY 12866
518-886-5491

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Table of Contents

Cover Sheet--------------------------------------------------------------------------------------------2

Executive Summary----------------------------------------------------------------------------------4-5

Project Description-----------------------------------------------------------------------------------5-15

Risk/Barriers-------------------------------------------------------------------------------------------9

Fundamental Assumptions--------------------------------------------------------------------------10

Financials----------------------------------------------------------------------------------------------11-14

Marketing----------------------------------------------------------------------------------------------14-15

Implementation Plan and Evaluation Criteria-----------------------------------------------------15-16

References----------------------------------------------------------------------------------------------17

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Executive Summary

This service is proposed to enable patients to have an MRI who are on a respiratory
ventilatorwho require cardiac monitoring, require an IV pump, require sedation or who have
an MRI safe pacemaker. It also opens the possibility of doing cardiac MRI if needed in the
future.
Our mission at Saratoga Care is to serve the people of our community by responding to
their health care needs in a supportive and caring environment. We feel this is exactly what this
plan is trying to achieve. It is our goal to serve a population of patients who currently cannot
have an MRI in Saratoga County due to limitations of equipment and service. We feel we would
be responding to their healthcare needs. This service will fit with larger strategic goals by
expanding our services to a population that is currently not being served in Saratoga County
resulting in a greater number of yearly MRI reimbursements.
The plan of this service is to target three areas. The first area is patients who are restricted
from having an MRI due to the patients dependence on a respiratory ventilator. These patients
currently have to be sent to Albany Medical Center or cannot have the exam. We have an MRI
safe Ventilator in the facility; however, we do not have an MRI safe cardiac monitor and IV
medication pump to accompany the Ventilator. This proposal will allow us to safely use the MRI
safe ventilator and perform the scans needed on these patients by monitoring their ECG in
concurrence with the use of the MRI safe ventilator. Currently, the ventilator cannot be used
without the use of an ECG.
The second target area is the population of patients who cannot have MRI scans due to
claustrophobia or anxiety and may need sedation. At Saratoga Hospital, the average number of

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patients who have cancelled their exam due to claustrophobia is 5.31%. This is 8.2 patients per
month and 98.6 patients per year. This is not including the population that simply did not
schedule due to anxiety or claustrophobia. It is our thought that targeting this population could
result in new business for the organization. At an average reimbursement of $1000 dollars per
MRI this can be a significant portion of new business. Currently there is no facility in Saratoga
County offering this service for the sole purpose of the successful completion of an MRI. All
sedation protocols currently being followed for other medical imaging procedures from the
nursing practice manual will be applied for MRI. Adult sedation for any reason will follow
established American College of Radiology (ACR), American Society of Anesthesiologists
(ASA), and the Joint Commission standards.

The third target is the population of people who currently have MRI safe pacemakers and
are unable to be done at Saratoga Hospital due to Cardiac Monitoring limitations. Currently, all
patients have to go to Albany Medical Center for this exam. The Cardiac Monitor enables us to
safely set up a protocol that would allow these patients to be done at Saratoga Hospital. We
currently have an average of one to two requests a month to scan these patients. We expect the
demand to rise as more and more patients are being implanted with these devices.
Project Description
Rationale:
Saratoga Hospital owns and services a MRI safe respiratory ventilator. At this time, we
are unable to utilize the ventilator in the MRI environment because of the inability to monitor
ECG and administer medications. Having a service that monitors ECG and medication
administration would allow the patients currently being sent via ambulance to Albany Medical
Centerto have an MRI in our facility. The purchase of a MRI safe ECG monitor and

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Medication pump will be required. The Monitor and pump must adhere to the FDA guidelines
for MRI safe equipment. All portable metallic or partially metallic objects that are to be brought
into Zone IV must be properly identified and appropriately labeled using the current FDA
labeling criteria developed by ASTM International in standard ASTM F2503
(http://www.astm.org). Those items which are wholly, nonmetallic should be identified with a
square green MR Safe label (ACR, 2013, p.509). This will be placed by the company.
Saratoga Hospital serves approximately 240,000 people of Saratoga County. According to
Statistica (2016) as of 2013, 106.9 per 1000 people get an MRI in the United States. By using the
proprietary software licensed to Saratoga Hospital (Crimson Market Advantage) we approximate
a 30.2% market share in MRI.
One of the key reasons for this proposal is to target the population of patients who cannot
have MRI scans due to the need for conscious sedation (claustrophobia, anxiety, mental illness,
or age). The University of Michigan performed a study of 939 patients, ages 18-91 (mean age of
60.75). They found that 14.3% of those patients required sedation to complete their MRI. As of
June 2016, Saratoga Hospitals claustrophobia rate for cancelled exams was 7.9% (Not including
the population that did not schedule due to anxiety). With a 30.2% market share and a national
average of 106.9 patients per 1000 getting an MRI, that could be a maximum of 608 patients per
year not being scanned due to claustrophobia. It is our thought that targeting this population
could result in new business for the organization. Similarly, this would result in greater patient
comfort reduction in motion artifact on the images and fewer prematurely terminated
studies that we would not be able to be reimbursed for.
Currently there is no facility in Saratoga County performing conscious sedation on
patients for the sole purpose of the successful completion of MRI scans. Conscious sedation is an

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effective and relatively inexpensive means of providing a patient with the most comfort during
procedures. When administered properly, the patient is able to maintain his/her own airway,
remain comfortable and follow commands. Regional anesthesia is usually combined with a
sedative to help the patient relax. That combination is used to place the patient in various stages
of awareness, from fully awake and conversant to vaguely aware, with little or no memory of the
procedure (American Society of Anesthesiologists, nd.).
The American Society of Anesthesiologists (nd,) defines the continuum of sedation as follows:

Minimal Sedation - Normal response to verbal stimuli.

Moderate Sedation - Purposeful response to verbal/tactile stimulation. (This is usually

referred to as "conscious sedation")

Deep Sedation - Purposeful response to repeated or painful stimulation.

General Anesthesia Unarousable even with painful stimulus.

(This proposal does not intend to go beyond Moderate Sedation).
Lastly, there is a population of patients needing MRIs that we are currently missing.

These are patients with MRI conditional pacemakers. According to the Medtronic (2016) It is
estimated that up to 75% of pacemaker patients will have a medical need for an MRI over the
lifetime of their device. Elderly patients are the primary users of MRI. Individuals over age 65
are twice as likely to need an MRI compared to younger patients. The prevalence of common
comorbidities increases over age 65, often requiring MRI the same population most likely to
require a pacemaker. (Medtronic, 2016, para. 3-6). Patients who need MRI for stroke, prostate

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cancer, arthritis, and cancer are usually 65 and older. Many of these patients are 65 and older.
The chart below shows the percentage of the US population that have these comorbidities and
their ages.
Medtronic (2016)

Saratoga Hospitals cardiac catheterization lab is currently implanting Medtronic Sure Scan MRI
compatible pacemakers in patients that fit the requirements. When these patients require MRI,
they are currently going to Albany Medical Center for their care. It is our goal to capture this
population of patients.
Thomas Wells of the Medtronic company has given us the guidelines needed to set up a
protocol to scan MRI conditional pacemaker patients. Our MRI equipment meets the standards
needed. Similarly, he has offered onsite training at no charge.
Risks/Barriers:

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Some of the barriers that an organization has in offering this service is first, the need for a
team to accompany respiratory ventilated patients to MRI and stay with the patient throughout
the exam. Saratoga has this team in place for other procedures currently being performed. Also,
the organization that performs this service will need emergency services onsite to perform
conscious sedation. Lastly, the organization will need a cardiologist in the building on stand-by
for the scanning of MRI conditional pacemakers. This is required by the Medtronic company.
There are several competitors in Saratoga County that offer MRI services. These
competitors have similar 1.5 tesla magnets that could accommodate the scanning of the patients
mentioned above; however, the majority do not have the capacity for ventilated patients, they do
not have emergency services to accommodate conscious sedation, and they do not have a
cardiologist on stand-by for MRI conditional pacemakers. Glens Falls Hospital (20 miles north)
does have these capabilities, but is not currently offering any of these services. Glens falls
Hospital shares the same barriers as Saratoga Hospital.
Because MRI conditional pacemakers are becoming more prevalent, Glens Falls Hospital
may decide to scan these patients in the future as well. However, it is our belief that if they do,
we will still see a percentage of these patients; resulting in new business either way.
There is no certificate of need barriers associated with this service. Also, there are no
reimbursement barriers. The MRIs performed in this service will be billed similarly to any other
MRI we are currently doing with CPT-4 codes and ICD 10s through all payers currently
associated with Saratoga Hospital. There will be no need for additional FTEs. Nursing coverage
will increase by a maximum of 5 hours per month; however, we feel this is absorbable.

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There are some barriers that need to be crossed in order to implement this service. For
instance, training needs to take place, policies and procedures need to be developed, staff needs
to be informed, quotes for equipment need to be obtained, and physicians offices need to be
informed. For those reasons, I believe a 6-week implementation timeframe is needed.

Fundamental Assumptions:
The assumptions of this project are: our rationale is appropriate for the needs of the
patients mentioned above. We do not anticipate any major medical practice or technology
changes in the next five years that would inhibit the need for this service. If anything, the
development of MRI conditional internal defibrillators may increase the populous of patients
needing the service.
It is expected that the local economy will remain stable. With a current 4.6%
unemployment rate compared to the 6.3% national averagea median household income of
$67,712 compared to a national average of $53,046 and a future job growth rate of 34.01%
(Sperling, 2016). In the event of an economic downturn, we have designed this plan with a 1year payback on capital; reducing the overall risk.
Operations:
Location: All studies will be performed in the existing MRI room at Saratoga Hospital.
Space required: Current patient holding area, MRI suite, and MRI Screening room.
Management Structure:

Oversight of Medical Direction-----------Philip Fear MD

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Oversight of MRI service------------------Bernie Godfrey BS RT

Oversight of Nursing Direction-----------Laura Smith BSN
Director of Medical Imaging--------------Mildred Aviles CRA
VP of Medical Imaging -------------------Jeffrey Methven

Staffing: We are proposing to utilize existing staff with no addition of FTEs. Nursing coverage
will increase by a maximum of 5 hours per month and we feel this is absorbable.
Equipment: MRI scanner, MRI safe monitoring equipment, MRI safe stretcher.
Training: All staff (Technologists, Nurses, and Physicians) will be required to take the online
Medtronic training program for the scanning of MRI conditional pacemakers.
Financials:
Forecasted Statement of Cash Flows

Start-up
Contribution Margin
Depreciation
Project Equity

Increase / (Decrease)

Beginning Cash
Balance
Ending Cash Balance

Year 1

Year 2

Year 3

Year 4

Year 5

$56,828
1,000

$59,574

$63,576

$67,852

$72,419

$320,249

2,000

2,000

2,000

2,000

9,000

(10,000)

(10,000)

($10,000)

$57,828

$61,574

$0

($10,000)

$47,828

($10,000)

$47,828

Cumulative

$65,576

$69,852

$74,419

$109,402

$109,40
2
$174,97
9

$174,97
9
$244,83
0

$244,83
0
$319,24
9

Rate of Return

584.71%

$319,249

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Forecasted Profit and Loss Statement

Year 1

Year 2

Year 3

Year 4

Year 5

Cumulativ
e

3
51
6

3
54
6

3
57
6

3
59
6

3
62
6

15
283
31

Incremental Outpatient
Revenue

$60,30
0

$64,21
4

$68,39
5

$72,86
3

$77,63
6

$343,408

Incremental Operating
Expenses:
Medical Supplies
Depreciation
Contingency (3%)
Total Expense

663
1,000
1,809
$3,472

713
2,000
1,926
$4,640

767
2,000
2,052
$4,819

825
2,000
2,186
$5,011

888
2,000
2,329
$5,217

$3,857
$9,000
$10,302
$23,159

Contribution Margin

56,828

59,574

63,576

72,419

320,249

Incremental Volume
OP Ventilator Patients
Patients needing sedation
Pacemaker Patients

67,852

Project Costs

Quantit
y
Cardiac
Monitor
IV Pump

Total

1
1

Price
5000
5000

Total
5000
5000

$10,00
0

Lif
e
5
5

Y1

Y2

Y3

Y4

Y5

500
500

1000
1000

1000
1000

1000
1000

1000
1000

$
1,000

$2,00
0

$2,00
0

$2,00
0

$2,00
0

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Volume Estimates
OP Ventilator Patients

Assume:

0.5
50%
0%

OP Ventilator Patients

per month based on historical experience

Outpatient Patients
Annual Increase

Y1

Y2

Y3

Y4

Y5

Patients needing sedation

2.8
5%

Assume:

OP Sedation Patients

(Cancellation rate)

1800

Avg. sched. Patients

5%

Annual Increase

Y1

Y2

Y3

Y4

Y5

51

54

57

59

62

Pacemaker Patients

Assume:

OP Pacemaker Patients

6.00

In Year 1

1.5%

Annual Increase

Y1

Y2

Y3

Y4

Y5

6.00

6.09

6.18

6.27

6.37

Revenue Assumptions

Assume:

1,000
2%
Y1

Per outpatient*
Annual Change
Y2

Y3

Y4

Y5

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Total MRIs
Total Revenue

14

60

63

$60,300

$64,214

66
$ 68,395

69
$72,863

72
$77,636

*Outpatient charges are based on historical records from the Saratoga Hospital Fiscal Dept.
Expense assumptions
Staffing: No new staffing will be required
Medical supplies

Medical Supplies

Y1
$ 663

$ 11.00
3%

Per Patient - based on historical costs

Annual Increase

Y2
$ 713

Y3
$767

Y4
$825

Y5
$888

Marketing:
As explained early, the target market will be the population of patients who are not
currently able to have an MRI at Saratoga Hospital due to cardiac monitoring, an IV pump,
conscious sedation, or who have an MRI safe pacemaker. We will prepare educational pamphlets,
letters to the referring physicians, and a Saratoga Hospital press release when service is
implemented.
The market size is difficult to determine because it is a new service with no immediate
competitors. However, using Saratoga Hospitals historical records we know that we serve a
population of approximately 240,000 residents. The national average is 106.9 MRIs per 1000
people. At a 30.2% market share, we anticipate approximately 608 patients a year for
claustrophobia24 a year for respiratory ventilatorsand 52 a year for MRI conditional
pacemakers. We are optimistic that we will see these volumes; however, our proposed volumes

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were planned very conservatively at 51 sedation patients (5% annual increase), 3 ventilator
patients (0% annual increase), and 6 MRI conditional pacemakers (1.5% annual increase).
Pricing will be competitively priced in the local market as all other MRIs. There will be
no change in the pricing policy or the billing of these MRI procedures. They will be billed as any
other MRI in accordance to the policies and procedures of Saratoga Hospitals fiscal department.
Because this is a unique service to the area, we will not only target the cardiology
practices, but all referring practices as well. This service will offer MRIs to patients who have
not been able to get MRIs in the past or have to travel to Albany Medical Center. Therefore, there
is no particular group to target. We will target all referring physicians.

Implementation Plan and Evaluation Criteria

We estimate a 6-week implementation is feasible for this service. To implement this
service, we will first need to purchase a MRI safe monitor and medication pump. This will
include at least three quotes from three different vendors. Because of the simplicity of the
equipment and the lack of need for system integration, we will not be utilizing an RFP process.
We feel 3 quotes are adequate for this an MRI safe ECG monitor and medication pump.
We will need to develop policies and procedures for the scanning of ventilator patients,
sedated patients, and MRI conditional pacemaker patients. Furthermore, all technologists, nurses,
and physicians working in MRI will need to take the Medtronic online training course and the
certificates will be filed. The ICU director will need to be contacted to establish a team for the
transport of ventilated patients to MRI. That team will need MRI safety training (if not already
done). Also, a procedure will have to be established with the Medtronic company for the

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scanning of MRI conditional pacemaker patients. Similarly, the director of scheduling will need
to be informed of a predetermined timeslot these patients will be scanned. Lastly, all referring
physicians will need to be informed of the services provided and a press release will be issued.

Week
1

Contact vendors for quotes on MRI safe equipment

Week
2

Medtronic online training. Meet with director of ICU

Week
3

Meet with director of scheduling. Develop policies and

procedures.

Week
4

Review quotes from vendors. Set up procedure with Medtronic.

Week
5

Purchase MRI safe equipment.

Week
6

Contact referring physicians. Press release. Distribute pamphlets.

Because the volume of patients for this service is relatively low, the evaluation process will be
simplistic. Bernard Godfrey (manager of MRI) will log all patients being scanned under the
category of this service. He will evaluate the workload, productivity, quality, and utilization
biannually. He will report the findings to the Medical Imaging Manager meeting on a biannual
basis and Bernard will also report financials at the one-year mark to evaluate if the service has
reached the intended goals.

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References

ACR. (2013). Retrieved August 16, 2016, from http://www.acr.org/Quality-Safety/RadiologySafety/MR-Safety

American Society of Anesthesiologists. (n.d.). Retrieved August 14, 2016, from
https://www.asahq.org/search?q=conscious sedation
Medtronic. (2016). Retrieved August 1, 2016, from http://www.medtronic.com/us-en/healthcareprofessionals/products/cardiac-rhythm/pacemakers/advisa-mri-pacing-system.html
Sperling, B. (2016). Saratoga County, New York. Retrieved August 15, 2016, from
http://www.bestplaces.net/economy/county/new_york/saratoga
Statistica. (2016). Retrieved August 2, 2016, from http://www.statista.com/statistics/271470/mriscanner-number-of-examinations-in-selected-countries/