As health systems shift from fee-for-service (FFS) to value-based care (VBC) models, radiology is emerging as a lever for both improving patient outcomes and reducing costs.
In this post, we explore how radiology’s role changes under a value-based paradigm, key differences compared to traditional FFS and how innovations — particularly in AI — can drive clinical and financial value in capitated settings, such as Accountable Care Organizations (ACOs) and Medicare Advantage.
Radiology in Fee-for-Service Versus Value-Based Care: Key Differences
Radiology in FFS Systems
- Volume-driven incentives
In the traditional FFS model, providers are reimbursed per service unit (e.g., per imaging study), so there’s an inherent incentive to maximize utilization. Radiologists and imaging centers benefit financially from higher scan volumes.
- Utilization oversight
Although there may be utilization management (e.g., prior authorizations), cost incentives are relatively misaligned: more scans typically mean more revenue, even if downstream value is limited. Several studies demonstrate a staggering increase in imaging volume over the last several years.
- Limited accountability for downstream outcomes
In general, radiologists in FFS are less impacted by the clinical sequelae of their imaging findings — whether early detection leads to effective treatment, or whether overutilization leads to unnecessary follow-up.
- Fragmented care coordination
Imaging may be ordered without full integration into care pathways. Radiologists may communicate findings, but often aren’t deeply embedded in broader care management strategies. Care pathways are generally independent of radiologists in their paradigm of management.
Value-Based Radiologists
A vision for VBC in radiology should include the following:
- Volume → value incentive shift
In VBC, especially in capitated models, the financial driver may not be how many scans are completed, but how imaging contributes to better health outcomes and lower overall costs. Granted, this formula needs to balance appropriate reimbursement rates, but marrying patient outcomes to imaging at some fundamental level should be an aspiration of a value-based minded diagnostic radiologist.
- Accountability and risk
Radiologists become part of teams that assume risk (e.g., in ACOs or Medicare Advantage). Their involvement in utilization management, care coordination and diagnostic quality directly affects shared savings or financial penalties.
- Integrated care pathways
Imaging is strategically deployed to support prevention, early diagnosis and monitoring. Radiologists may participate in protocol development, decision support and care planning rather than simply responding to ordering. Care pathways can and should be built with fundamental integration with imaging experts as it pertains to next best steps in clinical care and necessary ( or unnecessary) imaging follow-up.
- Long-term cost avoidance
The overarching goal here is reduced cost while maintaining appropriate clinical care. Reducing unnecessary imaging is a component to this equation, while ensuring diagnoses are made expediently (and catching diseases “early”) also lends to increased value throughout the healthcare ecosystem.
Radiologist Participation in Value-Based Models
Radiologist integration into VBC isn’t theoretical — it’s happening in practice. A study of Medicare Shared Savings Program (MSSP) ACOs found that radiologist participation grew from 10.4% in 2013 to 34.9% in 2018. And, ACOs that include radiologists tend to be larger and more specialty-diverse, which may facilitate better care coordination and management of advanced imaging.
In these ACOs, imaging use can directly correlate with cost savings. In one analysis, higher MRI utilization was associated with greater total savings and increased likelihood of meeting shared-savings thresholds. Radiologist participation in ensuring appropriate imaging exams are ordered, while helping inform their referring physicians with the most appropriate next best step — as it pertains to imaging and diagnostics — may lead to better patient outcomes and increased savings.
Clinical Impact of Radiology in a Capitated, Value-Based Setting
In a capitated VBC environment (e.g., an ACO or risk-bearing Medicare Advantage plan), radiology can drive better health outcomes through several mechanisms.
1. Early Detection and Disease Management
Radiology enables early detection of diseases (e.g., cancer, cardiovascular disease) and helps stratify risk. Earlier diagnosis usually translates to earlier intervention, which is often more effective and less expensive than treating advanced disease.
When imaging is used strategically — guided by evidence-based protocols and decision support — it helps care teams identify patients who need intervention, monitor progression and tailor management. The end result of effective imaging guidance along the spectrum of a patient’s journey is reduced overall cost to the health ecosystem and patient.
2. AI-Enabled Diagnostic Accuracy and Efficiency
AI applications in radiology significantly amplify these benefits:
- Improved diagnostic accuracy: AI models detect subtle abnormalities (tumors, bleeding, fractures) that might be missed. More specifically, by improving sensitivity rates in the outpatient, inpatient and emergency settings, disease states are identified expediently, empowering physicians to manage patients — and their risks — in the best possible manner. This heightened sensitivity can aid in earlier disease detection.
- Workflow efficiency: AI can reduce reading times, triage urgent cases and facilitate in creating reports in a shorter duration of time, allowing radiologists to focus on critical or complex cases.
- Economic value: A systematic review found economic benefits when AI is deployed in tasks that are resource-intensive, especially where AI’s accuracy matches or exceeds that of humans. For instance, in the detection of lung cancer in the setting of screening, research demonstrated $242 of savings per patient.
3. Reducing Unnecessary Imaging and Harm
In VBC, radiology must help reduce ineffective or redundant imaging. AI-driven decision support systems can detect repeated or redundant orders (e.g., duplicate exams) and alert ordering clinicians, helping avoid unnecessary radiation, contrast exposure and costs.
4. Care Coordination and Protocol Optimization
Radiologists in value-based settings can play an active role in designing imaging protocols, standardizing appropriateness criteria and contributing to care pathways. By embedding into multidisciplinary teams, radiologists help ensure that imaging is used in the most efficient, evidence-based way.
Business and Financial Impact of Radiology in Capitated Value-Based Models
From a business perspective, radiology in VBC can deliver both cost savings and revenue, albeit in ways very different from FFS. Here’s how:
1. Shared Savings and Risk Mitigation
- Shared savings: In ACOs, when better imaging utilization (especially advanced imaging like MRI) is linked to lower total medical expenses (thanks to early detection, fewer complications, and avoided downstream costs), radiology contributes to achieving shared-savings benchmarks. Radiologists can and should be financially incentivized to assist in shared-savings benchmarks.
- Risk reduction: By helping reduce hospital readmissions, preventing avoidable complications, and enabling more proactive disease management, radiology helps the broader risk-bearing organization (e.g., Medicare Advantage plan) lower its liability.
2. Operational Efficiency and Cost Avoidance
- Reduced operational bottlenecks: AI-powered triage and workflow optimization reduce radiology turnaround times, which may translate into shorter inpatient stays, faster discharges, and better throughput – all contributing to lower operating costs and potentially avoiding penalties.
- Reduced waste: By flagging redundant exams, supporting appropriateness decision-making, and detecting incidental findings earlier, radiology helps prevent wasteful imaging use, reducing unnecessary cost burden.
For health systems or value-based organizations (ACOs, Medicare Advantage, integrated delivery networks) looking to maximize radiology’s value in a VBC world, here are some strategic levers:
- Embed Radiologists in Care Teams
Include radiologists in multidisciplinary teams, care-pathway design, and utilization committees to ensure imaging contributes to long-term value, not just volume. Volume is now an essential pillar of diagnostic radiology, but translating that increased volume into meaningful, patient-centered care is an opportunity ripe for contribution from imaging experts.
- Invest in AI Thoughtfully
- Pilot AI tools in high-impact areas (e.g., triage of emergent findings, report generation, disease screening). Test AI tools post-deployment, and engage with users to fine-tune technical impediments or roadblocks in adoption.
- Monitor and Measure
- Track metrics such as turnaround time, follow-up compliance, redundant imaging, downstream care utilization, and clinical outcomes.
- Use economic analyses (e.g., cost per patient, shared savings attribution) to quantify radiology’s return on investment. This should include prevention of downstream clinical complications, divergence to outpatient management, appropriate interval follow-ups and decreased lengths of stay (LoS) within the Emergency Department (ED), intensive care unit (ICU) and inpatient departments.
What This Means for Radiology
Radiology is no longer just a downstream diagnostic tool waiting for orders — in value-based care, it becomes a strategic partner in prevention, early detection, and resource optimization. By integrating radiologists into risk-bearing teams, deploying AI to augment diagnostic speed and accuracy, and aligning incentives through value-based contracts, health systems can harness imaging to improve patient outcomes and reduce costs.
