An Insurance Broker’s Foray Into Diagnostic Imaging And Radiology

In an era of increasing consolidation and decreasing competition in the healthcare space, John Dils has found the concept of adding value to be a formidable business strategy. It’s a formula that served him in his earliest days in the insurance industry, right up to his recent success opening the first free-standing diagnostic imaging facility in his hometown of Richmond, Indiana.

As an athletic kid growing up in the Midwest, Dils gravitated toward the diet and exercise habits associated with healthy living. But it wasn’t until after college in the mid-1990s that he really started connecting the dots between lifestyle choices and a clean bill of health. Once he saw diet and exercise through the lens of health insurance, he never looked back.

“I came back to my father’s insurance agency and started pushing healthy living initiatives within the business,” he says. “We had smokers, dad being one of them, and we went smoke free.”

His insurance agency, RMD/Patti Insurance, implemented a division called Wellness Works, offering fitness programs and services to their policyholders. By encouraging clients to eat right and exercise regularly, the company was essentially reducing the likelihood of costly medical emergencies. A win-win.

“I went to local gyms that I was friendly with to establish discounted membership programs for our clients, anything that would set us apart within the insurance world,” Dils recalled. “We ended up buying a gym and experiencing tremendous growth within the community.”

The gym, Family Fitness Works, went from 600 members to 3000 members in the span of about four years, according to Dils. In a town of about 30,000 people, like Richmond, that meant 10% of the population was now part of the RMD/Patti health and wellness hub.

Playing the hand you’re dealt

Like many sectors in healthcare, the health insurance industry has been undergoing intense consolidation in recent years. Juggernaut payers like Anthem, UnitedHealth, Aetna, and Cigna have taken bigger slices of the pie, leaving patients and physicians at the mercy of higher prices and fewer alternatives. Smaller insurance providers are left scrambling for some kind of competitive value proposition.

“[In the old days] you had your carriers, but now with mergers and acquisitions, it’s like everybody’s got everybody,” says Dils. “No differentiation between me and the guy down the street, other than the individual. We all had the same market, same pull, nothing to separate us from them.”

That was the climate when Dils took over RMD/Patti from his father. Under his leadership, the company would lean even harder into its wellness offerings, because it was what they did that nobody else was doing. So the next step was opening a health clinic exclusively for their clients.

“We write your benefits, all built into back-end, employees use facility for free, no copay no deductible,” Dils explains. “We can be your primary care, acute urgent center, meds, labs, doctors visit, all covered without cost to employees.”

The success of Healthworks may have had as much to do with the unique healthcare market in Richmond, which Dils describes as “dominated” by a single hospital system with little incentive to negotiate prices, as it did with the ingenuity of the business model. If the lack of competitive care options contributed to the success of Healthworks, then the next differentiation project was a no-brainer: a free-standing imaging facility.

Enlisting a radiology insider

It is commonly understood that hospitals charge more for an imaging exam than a free-standing imaging center. In some cases, (emergencies and complex cases, for example) patients may be better served by a hospital and its extensive resources, but in the majority of cases, a free-standing imaging center is a more affordable means to an end.

Insurers like Anthem and Cigna understand this, and in recent years have written policies to steer their policyholders toward the more economical scanning alternative. Since Richmond did not have a freestanding diagnostic imaging facility, Dils saw an opportunity.

Until now, each strategic investment by RMD/Patti took place in familiar territory. As a fitness enthusiast, Dils understood gyms, as an insurer, he understood health clinics. In both cases, he had contacts inside the industry to help him solve problems along the way. Medical Imaging, however, is a technologically advanced industry and he had little experience in it, so he set out to find an advisor.

“One company looked promising but it wasn’t very responsive, maybe because I was just a small guy and they didn’t care to take the initiative,” recalls Dils. “It was like, sign here, commit here, send us the check and we’ll send the machine to you. Well, I don’t know what to do when the machine gets here.”

Eventually, a blind inquiry led Dils to a company called Radiology Oncology Systems (ROS), a company headquartered in California, where Mike Guthleben, VP of Diagnostic Imaging, based in Columbus, Ohio, became an indispensable resource. Together, they navigated the process of choosing and installing the right mix of refurbished diagnostic imaging equipment for Dils’ new facility.

Dils knew the local hospital used Siemens Healthineers imaging technology, so that seemed like as good an option as any. Guthleben agreed that Siemens made excellent MR scanners and CT scanners, but stressed that often the more affordable, independent service and third-party technical support market was more robust for GE Healthcare systems.

“If I got into a repair situation, I was going to be able to find parts and labor a little easier,” says Dils. “We looked at a number of different machines and he gave me his two cents and we made decisions from that”. He ended up installing a GE 1.5-Tesla MR system and a GE 64-slice CT scanner suitable for both general diagnostic as well as cardiac scans. He also added other imaging systems including an X-ray system.

Eventually they selected a full range of equipment that would meet the needs of his patients at the best price. With access to ROS’s network of resources and industry professionals, Dils was able to connect with experts who could verify the imaging environments were up to specifications, particularly the MR suite, where special RF shielding is required to ensure diagnostic quality scans.

“Mike Guthleben and his colleagues at ROS went above and beyond,” Dils recalled. “Helped me source leaded doors, showed me where I could get leaded glass. He had quality names and vendors to call, and he didn’t get paid for any of that but he still helped me with the process. He helped me source training. We had a third-party group come in and do all of our training, and without Mike’s industry knowledge I would have been swinging at the air.”

If you build it, they will come

Each of Dils’ new business ventures started with recognizing an unmet need in the Richmond, Indiana area. In each case, that has also meant creating value in industries where consolidation has stifled competition.

“It comes down to having an option for the people in this community that they deserve,” says Dils. “Other communities have free-standing centers. I can drive an hour to go to one in Indianapolis, but why not have one here?”

When ImageWorks opened in July 2021, the COVID-19 delta variant was just beginning to spread across the country. The timing meant referrals were scarce and ramping up patient volumes took longer than expected. Further complicating things was an unwillingness by the local hospital to build a relationship with his facility.

“Patients have to almost physically deliver the scan referral orders to us, but they have to ask, and the hospital wants to play the game that our machines are not as good as theirs,” says Dils, who stresses the anti-competitive attitude is not surprising, but frustrating nonetheless.

“I get it — when there’s a patient located in the hospital, sure you’ve got to use that scan; but if you look at a $4,000 CT and a 20% copay, that’s $800 out of pocket,” says Dils. “Well, you have another option, you could come get it here for $600 cash.”

Aside from Medicare and Medicaid, ImageWorks is accepting all the major insurers and has flat rates listed on its website for paying out of pocket. Feedback from patients who have undergone scans has been nothing but positive, Dils reports, and as word gets around town, he expects business to continuing increasing.

“It’s another service we’ve opened up with the primary purpose of being different than the guys down the street,” he says. “We all have the same markets and everything else, when it comes down to buying decisions, I don’t want to have to win a popularity contest, I want the best products and service.”

As the economic landscape for independent, diagnostic imaging centers continues to toughen, John Dils’ experience is a valuable lesson for others seeking to expand healthcare into rural and less densely populated markets. Trust in your product, offer clients an unparalleled patient experience at an affordable price, and rely on experts to provide you with the right equipment. Follow these simple principles and you just might be successful.

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