How to Build an Office-Based Lab & Office-Based Lab Requirements

[Mary Costantino]
Well, I think an OBL is a really great thing for someone who is always learning. There's a lot of business. I have to be really cognizant. This goes back to having some good luck of having the business development person at the outpatient imaging center. She had a human resources background. We would talk about, why didn't things work out in the first group that I was part of, and why is A so easy and B is so difficult. Some advice that I took away from that is finding your happy place, right? For me, I'm very cognizant of what my happy place is. That's in a cath lab with my hands on a catheter doing cases. You have to be really cognizant of that because the business side of it can take over. It's interesting. It's fun. It's different. It's entrepreneurial.

Over the last year, I've looked at every piece of equipment known to mankind. You can be really distracted by that because it is really fun. It works the brain in a different way. There's the marketing. You learn all about marketing. You learn all about construction. You learn all about equipment. You learn all about product cost and contracts and the whole business of medicine. When you have a corporation or a hospital behind you, they are doing all that.

You don't even know what insurance products you cover or how that works. One fun part is that I get to know all of that stuff. It also can be an endless job. I always keep in mind what's the thing that I like to do. I would say that's a challenge for people who are going into it is, you want to be really, really cognizant of how you spend your time. I do believe in hiring good people, they're expensive also.

Another challenge is that you're not going to make any money. I haven't really had a salary in a year. For me, the financial part of it, preparing, anyone can do it because IRs make enough to be prepared for the investment, but it really becomes a startup like you would see a software startup or a device startup or really, any other type of startup. That mentality is very different than the hospital-based IR who is used to making their big salary every year.

[Michael Barraza]
Right. You're talking about just until you reach that break even point?

[Mary Costantino]
Yeah. Depending if you lease or rent, you're looking at buying a building, paying contractors. Yeah. It can be a very lucrative situation on the other end, but what does that year or two years look like.

I don't know. About 25% of OBLs closed is what I've heard. I find that hard to believe if done correctly because it's favorable for everything. It's favorable financially. It saves the healthcare system money. It's much easier on the interventional radiologist. I don't think anybody loses in an OBL, but you just have to be prepared for it.

If somebody is going into building an OBL, I think the number one thing you want to do is, you want to approach this as a startup. In general, everybody is different, but we're used to being employees. We're used to getting a salary. We have lifestyles that demand a certain level of income. To have that be not so steady, that's not for everybody.

What I would say to anybody who's interested in doing this, start financially planning for it because you're going to be down for a year or two. It's okay because that is how startups go, but then the upswing will come, and the pay-off will be there. To anybody who wants to start an OBL tomorrow, you're looking at 14 to 16 months type time frame at best. In that time frame, I would say, the number one thing is, get your financials in order and start saving money because you're going to start writing checks like you would not believe. You're going to have six months to get insurance contracts negotiated. A lot of people in hospitals don't understand how that works, which is, your group bills under your group's NPI. When you leave, you have to build on your own NPI, which means you have to renegotiate your contracts with every single insurance provider. The value of being in a group like CIC is that they have people to negotiate these contracts. Because if I call up as an independent person, my rates are not going to be as good.

… You got to remember, there's anywhere between two and four years of work, kind of a second, job going into building these things, right? Every vacation I take, I'm on the plane to go visit an OBL. I did a lot of visiting of OBLs.

I still will do that forever. I learn from every single visit I make. Contracts are really important including finding a good contract attorney. I would say not a healthcare attorney. You're entering into a business relationship with people forever. The reason there are contracts is because if things go bad, you want it to be clear how a separation is going to exist. It's not so much about the startup, it's about what happens when things don't work out. We have a lot to learn as IRs and physicians about that process, especially if our history is just being handed an employment agreement and saying, "Here's your employment agreement." Maybe we're negotiating for a 5% salary difference or one last day of call. It's not really about those things in your corporate agreements.

The financing. The financing is really interesting and I've seen all different models. Certainly, what is out there has evolved. When I started thinking about OBL, probably six years ago, the deal for physicians was much different than the deal now. Right now, there are many more people out there being consultants who will tell you they'll startup your lab. They all have a good sales pitch, so be careful.

[Mary Costantino]
… The other thing is, as much as people are liked in the hospital, they usually do not get referrals from the physicians they know in the hospital.

[Michael Barraza]
That's a good point. I haven't thought about that.

[Mary Costantino]
Yeah. This is a really common mistake. Again, everybody's situation is a little bit different. For some people, their OBL is tied in to the hospital. That's, maybe, a different situation, but in general, IRs were well-liked. The GI doctors and vascular surgeons and everybody you see in the hallway … even if they say, "Oh, yeah. We'll send patients to you." Once you're gone, you're gone in their mind.

Locally, our hospitals have their own insurance products. They're very big on keeping people within their system even if they don't have their own insurance product. If you're a primary care provider at a hospital system, you're going to be hounded by your administration to send to your own gynecologist or your own IRs. Some of the local systems here are so bad that if they order a referral, on the order it says my name, Mary Costantino, a non-legacy provider in big capital letters. I’m sure, someone sitting on the back is screening those, right? They will then go to the gynecologist and say, "Why are you sending outside of our system?"

For those reasons, I think it's just easier to start fresh just to not really anticipate on having a whole lot follow you. You'll just be happier in the end. If you get a couple things that trickle in from the hospital, you'll be super excited.

[Michael Barraza]
Tell me this, before we get into what your practice looks like now and everything. What has worked for you both for UFE and for other things in building your business?

[Mary Costantino]
I've done all sorts of ads and TV. Ads haven't really worked. The patients respond differently. I don't actually like the print ad and the fancier magazines. I've done, basically, every type of marketing. I don't like the kind of marketing that I actually have to do that's any more than meeting physicians. I don't even really like driving around and meeting physicians but you have to do it. I like the talks.

… I go around and meet physicians. I have to stay active in giving talks. I don't think there's anything you don't do when you don't have any patients.