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(Radiology. 2001;219:467-473.)
© RSNA, 2001


Health Policy and Practice

Providing Professional Mammography Services: Financial Analysis1

Dieter R. Enzmann, MD, Peter M. Anglada, MBA, Corinne Haviley, RN, MS and Luz A. Venta, MD

1 From the Department of Radiology (D.R.E.) and Lynn Sage Breast Center (C.H.), Northwestern Memorial Hospital, 676 N St Clair St, Suite 800, Chicago, IL 60611; Midwest Cultural Center, Chicago, Ill (P.M.A.); and Department of Radiology, Baylor School of Medicine, Houston, Tex (L.A.V.). Received July 26, 2000; revision requested September 7; revision received October 4; accepted October 31. Address correspondence to D.R.E. (e-mail: denzmann@mednet.ucla.edu).


    ABSTRACT
 TOP
 ABSTRACT
 INTRODUCTION
 MATERIALS AND METHODS
 RESULTS
 DISCUSSION
 REFERENCES
 
PURPOSE: To perform a financial analysis of mammography services to determine whether the key underlying economic drivers of this service are aligned with the public’s expectations.

MATERIALS AND METHODS: The financial status of mammography services at seven university-based programs was assessed by using an extensive financial survey encompassing revenue, direct and indirect costs, and volume data for 1997 and 1998. At one of the institutions, an activity-based costing analysis was performed by procedure type: screening mammography, diagnostic mammography, breast ultrasonography, interventional procedures, and review of outside mammograms.

RESULTS: All seven institutions incurred losses in the professional component of mammography services. The underlying financial problem was a negative contribution margin (total mammography revenues minus direct expenses). The driver of the financial loss was the volume of diagnostic mammograms, which generated a loss per procedure. Diagnostic mammogram volume drove the mammography full-time equivalent count (P = .039) and was highly and negatively correlated with contribution margin (P < .001).

CONCLUSION: The reimbursement rate for mammography procedures, especially diagnostic mammography, needs to be increased to reflect the current reality of the resources necessary to maintain the accessibility and accuracy of this evolving mix of clinical services.

Index terms: Breast radiography, quality assurance • Breast radiography, utilization, 00.112, 00.126, 00.1298 • Economics, medical • Radiology and radiologists, socioeconomic issues


    INTRODUCTION
 TOP
 ABSTRACT
 INTRODUCTION
 MATERIALS AND METHODS
 RESULTS
 DISCUSSION
 REFERENCES
 
The perceived value of mammography in the treatment of breast cancer is such that its quality has become an expanding regulatory component of public health policy. It has become the subject of numerous federal regulations encompassing equipment, operations, and physician reporting standards (1,2). Screening mammography is the only imaging examination that requires an act of Congress to change its reimbursement. Mammography is becoming a medical economic example of where the effects of regulation and reimbursement are not congruent with the demand for or delivery of that service.

A common opinion outside of radiology is that mammography is a high-volume, easy-to-perform, and profitable service. These assumptions are in need of revision. Volumes are high and likely increase as the population ages. Mammography, far from being an easy-to-perform radiologic service, is a subspecialized, clinically oriented, time-consuming, primary care service. The expertise of the radiologist plays an important role in the detection rate of early treatable cancers (3). In addition, the underlying technology is at a turning point with the introduction of digital mammography. Mammography is changing, is of high volume, and is a critical examination with great emotional effects. Thus, the purpose of our study was to perform a financial analysis of mammography services to determine whether the key underlying economic drivers of this service are indeed aligned with the public’s expectation.


    MATERIALS AND METHODS
 TOP
 ABSTRACT
 INTRODUCTION
 MATERIALS AND METHODS
 RESULTS
 DISCUSSION
 REFERENCES
 
Mammography Financial Survey (1997 and 1998 Data)
Data collection.—A survey form was developed to collect financial and volume data from mammography sections of university-based radiology departments around the country. The form was sent to 12 radiology departments. Ten institutions completed the surveys for the professional fee component. Of these 10 institutions, two were not included in the study because their mammography section consisted of less than one full-time equivalent (FTE). One institution was excluded because of data inconsistency. Seven institutions were included in the study: the University of Wisconsin, the University of Michigan, the University of Texas–Houston Medical School, the Johns Hopkins University, the Northwestern University Medical School, the Medical University of South Carolina, and the University of Alabama. The financial survey encompassed only the professional fee component for 1997 and 1998. It is this fee that ultimately governs the profession’s investment in this subspecialty skill. The survey included the following information: total mammography revenues (collections and medical director support); direct expenses (physicians’ salaries and benefits, fellows’ salaries and benefits, malpractice insurance, secretarial support, and supplies); indirect expenses (practice overhead including billing expenses and dean’s tax); total mammography volume, number of screening mammograms, and number of diagnostic mammograms; and net number of mammography physician FTEs (FTE of radiologists doing mammography; fellows did not bill and were not included in the FTE count); and work relative value units, or RVUs (resource-based relative value units). Work relative value unit data were not consistent and, therefore, not used in the study because screening mammography has not been assigned a relative value unit.

Calculations and analysis.—The following calculations were computed for each institution: contribution margin, defined as total mammography revenues minus direct expenses; and total profit (loss), defined as contribution margin minus indirect expenses. Other calculations were also computed for each institution: contribution margin per FTE, contribution margin per procedure, total profit (loss) per FTE, total profit (loss) per procedure, indirect cost per FTE, indirect cost per procedure, indirect cost as percentage of total revenues, procedures per FTE, and the ratios of screening mammograms to total mammography volume (screening ratio) and diagnostic mammograms to total mammography volume (diagnostic ratio). Means and SEM were calculated for all data and calculations. Correlation coefficients (R) were calculated by performing a standard statistical test and using the relevant data. A P value of less than .05 was considered to indicate a statistically significant correlation.

Activity-based Costing Analysis of Mammography at Northwestern (1998 Data)
Data used.—The financial information used for the activity-based costing (ABC) analysis of mammography services at Northwestern University Medical School was the same as the information used for the Mammography Financial Survey described above for 1998, that is, total mammography revenues, direct expenses, contribution margin, indirect expenses, total profit (loss), and number of FTEs. Additional data needed for the ABC calculation were the volume by procedure type (screening mammography, diagnostic mammography, breast ultrasonography [US], interventional procedures, and review of outside mammograms), estimated total radiologist’s time for each procedure type, billings, collection rate, and collections by procedure type (4).

The total radiologist’s time used for each type of study and procedure was based on a 2-month time motion study at the Northwestern Lynn Sage Breast Center, which had at the time of this study an annual volume of more than 35,000 studies and five full-time experienced mammographers. Time estimates for each procedure were as follows: 5 minutes for screening mammograms, 25 minutes for diagnostic mammograms, 25 minutes for breast US images, 60 minutes for interventional procedures, and 25 minutes for review of outside mammograms. These estimates included the time the radiologist spent looking at the images, dictating and approving the report, filling out the paperwork necessary for compliance with the Mammography Quality Standards Act (which includes tracking of data and patient letters), and in cases of a lesion suspicious for malignancy, contacting and consulting with the referring physician directly and informing the patient of the results. For screening mammograms, the interpretation time of 5 minutes was a mean that encompassed all of these activities, with the exception of informing the patients of results. A substantial portion of the 5 minutes of interpretation time for screening mammograms was spent in activities other than inspecting the images. Interventional procedures included core biopsy, needle localization, ductography, and cyst aspiration. Collection rates by procedure, based on an in-depth survey, ranged from 49% to 68% and were used to calculate collections per individual procedure. Indirect costs were allocated by collections.

ABC analysis.—An ABC model was used to analyze and determine the costs and profit (loss) by major procedure type (4). A computer model was developed of the five major services provided by the mammography section: (a) screening mammography, (b) diagnostic mammography, (c) breast US, (d) interventional procedures, and (e) review of outside mammograms. Direct expenses were allocated on the basis of total radiologist’s time by procedure type; indirect expenses were allocated on the basis of collections per procedure. The following reports were produced and analyzed: total cost by procedure type, contribution margin based on direct costs by procedure type, and total profit (loss) based on direct and indirect costs by procedure type.


    RESULTS
 TOP
 ABSTRACT
 INTRODUCTION
 MATERIALS AND METHODS
 RESULTS
 DISCUSSION
 REFERENCES
 
Financial Survey of Seven Institutions
The mean contribution margin for mammography services was negative in both years. Although in this 2-year period the mean contribution margin per institution decreased from -$258,693 to -$167,283, it remained negative (Table 1). There was no consistent relationship between the magnitude of the contribution margin and total mammography volume and, thus, no economy of scale effect was detected (Fig 1). When stated in terms of contribution margin per FTE, the mean was -$42,788 in 1998, less than the -$69,682 loss in 1997 (Table 1).


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TABLE 1. Seven-Institution Mammography Financial Survey for Fiscal Years 1997 and 1998

 


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Figure 1. Graph depicts the relationship between contribution margin (CM) and total mammography volume for each institution for fiscal year 1998. No economy of scale effect was detectable.

 
There was a net loss at all institutions when indirect expenses were also taken into consideration (Table 1). The loss per FTE was consistent among these institutions (Fig 2). Although the overall financial results for providing professional mammography services in these seven institutions showed some improvement in 1997–1998, all showed an overall loss. The mean total loss per institution, although lower in 1998, was still approximately -$346,000 (Table 1). There was, therefore, a mean net loss of -$99,750 per FTE in 1998 (Table 1). In this 2-year period, these seven institutions showed an increase in revenues of 35%, an increase in total mammography volume of 28%, and an increase in radiologist FTEs of 19% (Table 1). Productivity, as measured by procedures per FTE, increased 10% to a mean of 4,369 procedures per FTE. The distribution of screening and diagnostic mammograms as a percentage of total volume remained stable.



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Figure 2. Graph depicts the profit (loss) per radiologist (FTE) versus total mammography volume for each institution in fiscal year 1997. Except for one data point, the loss per FTE is quite consistent in the institutions surveyed. The mean contribution margin per FTE in fiscal year 1997 was -$69,682 (Table 1).

 
The data suggest the major driver of FTE count to be the volume of diagnostic mammograms in a relationship that was virtually linear (R = 0.954) (Fig 3). In the transition from 1997 to 1998, the diagnostic and screening measures of volume showed increased correlation. The FTE count and the diagnostic mammogram volume showed a statistically significant correlation for both years (P = .039) (Table 2). This is confirmed in the statistical relationship between the ratio of diagnostic mammograms to total mammography volume and the contribution margin (P < .001) (Table 3) (Fig 4). There was a strong negative correlation between the diagnostic mammogram ratio and both total loss (P < .001) and contribution margin (P < .001) for 1997 and 1998 (Table 3) (Fig 4). The greater the percentage of diagnostic mammograms, the greater the loss. During the 2 years, this correlation weakened but remained clearly negative. There was a positive correlation between contribution margin and the ratio of screening mammograms to total mammography volume (Table 3).



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Figure 3. Graph shows the relationship between the total FTE count and the volume of diagnostic mammograms for each institution in fiscal year 1998. The relationship between staffing needs and the volume of diagnostic mammograms is almost linear. No such relationship was seen between FTEs and the volume of screening mammograms (data not shown).

 

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TABLE 2. Correlation of FTE Count and Mammography Volume for Fiscal Years 1997 and 1998

 

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TABLE 3. Correlation of Contribution Margin and Profit (Loss) with Volume Ratios for Fiscal Years 1997 and 1998

 


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Figure 4. Graph depicts the negative correlation between contribution margin (CM) and the diagnostic ratio, which is defined as the volume of diagnostic mammograms divided by the total mammography volume, for the seven institutions for fiscal year 1998. As the percentage of diagnostic mammograms increases, the contribution margin becomes more negative.

 
ABC Analysis of Mammography at Northwestern
The ABC analysis revealed that only two examinations showed a profit—screening mammography and interventional procedures (Table 4). Diagnostic mammography and breast US showed a loss per procedure, as did the review of outside mammograms. The loss per diagnostic mammography was greater than the profit per screening mammography. The collection rates between these procedures differed, and when indirect expenses were allocated on the basis of collections, the profit narrowed on screening mammography and interventional procedures, and the losses widened for diagnostic mammography, breast US, and review of outside mammograms (Table 4). This individual ABC analysis supports the multiinstitutional aggregated data findings in that the diagnostic mammogram volume was the major but not only factor determining the financial losses.


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TABLE 4. ABC Analysis of Profit (Loss) per Procedure for One Institution for Fiscal Year 1998

 

    DISCUSSION
 TOP
 ABSTRACT
 INTRODUCTION
 MATERIALS AND METHODS
 RESULTS
 DISCUSSION
 REFERENCES
 
The financial analysis of mammography services in this survey does not provide a reassuring picture of support for this important and demanding clinical service. Although the financial picture improved between 1997 and 1998, the mean contribution margin remained solidly negative. A negative contribution margin is an important fundamental concept to understand, for it means that the more of that service one provides, the more money one loses. Whereas contribution margin is a better measure of financial performance, indirect costs do need to be taken into account. Different allocation methods for direct and indirect expenses would affect the contribution margin but not the total profit and loss, since their total remains constant. When indirect costs are included in the cost structure, all mammography programs in this survey registered losses. The data did not reveal any evidence of economies of scale, which could ameliorate the effects of negative contribution margins. Since these mammography centers have been providing this service for a number of years, a learning (or experience) curve factor is not expected to reduce this negative contribution margin. These negative contribution margins appear to have staying power.

What is often not well recognized is that the common term "mammography" refers not to a single examination but to a set of diagnostic procedures in breast imaging. The most common and familiar examination is screening mammography. The American College of Radiology (ACR) published standard defines screening mammography as a radiologic examination to detect unsuspected breast cancer in asymptomatic women (5). A screening mammography examination consists of two standard views of each breast, which are typically interpreted by the radiologist after the woman has left the mammography facility. The ACR-published standard for diagnostic mammography defines it as a problem-solving breast evaluation, which is indicated when there is a specific focus of clinical concern, such as a palpable abnormality or an abnormal screening study (57).

Perhaps less well understood is that diagnostic mammography is a much more comprehensive examination that consists of customized views of the breast depending on the findings of concern, and it is often supplemented with breast US. The ACR instructs "the requests for a diagnostic mammogram and problem solving breast examination should be regarded as a consultative process and may involve tailored or comprehensive imaging analysis" (6). Part of providing comprehensive breast imaging services includes the interpretation of outside mammograms, a task that can be time-consuming and often associated with diagnostic mammography. A compounding factor leading to the negative financial outcome for diagnostic mammography is that these three examinations, each with a loss per procedure, are often grouped by clinical need in delivering comprehensive breast imaging services.

Finally, there are a series of interventional procedures designed to localize and diagnose breast cancer by means of tissue specimens. These interventional examinations, especially core biopsies guided with US and stereotactic equipment, require intense, extended, direct patient contact. These examinations impose on radiologists considerable responsibility in communicating results and recommending further clinical management to both patients and referring physicians. The simple term "mammography" no longer adequately reflects the scope and complexity of this medical service. The changing mix of these services drives the negative financial picture.

The negative financial results in delivering mammography services relates primarily to the volume of diagnostic mammograms, which governs the number of FTEs, which are the major professional expense. As the ABC analysis reveals, reimbursement for these mammography services relative to their cost is heterogeneous. The major driver for negative financial results is the inadequate reimbursement for diagnostic mammography, which has become a pivotal high-volume study. Reimbursement for diagnostic mammography, therefore, requires scrutiny and revision. With use of our ABC analysis, for example, the revenue for diagnostic mammography must increase by 118% to break even on direct costs and must increase by 143% to break even on direct and indirect costs. If one were to calculate an adjustment factor to the assigned work relative value unit for diagnostic mammography, then the ABC analysis reveals that the factor would be 2.62 to cover direct costs and 2.95 to cover direct and indirect costs. The other major factor causing a loss is the breast US examination, which plays an increasing role in the imaging and tissue diagnosis of breast cancer. Its reimbursement also needs reexamination.

Although the financial data from these seven institutions are representative of mammography services delivered by full-time mammographers, the number of institutions is still limited. The number is small because most institutions contacted for participation in this study did not have the relevant data available for analysis. The data assembled do, however, show consistency over these seven institutions. A potential source of error in the data is the incorrect determination of clinical FTEs dedicated to mammography. However, as Figure 2 shows, the profit (loss) per FTE is relatively consistent over the institutions, except for one outlier. This suggests an overall accurate tabulation of FTEs in this survey. A limitation of the ABC analysis, which is time-consuming, is that it was performed at only one institution and thus may not be fully representative of other practices.

Another potential source of error in the ABC analysis is the measurement of the mammographer’s time in completing each of the procedures studied. The time estimates were inclusive of all relevant associated activities such as dictation, meeting compliance requirements of the Mammography Quality Standards Act, physician communication, and patient communication. For screening mammography, a greater proportion of time was used for these activities than for actual image reading.

These time estimates also need to be viewed in light of some measure of clinical outcome such as the detection rate of breast cancers smaller than 1 cm. Sixty-two percent of cancers detected with screening mammography in this breast center were ductal carcinoma in situ or invasive tumors smaller than 1 cm. This compares favorably with other published medical audit reports of a tumor mix consisting of 30% ductal carcinoma in situ and 39% of all invasive tumors smaller than 1 cm (811). The data used for this determination were based on measured observations and reflected the behavior of skilled full-time mammographers. The use of the ABC analysis to identify diagnostic mammography as a major determinant of financial outcome, however, is generalizable to other practices, as the data demonstrate. The specific financial result for any particular practice depends on the specific mix of mammography services delivered and reimbursement patterns. It is clear in this survey that the higher the percentage of diagnostic mammograms, the greater the financial loss.

This financial survey indicates that current reimbursement patterns are not aligned with the public’s interest in or expectation of mammography and other breast imaging procedures. These examinations are currently highly valued by women but less so by payers. This dichotomy results in subsidization of breast imaging by professional fees from other radiologic examinations. In the long run, mammography and breast imaging will suffer the consequences of services that depend on subsidization. Although a great deal of regulation has been used to maintain technical quality (1,2), a subsidized examination is unlikely in the long term to be provided in a consistently fast and convenient way, as demanded by an increasingly consumer-oriented patient. An emotionally laden critical examination for breast cancer should not have to rely on subsidization, especially when it faces a rather substantial malpractice liability (1214).

This negative financial picture eventually does affect physicians electing for career paths in mammography. Radiology groups need to respond to service demands at a time when mammographers are in short supply while demand for them and their time, driven by regulations and demographics, is increasing. A survey of 70 programs representing 797 residents reported that 82% accepted fellowship training after their residency in diagnostic radiology (15). This survey, conducted during a 1999 meeting of the American Association of Academic Chief Residents in Radiology, reported that only 4% of the 1999 residents and 4.2% of the 2000 residents selected fellowship training in women’s imaging. In contrast, combined interventional radiology and body imaging fellowships accounted for 57% and 59.6%, respectively. Although the survey did not ask participants to explain their choices, the authors speculate that perception of the subspecialty opportunities and advances in technology were contributing factors.

The demand for radiologists specializing in mammography can be elucidated by tracking changes in the job market through a help-wanted index. A report of jobs advertised in major radiology journals between 1991 and 1998 noted 13,701 positions during the 96-month period (16). Of all advertised positions, 6.6% were for radiologists specializing in mammography. During the period of the study, a statistically significant increase in the percentage of jobs in interventional radiology (10%–16%; P < .001) and mammography (5%–8%; P < .001) was seen, whereas the percentage of advertisements for dedicated cross-sectional and chest imaging positions decreased. This shift in demand for specialists in mammography has not been matched by an increase in mammography fellowship positions, or in radiologists practicing this subspecialty (17). A subspecialty within radiology that is perceived to operate at a financial loss does not attract the number of individuals the service needs. The unusual outcome of the decreasing supply of mammographers, combined with inadequate reimbursement, is that the losses generated may widen if the price of mammographers increases.

A comparison of results between 1997 and 1998 show institutional attempts to reduce losses by increasing productivity and better adjusting staffing levels to volume. In the ABC study, capacity utilization calculations for an experienced group of mammographers was 80%; when vacation and meeting time was taken into consideration, the capacity utilization was 94%. Productivity improvements in the professional interpretation of mammograms have limits, however, since error rates can increase with fatigue and with stressful time constraints for image interpretation. Computer-aided diagnosis, which uses sophisticated software algorithms to analyze mammograms to highlight suspicious areas, may eventually affect screening mammography but will have no major effect on diagnostic mammography (18,19).

In screening mammography, the effect of computer-aided diagnosis may be to increase the inexperienced reader’s sensitivity to breast cancer, but this may come at the expense of more false-positive interpretations. This may increase the number of diagnostic mammograms rather than increase productivity. Streamlining non–image-interpreting activities such as communication of results and meeting regulatory requirements could improve productivity. There are limits to institutional adjustment, since it is not easy to adjust the mix of mammography services because they are determined by the patient population and by patient expectation. In addition, the volume of different procedures is interrelated; growth in screening mammography is followed by growth in diagnostic mammography, breast US, and interventional procedures. Breast centers with a good reputation will, because of referrals, have a higher proportion of diagnostic mammograms and difficult outside mammograms. Since both are provided at a financial loss per examination, there are economic disincentives to concentrate high-quality mammography talent.

The issue of subsidization becomes even more critical because we are on the threshold of a technologic change in mammography as we migrate from a film-based examination to a fully digital one. Since this will require the substantial investment of capital, a mammography service that can stand on its own financial legs will facilitate this transition. The new digital mammography environment promises to change the entire practice of mammography in terms of how, who, and where digital mammograms are acquired, interpreted, and stored. To realize the benefits of a fully digital breast imaging service will require a different financial environment.


    ACKNOWLEDGMENTS
 
We thank the following individuals for their contributions to the study: R. Edward Hendrick, PhD, Research Professor, Department of Radiology, Northwestern University, Chicago, Ill; and Enrique R. Venta, PhD, Dean of the School of Business Administration, Loyola University, Chicago, Ill.


    FOOTNOTES
 
Abbreviations: ABC = activity-based costing, ACR = American College of Radiology, FTE = full-time equivalent

Author contributions: Guarantor of integrity of entire study, D.R.E.; study concepts and design, D.R.E.; literature research, L.A.V., D.R.E.; data acquisition, P.M.A., C.H.; data analysis/interpretation, P.M.A., D.R.E., L.A.V.; statistical analysis, L.A.V.; manuscript preparation, all authors; manuscript definition of intellectual content, D.R.E.; manuscript editing, all authors; manuscript revision/review, D.R.E., L.A.V.; manuscript final version approval, D.R.E.


    REFERENCES
 TOP
 ABSTRACT
 INTRODUCTION
 MATERIALS AND METHODS
 RESULTS
 DISCUSSION
 REFERENCES
 

  1. Mammography Quality Standards Act. 42 USC §102-539. 1998; :.
  2. Food and Drug Administration requirements for accrediting bodies of mammography facilities: FDA-interim rule with request for comment. 58 Federal Register 1993; 67558-67572:.
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  5. American College of Radiology. ACR standard for the performance of screening mammography 1995 Reston, Va: American College of Radiology, 1995.
  6. American College of Radiology. ACR standard for the performance of diagnostic mammography and problem-solving breast evaluation 1998 Reston, Va: American College of Radiology, 1998.
  7. Food and Drug Administration. Quality Mammography Standards: correction-FDA: final rule and correction 1962. 58 Federal Register 1997; 6613-60632:.
  8. Kopans DK. Breast imaging report: data management, false-negative mammography and the breast audit. Breast imaging 2nd ed. Philadelphia, Pa: Lippincott-Raven, 1998; 761-796.
  9. Sickles EA. Auditing your practice. In: Kopans DB, Mendelson EB, eds. Syllabus: a categorical course in breast imaging. Oak Brook, Ill: Radiological Society of North America, 1995; 81-91.
  10. Rosenberg RD, Hunt WC, Williamson MR, et al. Effects of age, breast density, ethnicity, and estrogen replacement therapy on screening mammographic sensitivity and cancer stage at diagnosis: review of 183,134 screening mammograms in Albuquerque, New Mexico. Radiology 1998; 209:511-518.[Abstract/Free Full Text]
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