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ImagingBiz
Over the past few years, hospitals have been acquiring imaging centers at a brisk pace. Hospital and
imaging center transactions require an independent opinion on fair market value to ensure regulatory compliance; a thorough fair-market analysis will incorporate macroeconomic industry trends, along with the facts and circumstances specific to the individual center. In 2011, Radiology Business Journal and SDI Health LLC published the results of their second annual survey¹ illustrating trends related to the top 20 imaging-center chains and the larger environment in which they operate. The data in this survey can assist the valuation analyst in formulating a basis for the future financial performance of a center that is used in the income approach (discounted–cash-flow) methodology of valuation. The industry information also assists the valuation analyst in determining the velocity, pricing, and strategic motivation behind comparable transactions within the industry, and can be very helpful when preparing an analysis of fair market value.
The Survey
In 2011, the economy stabilized in many areas of the country; however, imaging-center operators were hit with a new round of reimbursement cuts and were forced to run more efficient operations. Many of the imaging-center chains divested themselves of centers, and the largest integrated health networks (IHNs) did not increase their market shares. These negative data points are no surprise, given the challenges that the industry has endured through the past few years. Examples of negative industry trends shown in the survey are that 10 of the top 20 imaging chains reduced the number of centers owned and that more imaging centers were sold to IHNs, signifying a challenging operating environment. Many trends identified in the survey, however, are positive for the value of the remaining independent industry participants. For example, the total number of imaging centers, including single-site operators, increased during 2011. Demand for diagnostic-imaging services has increased as patient visits continued the upward trend. In addition, there is a well-capitalized universe of buyers of imaging centers, signifying confidence in the future of the industry. Overall, the data are conflicting, resulting in mixed effects on their application and impact on the valuation analysis of an imaging center.
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