The Reconsolidation of Imaging Centers

Published by ImagingBiz Significant market trends, over the past few years, have affected the competitive environment between hospitals and physician-owned freestanding imaging centers. The primary drivers of these trends are the relative weaknesses of a large number of freestanding imaging centers (caused by changes in reimbursement and regulation) and the sensitivity of these businesses to the economic crisis. These changes in the landscape have created the ideal environment for a reconsolidation of imaging centers that can bring them back into hospital operations through acquisitions, perhaps at depressed market values. Hospitals are using their newfound relative strength in certain key strategic areas opportunistically to acquire freestanding imaging centers in their markets. Some hospital advantages include reimbursement, access to capital, vendor relationships, and physician employment. Our company, VMG Health, has experienced a significant increase in the demand for valuation services, in the past year, in support of hospital acquisitions of freestanding imaging centers.

A Challenging Past

The loss of imaging services, over the years, has caused myriad unpleasant dynamics for hospitals. There has been a consistent and continuing migration of imaging services out of the hospital setting, mostly to physician-owned or entrepreneurial businesses. Often, the imaging services that remain in the hospital have low margins, combined with a high remaining cost structure. The result has been a deterioration of capacity in imaging services due to the inability to reinvest in imaging equipment and infrastructure; this, in turn, has caused a loss of market share and a loss of business to more efficient competitors in the marketplace. Click here to continue to the full article.