Why Hospitals Buy Imaging Centers

While hospitals have always been significant players in the market for freestanding imaging centers, volume for hospitals purchasing all or part of the ownership interest in freestanding imaging centers has increased dramatically over the past few years. For hospitals already involved in joint ventures with physicians or entrepreneurial companies, we have seen a flurry of transaction activity around hospitals buying out their joint-venture partners.

In many cases, hospitals desire to maintain consistent subspecialized professional coverage across all inpatient and outpatient radiology. This is not only beneficial from a quality standpoint, but also may allow the hospital strategically to expand opportunities for the radiologists with whom it maintains exclusive arrangements.

While the benefits of a transaction are mutual, discussions are most often initiated by the freestanding imaging center’s owners, consisting of radiologists, referring physicians, and even entrepreneurs. The effects of reimbursement cuts; increasing regulatory restrictions on the operation of referral-source imaging; lack of access to credit; the hassle of running a small business; and large, pending capital requirements for equipment have driven many freestanding imaging centers’ owners from a position of strength to one of weakness, relative to hospitals.

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