Where are US Diagnostics, Radiologix, InSight, CMI, etc., now? They don't exist. What assurance do you have that you're aligning with an entity that is going to survive more than 5 to 10 years, the typical private equity cycle between sales?
By Wayne K. Baldwin
In a prior life, I was General Counsel and Chief Development Officer for Comprehensive Medical Imaging, a consolidator of outpatient imaging centers across the country. It is interesting to me that consolidation has again become in vogue.
Names like US Diagnostics, Radiologix, InSight, and my old company CMI were actively consolidating imaging centers in the late 1990s early 2000s. The current iteration of consolidation has different actors, but much the same approach—pay a multiple of earnings for practices under the assumption that, somehow, bigger means more efficiencies, better technology, smarter management (all arguments for prior rounds of consolidation). I'm not sure how all of that plays out in reality, but when you talk to any consolidator, it can sound pretty good.
Is consolidation a bad thing? Not necessarily, but for those considering consolidation, I'd think about a few things pretty seriously first.
Spending adequate time to understand your group, its ethos, and market position should precede any decision to consolidate. These ten questions are a good place to begin:
1. How much does your group value independence?
2. Does your group have strong leadership?
3. Do you have a leading market position or are you struggling to keep up with the competition?
4. Do you have trouble recruiting and/or retaining radiologists?
5. If completely or partially hospital based, what is the status of your hospital relationship, and how would the hospital view a consolidation?
6. Do you have younger radiologists who exhibit leadership potential?
7. What are the financial metrics of the professional practice such as professional revenue per radiologist, RVUs per day, etc., compared to other similarly based practices?
8. If you have an outpatient practice, what are the financial metrics of your outpatient facilities such as EBITDA, collections, age of equipment, payroll costs, service costs, etc?
9. Are you good at billing and collection and what does it cost you?
10. Does your technology allow you to practice efficiently and keep up with regulatory requirements such as MACRA/MIPS reporting, clinical decision support (appropriate use criteria), registry reporting, etc.?
This is just a start, as the list of questions should be quite lengthy.
Thank you for indulging my pontification—recent conversations with colleagues suggest it is something on a lot of people's minds. I hope it helps someone out there.
Wayne K. Baldwin is CEO, Pueblo Radiology Medical Group, an independent private radiology practice based in Santa Barbara CA. A version of this article first appeared as a post on an RBMA discussion board.
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