The nation’s 100 largest private radiology practices bulk up, adding radiologists but shedding employees and imaging center assets as they grow
The nation’s largest radiology practices sought strength in numbers, sending the median practice size of the 100 largest private radiology practices soaring, from 41.7 in 2014 to 47 in 2015. Much of that growth occurred at the lofty heights of the Radiology 100 list, in practices of 65 or more full-time equivalent radiologists.
Signs of a maturing radiology marketplace can be seen in the consolidation of radiology providers, the growth in hospital contracts among the largest practices and the loss of hospital contracts among the smallest practices. The bloom appears to be off imaging center asset ownership, as all practice size cohorts shed imaging centers.
Co-sponsored by accounting firm CliftonLarsonAllen and Radiology Business Journal, the eighth annual survey to rank the 100 largest private radiology practices was posted online at RadiologyBusiness.com and publicized through email. We received 70 responses, not all of which ranked in the Radiology 100. Practices were ranked based on their number of full-time equivalent (FTE) radiologists. When two practices had the same number of radiologists, we ranked the practice with the greater number of FTE employees higher.
In an effort to make the list as accurate as possible, we reached out to known practices of size via email and telephone to collect the basic data points, including those illustrated in Figures 1–6. When we could not connect with a practice representative, we counted the number of radiologists on the practice’s web site; those practices are printed in italics because their radiologist counts are body counts, not FTE counts.
While the median size of the Radiology 100 took a five-FTE leap this year, most of the action was at the top of the list. The median size of the smallest practice cohort (< 35 FTE radiologists) increased by one, from 29 to 30 (Figure 1). The 35 to 49 FTE radiologist cohort actually declined by one, from 41 to 40. The second-largest size cohort was flat at 56 FTEs, and the largest practice-size cohort jumped by more than three radiologists, from 82.9 to 86.
The composition of the list has changed significantly since we began tracking the nation’s largest private radiology practices. Back in 2008, our first annual survey ranked the nation’s 50 largest radiology practices—and included hospital-based practices. The largest practice on the list was Brigham & Women’s Department of Radiology, Boston, with 95 FTE radiologists, and the smallest, Windsong Radiology, Williamsville, NY, had 15 radiologists.
When we expanded the ranking to include the 100 largest private radiology practices in 2011, the largest practice, Radiology Associates of North Texas (RANT), had just formed a 122-radiology mega-practice from a merger of three smaller practices and just 15 practices on the list had more than 65 radiologists. In 2015, practices of more than 65 radiologists numbered 20.
In the heights
RANT continues to dominate the list (see Table) in size at a whopping 128 FTE radiologists, adding six FTE radiologists since last year. With no imaging centers and 25 hospital contracts, the practice is exclusively hospital based, employing just 50 employees and generating 2,197,152 reads.
University Radiology added 10 FTE radiologists for a total of 106 FTEs, leap-frogging from fifth on the list last year to become the second-largest practice in the U.S. The group had 61 FTE radiologists when it first appeared on the list at number 14 in 2009, with eight imaging centers and 300 FTE employees. It performed 1,242,000 studies.
Bucking the divestiture trend, the practice continues to grow its imaging center assets, adding one center last year for a total of 16. University Radiology employs 474 FTE employees.
Michigan-based Advanced Radiology Services, a veteran of the top five since we began conducting the survey, occupies the No. 3 spot on the list this year with a total of 106 FTE radiologists. A hospital-based practice, Advanced Radiology Services has no imaging centers, 113 FTE employees and serves 14 hospitals.
Southwest Diagnostic Imaging (SDI), Phoenix, Ariz., slipped from the third to the fourth position on the list, with 101 FTE radiologists, the same as last year, the same number of hospital clients, 15, and with roughly the same number of procedures: 1,821,680 versus 1,823,551 in 2014. The practice, however, grew in few other ways.
SDI added three imaging centers for a total of 28, making it not only a leading provider of outpatient imaging services in the Phoenix Metropolitan Area, but tied with ProScan Imaging as a top private-practice provider of outpatient imaging-center services. The practice also is the No. 1 employer among its peers with 851 employees, up from 752 last year.
Radia, Inc., in Lynwood, Wash., added four FTE radiologists for an even 100, to ascend from the sixth- to the fifth-ranking practice on the list. Radia has grown steadily since 2008, when it debuted on the list at No. 9 with 65 radiologists. At the time, it operated four imaging centers but in 2015, the practice is down to two. The group’s 100 radiologists read 1,300,000 studies last year.
Mergers and acquisitions
For the first time since launching the annual survey, the median number of FTE radiologists increased in every practice-size cohort, but most significantly in the largest. The median number of FTE radiologists increased from 82.9 to 85.5 in practices with more than 65 FTE radiologists; from 55.1 to 56.8 in the 50 to 65 cohort; from 37.8 to 40 in the 36 to 49 cohort; and from 29 to 30 in practices with less than 35.
Big increases in practice size are an indication that mergers and acquisitions have been instrumental in sending the median practice size upward. We counted eight practices that grew by 10 or more FTE radiologists in the past year compared to just one such growth spurt in 2014.
In the past year, the following practices grew by 10 or more FTE radiologists: University Radiology (10), Texas Radiology Associates, Plano, Texas (12), Columbus Radiology Corporation, Columbus, Ohio (32), Radiology Associates of Florida, Tampa, Fla. (11), Northside Radiology Associates, Atlanta (17), Renaissance Medical Imaging Associates, Northridge, Calif. (23), Medical Diagnostic Imaging Group, Phoenix (11), and Advanced Medical Imaging Consultants, Fort Collins, Colo.
Provider mergers are a likely factor in the heightened merger and acquisition activity among private radiology practices as they seek to provide a single level of service across increasingly sprawling enterprises. Many health systems are seeking standardized service levels to meet system-wide quality metrics, another likely driver of merger activity.
The largest and most groundbreaking transaction occurred when Columbus Radiology picked up six new hospital contracts and brought on most of the incumbent radiologists. The practice added 32 radiologists, catapulting from 47 radiologists to 79 FTE radiologists, climbing from No. 72 to No. 13 on the Radiology 100 list.
Another practice on the move is Renaissance Medical Imaging, which jumped from the 69th to the 36th largest practice in the U.S., adding 23 radiologists for a total of 56 since our count last year. The practice covers a wide swath of the San Fernando Valley as well as hospitals in Los Angeles, San Bernardino, Inyo, Kern and Orange Counties. According to its web site, RIMA added at least five hospital contracts over the past year.
Northside Radiology Associates rounds out the trio that added the most FTE radiologists. The group jumped from 54th to 31st on the list, adding 17 FTE radiologists for a total of 50. The group serves three hospitals and employs 18 FTE employees.
Trends and anomalies
On the surface, it appears that practices are exiting the imaging center business in droves. The median number of imaging centers owned declined in every practice cohort (Figure 2).
Imaging-center ownership dropped precipitously in the largest practice-size cohort in 2015, where the median number of centers owned declined from 15 in 2014 to 8 in 2015—nearly a 50% reduction. The median number of imaging centers owned dropped from seven to six in the 50 to 65 FTE size-cohort; from three to two in the 35 to 49 FTE size-cohort; and from four to zero in groups of less than 35. Just three practices of less than 35 FTE radiologists reported owning imaging centers, but they each owned three or four.
While it appears that many practices have exited the imaging center business, another data point we track suggests the possibility that practices may continue to have a hand in the sector. A majority of practices reported having a managed services organization (MSO), 58.8% versus 41.2% (Figure 3), although when viewed by practice cohort, the majority of reporting practices in the two smallest cohorts did not operate an MSO. One of the services these practices may be providing is imaging-center management for the buyers, particularly if those buyers are client hospitals.
Imaging center ownership is an employee-intensive endeavor, and a decline in the number of centers a practice operates would trigger a decline in its number of employees. In fact, the 2015 trend away from imaging center ownership is reflected in a decline in the number of FTE employees in two of the four practice size cohorts this year (Figure 4).
In the practice-size cohorts where imaging center ownership declined sharply (> 65, from 15 to 8; < 35, from 4 to 0), the median number of FTE employees plummeted from 253 in 2014 to 139 in 2015 and from 44 to 28, respectively. The number of FTE employees increased from 50 to 63 in groups of 35 to 49 FTE radiologists; and increased negligibly, from 196.8 to 198 in groups of 50 to 65 FTE radiologists.
The decline in imaging center ownership and FTE employees may signal a rise in the number of hospital-focused practices that outsource all business services. The nation’s seventh largest practice uses consulting services but outsources all business services, including the management of its imaging center assets, to Los Angeles-based RadNet, Inc., Our top-ranking practice, RANT, employs just 50 FTE employees to support 128 radiologists.
A stronger economy—as well as continued cost cutting—may have been reflected in one of the most important numbers of all: 76.9% of the 39 practices that shared financial revenue data reported year-over-year increases in revenue at the close of their most recent fiscal year. It would be unwise, however, to read too much into that number since that represents just 30 of the 100 practices on the Radiology 100 list.
A more sobering assessment is reflected in the median number of procedures performed: Median procedures performed declined in two of the four practice-size cohorts (Figure 5) despite the increase in median FTE radiologists, suggesting that growth remains elusive for at least some practices.
There were increases in the median number of procedures performed for both the smallest and the largest practice-size cohorts: the former increased from 445,797 in 2014 to 490,000 in 2014; the latter increased from 1,099,142 to 1,385,000. Practices with 35 to 49 FTE radiologists saw the greatest decline, from 680,611 in 2013 to 567,765 in 2014. Practices with 50 to 65 FTE radiologists also saw a decline in their median number of procedures performed: from 873,500 to 859,349 FTE radiologists.
Although all practice-size cohorts registered increases in median number of FTE radiologists, only the two largest size-cohorts managed an increase in the median number of hospital contracts (Figure 6). Practices greater than 65 FTE radiologists increased their number of hospital contracts from 15 to 17; and practiced of 50 to 65 FTE radiologists increased their median number of hospital contracts from nine to 11.
The smallest two cohorts each registered declines in hospital contracts. For practices of 35 to 49 FTE radiologists, the median number of contracts declined from seven to five; likewise, for practices of less than 35 FTE radiologists, the number of contracts declined from six to five.
Spending on IT is robust among the nation’s largest practices. Well more than half of all practices are spending 3% to 5% of revenue or more on information technology (Figure 7).
Looking ahead, radiology practices face both challenges to and opportunities for growth. The impending rollout of clinical decision support may further tamp down imaging procedure volumes beginning in 2017, but the aging of the baby boomer generation and the expansion of healthcare coverage—with approximately 16 million newly insured to date—are likely to fuel volume increases.
One thing is certain: Consolidation continues to defragment the healthcare provider market. This factor alone will make it more challenging for the small practice to compete.
About the Survey
The survey to rank the 100 largest radiology practices is the result of a collaboration between CliftonLarsonAllen and Radiology Business Journal. CliftonLarsonAllen is a nationwide professional-services company counted among the top 20 accounting firms. Blake Darsow, CPA, CliftonLarsonAllen, Minneapolis, Minn., performed the computations for this report.