Imaging-center Growth Hits the Wall in 2013; Volumes Plummeted in 2011

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Persistent decreases in outpatient imaging reimbursement and a dramatic decline in volume finally took their toll on the imaging-center market, with a resulting 3.65% decline in the total number of freestanding outpatient imaging centers. This is the first contraction since the dip that followed the stock-market crash in 2009.

Over 10 years, the freestanding outpatient imaging-center market has exhibited consistent year-over-year increases (except in 2009) in the number of centers. The market benefited, in the early years, from the rapid growth of imaging utilization; growth since 2005 is likely to have been spurred by hospitals’ imaging-center acquisitions as health systems bulked up their community presences.

Until this year, the market appeared impervious to eight years of health-policy decisions aimed at curbing imaging growth by slashing reimbursement. In fact, last year’s increase in the number of centers came as a surprise to many observers, who saw many center owners looking for a way out and saw much evidence of distress. This year’s counts reveal that both the number of imaging-center chains and the overall number of imaging centers declined—a trend seen in every region of the United States.

Of greater concern is the steep 35.25% decline in the number of procedures performed per week per center, with a correlated drop in the average number of visits per center per year; there were no exceptions across regions. Both of these indicators are based on the most recent data available (from 2011).

This is the fourth annual report published by Radiology Business Journal on the freestanding outpatient imaging-center market. This overview of the nation’s outpatient imaging-center market and its 10-year trends is based on data provided by IMS Health (formerly SDI and Verispan), a health-care–research consulting company. Imaging centers located on hospital grounds are not included in the counts.

Market Contraction

At the close of the first quarter of 2013, the imaging-center market had lost 3.65% of its record 2012 size, making it smaller by 258 centers (Table 1). The number of imaging-center chains (defined as organizations owning two or more centers) also declined.

 - US imaging centers (by state and region), 2013
 
 - Table 1. Chain Affiliation.

While it is possible that a small number of these centers were purchased by hospitals and are close enough to the mother ship to qualify as hospital-based outpatient imaging centers, it is safe to assume that most of them were simply shuttered. The state-by-state counts indicate that the losses were distributed throughout the country.

Not one state added centers, inventory stayed the same in another 14, and the rest saw attrition in their imaging-center inventory (see figure). The states that lost the greatest number of imaging centers, compared with last year’s report,¹ were among the states that had the greatest number to begin with: Texas (40) and California (27). Even Florida, where Medicare is the predominant payor, saw 19 centers close. Arizona, Mississippi, and Pennsylvania appear to have lost a greater percentage of centers than most states.

With 6,816 imaging centers, the market still has its second-largest tally of centers in 10 years (Table 1)—proof that there continues to be vitality in the outpatient imaging arena. Signs of growth, however, are few and far between.

 - Table 2. Chain Size

One sign that size might confer advantages is the 2% increase in the percentage of imaging centers owned by chains, which now own 68% of all centers. Just being a chain, however, was no insurance against failure. In 2013, the number of imaging-center chains declined by 36 organizations (Table 2).

The Biggest Players

There was scant change among the top 20 imaging-center chains, with the number of centers owned inching up or down (mostly down) by one or two centers (Table 3). The total number of centers owned by the top 20 chains increased by 16 centers, but only because two of last year’s players on the entrepreneurial side—CDI and Insight Imaging—merged to create the market’s second-largest imaging-center chain, Insight Imaging/CDI (Lake Forest, California). This left room for a new organization to enter the top 20: Promedica (Toledo, Ohio), with 21 centers.

 - Table 3. Top 20 Chains

None of the imaging-center chains increased the number of centers that they owned. Most stayed the same, and three saw declines. Even the new megasized organization created by the merger of CDI and Insight Imaging reduced the 2012 sum of their two parts by one, to top out at an even 100.

RadNet, with 219 centers in 2013, handily