The Top 20 Imaging-center Chains

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It seems clear that the number of US imaging centers has stopped expanding, and that imaging-center chains are no longer as eager to snap up as many centers as possible. This is not bad news, however. Procedural volumes per imaging center are growing—so the combination of greater demand for imaging and fewer centers competing for those referrals means that even lower reimbursement will be easier for today’s busier imaging centers to withstand. Radiology Business Journal and SDI, Plymouth Meeting, Pennsylvania, are cosponsors of this look at imaging-center chains and the larger environment in which they (and their independent competitors) operate. SDI provided the data on which this report is based, as well as comparison information1 that the company had collected and analyzed in earlier years.
Table 1.Top 20 Chains
The top 20 imaging-center chains added 65 centers between 2008 and 2010, for a growth rate of 7.5%, but a slight majority of the top 20 chains either added no imaging centers or lost some (Table 1). RadNet, at the top of the stack, also added the most centers (24); Tri State Imaging Consultants, the 10th largest chain, showed the second largest growth, adding 18 centers. The fourth largest chain, Center for Diagnostic Imaging (CDI), added 16 centers, and 15 centers were added by SimonMed Imaging, bringing it up to 19th position among the largest chains. Five other chains added smaller numbers of centers.
Figure 1. US imaging centers (by state and region), 2010.
Two chains neither added nor subtracted centers, one was new to the top 20 list, and eight lost three or more centers. Insight Imaging (the fifth largest chain) and Diagnostic Health (in 12th position) thinned their ranks most, losing 13 centers each. A small decline was seen in the total number of imaging centers (Figure 1), which includes centers that are not allied with any chain. Between 2008 and 2010, there was a 1.8% decrease in the number of US imaging centers, representing the elimination of 120 centers. The Southeast region had the largest reduction, losing 56 imaging centers, and the Mid-Atlantic, Pacific, and Rocky Mountain regions also registered losses. Only the Southwest Central region showed a gain, adding eight centers. There was little change in the number of imaging centers operating in the Great Lakes, South Central, North Central, and Northeast regions (although individual states within those regions showed more noticeable gains and losses). This represents a major change in the trend that favored growth in the number of centers in previous years; for example, between 2003 and 2008, all regions exhibited growth, with some showing increases of more than 30%. The same five states have the most imaging centers as in 2008, although their relative rankings have been juggled a bit. In order, the top five states in 2008 were Florida, California, New York, Texas, and Pennsylvania; for 2010, they are California, Florida, Texas, New York, and Pennsylvania. Of these, only Texas had added imaging centers since 2008, with 16 new centers opening there.
Figure 2.Growth/decline of US chains, 2003–2010.
Since reaching a peak of 1,066 in 2008 (Figure 2), the number of imaging-center chains has declined, dropping to 945. This 11% reduction over a two-year period was accompanied by a decrease in the number of centers that are affiliated with (defined as owned, managed, or leased by) chains from the 2008 high of 4,703 to the 2010 level of 4,433. This two-year decline of about 6% does include an increase of 50 in the total number of centers over the 2009 total, however.
Figure 3.Growth/decline of the top five chains, 2007–2010.
The top five imaging-center chains do not appear to have pursued similar expansion strategies over the past five years, with growth and shrinkage alternating (Figure 3), but all showed decreases in affiliated centers between 2008 and 2009. This might have been a cautious pause taken while they waited to observe the effects of the DRA on their revenues. By 2010, three of the five chains were again acquiring imaging centers, with RadNet adding 32 centers, CDI adding 17, and HCA adding five. Insight Imaging showed the greatest reduction in centers among the top five chains, shedding seven centers between 2009 and 2010.
Table 2. Growth/Decline of Imaging Centers (by Region), 2008–2010
The overall regional changes in total imaging centers have been small between 2008 and 2010, with no region losing more than 4% of its imaging centers, but no region adding more than 1% to its total (Table 2). This relative lack of change seems uneventful, but it is noteworthy because it indicates a sharp application of the brakes to previously rapid rates of national and regional growth. Between 2001 and 2008, for example, the number of imaging centers increased 55%. The fastest-growing area—the South Central region—saw a 38% increase in total centers between 2003 and 2008. The following two years showed growth of only four centers (1%) in the same region, and the most rapid growth shifted to the Southwest Central region. That growth, however, consisted of eight centers (1%). The Southeast, during the same period, lost 56 centers (4%).
Figure 4. Affiliation of imaging centers with chains, 2003–2010.
From 2003 through 2006, there was a sharp increase in the percentage of imaging centers affiliated with chains (Figure 4), but no further growth is being seen, so it is possible that chains are postponing further imaging-center acquisitions—perhaps until they are certain that increasing demand for imaging services will outweigh the effects of declining reimbursement on maintaining the chains’ profitability. Since 2006, the percentage of imaging centers affiliated with chains has decreased slightly, from 74% to 70%. In addition to chains’ apparent lack of interest in adding to their imaging-center coverage, it is possible that this small decline represents the chains’ decision to remove some of the least desirable centers from their holdings. Many chains (on the opposite end of the scale from the top 20) consist of only two imaging centers; in 2008, only 7% of chains owned more than 11 centers. It could be that the recent drop in chain affiliation reflects a decision by some members of the smallest chains to return to independent operation.
Table 3. Integrated Health Networks With the Most Imaging-center Relationships
There has, however, been a large increase in the number of imaging centers with which integrated health networks (IHNs) maintain relationships (Table 3). While this growth is difficult to quantify because the 2008 data covered only the top five IHNs (instead of the 10 IHNs now shown), the five IHNs for which 2008 figures are available included four of the five that still hold those positions today. The top five IHNSs for 2008 had relationships with 182 centers; for today’s top five, the number of centers has increased to 298, indicating that a strong trend toward greater affiliation with IHNs is probable among imaging centers. This would be supported by the desire of many IHNs to move care to less expensive settings, since imaging centers’ costs are often lower than those of hospitals’ outpatient radiology departments for the same procedure. In addition, many patients prefer to obtain imaging services outside the hospital, providing another incentive for IHNs to make more services available to their patients in freestanding imaging centers.
Table 4. Average Patient Visits per Imaging Center (by Region)
2008 is the most recent year for which the average number of patient visits per year is available (Table 4). The Rocky Mountain region had the highest average number of visits per center, perhaps indicating that there is still room for growth in the number of imaging centers serving both this region and the Southeast region (which also shows a large number of visits per center). The need for imaging centers may be more fully met in regions showing fewer average visits per center; for example, in the Great Lakes region, there were 25% fewer visits per center than there were in the Rocky Mountain region. This represents a shift in the regional distribution of visits per center; for the previous year (2007), the Southeast region had the highest average, at 14,025 visits, and the South Central region had the lowest average, at 7,821 visits. That region’s 2008 average of 13,448 represents a near doubling of visits per center.
Figure 5. Average number of procedures per week performed at imaging centers, 1999–2009.
The small decline seen since 2008 in the number of imaging centers would be expected to increase procedural volumes by making the remaining centers handle more exams, and this appears to be the case (Figure 5). During the steep growth in the number of centers seen in previous years, average procedures per week declined from a high of 291 in 2002 to just 204 in 2008. For 2009, however, procedural volumes bounced back to an average of 266 per week, creating a sharp increase. Because this 30% growth in procedures per week considerably outweighs the volume redistribution predicted by the minor reduction in the number of imaging centers, it seems safe to assume either that the demand for imaging is growing quickly or that patients are having more of their imaging performed at imaging centers, rather than in hospitals’ outpatient imaging departments or in physicians’ offices. It’s possible that all three forces are at work, with the combination of fewer imaging centers, patients’ and/or referrers’ preference for using those centers, and high demand for imaging combining to increase average procedural volumes. Despite reductions in per-patient and per-exam reimbursement, growth in procedural volumes means more than the fact that imaging centers are increasing throughput, efficiency, and total exam volumes in a bid to survive. That such volume growth has been possible—without large numbers of imaging-center closures—implies that there is still an expanding demand for imaging. Clearly, imaging centers are not increasing their procedural volumes by stealing referrals from one another, but by responding to consumers’ growing needs. That demand, in turn, will allow more imaging centers, both within and outside chains, to keep their doors open in coming years. Kris Kyes is technical editor of Radiology Business Journal.