Last spring three-hospital Kennedy Health System in southern New Jersey and RadNet, the Los Angeles-based network of 250-plus outpatient imaging centers, announced their joint venture (JV). On Nov. 10 the resulting entity—Garden State Radiology Network—officially launched.

The first order of business was the purchase of two freestanding outpatient facilities in the area, signaling the new organization’s interest in growth by acquisition.

The newly acquired outpatient centers combine with Kennedy’s existing imaging satellite plus a RadNet location to bring the JV’s initial outpatient footprint to four sites, all of them multi-modality.

This followed RadNet’s folding Kennedy’s inpatient imaging department into its operation earlier this year, making RadNet employees of about 20 radiologists and beefing up reading capacity to 24/7 coverage, partly via teleradiology.  

The partnership also calls for RadNet to provide Kennedy with IT and practice-management expertise in both inpatient and outpatient settings, and it holds the promise of boosting bargaining power with payors and pricing leverage with vendors.

The JV model, as opposed to other kinds of partnership possibilities, was “a natural way for us to go,” Kennedy CFO Gary Terrinoni told RadiologyBusiness.com in a phone interview. “It allows us to create a network of ambulatory services, which is what we need to do to service our communities and build a continuum of care. At the same time, it does give us access to revenue that we wouldn’t have had access to before. When you’re looking to [broaden] your income stream, a joint venture makes very good sense.”

RadNet has already made its mark improving Kennedy’s inpatient imaging operations, said Terrinoni, adding that the health system hopes to build on that momentum to build its outpatient business.

“The benefit for us with RadNet is that radiology is their business,” he said. “They understand efficiency, they understand productivity, they understand quality, service to the patient and to the referring docs—all things that we were looking to enhance. We don’t expect much different on this ambulatory strategy. We’re not looking to grow in a huge way; we just want to be deliberate. If there’s an area where we think we could benefit from RadNet’s capabilities, we’re going to try to do that.”

As for Kennedy’s radiologists, they transitioned to their new employer’s payroll with no major snags, according to Terrinoni. “It wasn’t always easy as those kinds of talks went on, because, whenever there is change, you’re always dealing with different personalities and issues,” he said. “But a couple of leaders in the radiology group really stepped up and helped facilitate.” Meanwhile, being part of a larger radiology group may give the radiologists more of a say in matters that affect them, added Terrinoni.

For RadNet, the joint venture solidifies its presence in the Garden State. In 2012 it joined with Barnabas Health to form the New Jersey Imaging Network, which started with 37 access points and now has more than 40.