Radiology 100: Big Is Beautiful

Twitter icon
Facebook icon
LinkedIn icon
e-mail icon
Google icon
 - Color lion

Welcome to the 7th annual Radiology 100 group survey results. Hopefully the survey will cause some of the radiology groups to pause and ask what has changed in the marketplace this year, and what could/will happen in the next year? As you review the survey and compare this year’s results with last year’s, you will notice that many of the radiology groups are not growing in terms of the number of radiologists. Both productivity increases and decreased utilization have had obvious impacts on the industry. 

Download the Results

Growing a business in a mature industry is difficult, and radiology is now a mature industry. Growth can come through two main areas: organic growth and mergers/acquisitions. The survey highlights some of mergers that we have seen in the marketplace: Integra Imaging, University Radiology, Synergy Radiology, South Jersey Radiology Associates and others have climbed in the survey as a result of mergers. Mergers, however, are difficult due to power, money and control issues. In successful mergers, we see culture, trust and financial discipline helping to pave the path to success.

Organic growth will come from one of the following four areas, with the respective relative cost noted:

Growth tactic/strategic focus Relative Cost
More current services to current clients/customers Low
New services to current clients/customers Medium/high
New services to new clients/customers High
More of the current services to new clients/customers Medium/low

From a radiology group perspective, it seems that “more current services to current customers” has some limited upside in our healthcare system today. In many markets, in fact, being a good radiology group partner to a hospital means providing fewer services to current customers.  The next best option taking cost in account would be “more of the current services to new clients.”

Opportunities and threats

As the large groups get bigger and more efficient, and as utilization decreases, growth is going to be of key importance. Mergers are an answer, but organic growth is required in order to not simply split a smaller pie between the same number of radiologists. The next logical strategy for growth is providing current services to new customers. Enter competition—this will come into the radiology world to a level we have not seen previously. In the past, competition between radiology groups has been limited due, in part, to a shortage of radiologists and a professional culture that frowned upon predatory behavior. The question is whether this will change in the coming years, as the need for growth drives greater competition.

If we are entering into a more competitive environment, groups should review their strengths, weakness, opportunities and threats. Groups should also know their competitors, who they are and what they are doing. There has been a lot of concern in the past years about competition from the national teleradiology companies. Those companies appear to have not been as successful as they may have hoped to be, as prices dropped and groups brought their nighttime reads in-house. The independent groups may have won the first battle; I expect that we will see a round of consolidation of national companies in the future. If that occurs, they might recapitalize and start a second round of growth initiatives.

Watching the national multispecialty groups might also be wise. Cleveland Clinic and Mayo Health System are building partnerships with the likes of Community Health Systems (150 community hospitals) and a technology division of United Health Care. Start to develop your plan to compete against these “category killers.” That is the competition I fear for  independent groups.

We are seeing many mergers of groups in the 10- to 50-radiologist range that will be completed in 2015. As these groups walk through the process, it is apparent that there are many synergies and cost savings. Mergers are difficult in many ways, but those groups that learn how to successfully allow smaller groups to join with them will find the growth less difficult. Build a culture of being the best place in the world for a radiologist to work and smaller groups will want to join your practice.

We continue to be very optimistic about the future for private radiology groups. Thank you for your participation in the survey!

Joseph P. White, CPA, MBA
CliftonLarsonAllen LLP: CPAs, Consultants, and Advisors

With procedural volumes down in 2013, the nation’s largest private radiology practices sought