SDI–EVDI Merger Blankets Phoenix with Mega-Practice

Southwest Diagnostic Imaging (SDI) leap-frogged into the upper ranks of the nation’s largest practices this week by merging with East Valley Diagnostic Imaging in Mesa, Arizona, folding 100 radiologists into a mega-practice that covers the entire Phoenix metropolitan area.

“We are starting to see ACO-like contracting entities that want to service an entire metropolitan area,” Rod Owen, MD, co-executive VP, SDI, told Radiology Business Journal.  “For us to do that, we need to be able to have an offering that covers all of the geography of the populated area of Mariposa County. That is what we tried to accomplish.”

SDI was formed in 2004 when Scottsdale Medical Imaging, based in Scottsdale, and Valley Radiologists, based in Phoenix, merged. By 2013, the resulting practice ranked number 28 on the Radiology Business Journal’s list of the nation’s 100 largest private practices, with 58 radiologists. EVDI brings an additional 40 radiologists, covering the East Valley region of Mariposa County, bringing SDI near the 100 mark and likely one of the largest five private radiology practices.

“The expansion will provide new opportunities for full-service diagnostic and interventional radiology services across the entire Valley,” said Christian Dewald, MD, co-executive VP, SDI, in a press release. Dewald also noted improved patient access and a higher level of subspecialty expertise among the merger’s benefits.

The larger resulting entity will have 28 outpatient sites, 14 covered hospitals, and approximately 100 radiologists. Owen cites payor pressure, including 13 different Medicare reimbursement reductions for imaging since 2008, as a precipitating factor in the consolidation of radiology services in the Phoenix market.

Prior to the merger, SDI was approached by Banner Healthcare, which has multiple hospitals throughout the Phoenix metropolitan area and a significant number of covered lives through its insurance arm.

“Banner wanted to build a narrow network for its insured population and came to SDI wanting to do a narrow network, but we just didn’t have the East Valley,” Owen tells. Eventually, Banner inked deals with both SDI and EVDI, which covered a number of Banner hospitals in the East Valley.

“It really brought to the fore the need to have an organization or a company that could service the entire metropolitan area,” Owen says. “I think everybody is realizing that to play in a more sophisticated, more complicated marketplace, you have got to be bigger, and you have to be more sophisticated.”