Those who think that radiology is not a target for corporatization need look no further than the recent acquisition by Envision Healthcare of Sunshine Radiology, a 35-radiologist practice based in Tampa, Fla., serving the East Region of Florida Hospital. Right about now, some of you are asking, what is Envision Healthcare and where did it come from? Our coverage of the acquisition will shed some light.
Having had a good deal of success rolling up anesthesiology and emergency physicians into big, national single specialty provider organizations—many with built-in operational expertise—private equity has decided that radiology provides similar opportunities and it is on the move.
In some ways, radiology must appear to be a particularly attractive target. The specialty is “fragmented” in Wall Street-speak. The best estimate of the number of radiologists in the U.S. is between 30,000 and 37,000, and only ~5,300 of them practice in the nation’s largest 100 private practices of 28 or more radiologists. The remainder are either employed or engaged in smaller or solo practices.
On the other hand, radiology has long exhibited a resourcefulness and entrepreneurial flair seen in few other specialties, as witnessed in its willingness to invent, own, and operate technologies, including the specialty’s most advanced. Of course, draconian cuts to radiology’s technical component have driven all but the most determined from the outpatient imaging center business.
Radiologists—all physicians—are looking at increasing regulatory requirements, declining reimbursement, and the need to invest in information technology. Health systems want a single level of service across the system, requiring multi-practice cooperation—or else. The business of medicine is getting harder and more complex, and it demands skilled business people to steer the ship.
Understanding these pressures is part of the opportunity that health-care-focused private equity recognizes. In short order, many of the nation’s physicians are finding themselves employed—just 33% of physicians reported owning their practices in a recent survey by Merritt Hawkins.
This is a good time for practices of all sizes to seriously consider their strategy for the future and plan accordingly. During private equity’s last run at radiology in the ‘90s, the physician practice management (PPM) industry, most of the radiologists working in those practices that sold to the PPMs were able to return to private practice after the industry collapsed, although some were stuck for years.
This time is different, though. Health care is changing quickly. If you decide to step out of private practice for the shelter of a large, well-capitalized public or privately funded radiology services provider, it may be hard to find a private practice to join if you want to return.
Visit the websites of these large, corporate radiology services providers, and ask yourself this question: Why don’t any of them show the photographs or even list the names of all of their radiologists? Could it be a clue that this specialty you chose to practice is being sold like a commodity?