By Bill Pickart, CEO, Integrated Radiology Partners
Healthcare has become one of the most dynamic and competitive industries in the past few years, with M&A activity increasing as physician practices struggle to survive in a rapidly evolving market.
According to a recent Business Insider article, the 2015 worldwide M&A volume stands at an all-time high of $4.86 trillion. The largest volume and activity has come from the healthcare sector, reports Dealogic, reaching $39.4 billion (304 deals), up from $28 billion (262 deals) in 2014.
As we say goodbye to 2015, it is important to note the factors that have contributed to this heightened activity in the healthcare services provider sector, which include technology demands and declining reimbursements. As publicly traded and private equity-backed consolidators continue to expand throughout the industry, promising health systems economies of scale, increased service offerings and greater operational efficiencies, it is important to review health systems’ and radiology groups’ options to remain competitive and successful in the new year.
National, Multi-Specialty Company
National healthcare management companies such as TeamHealth, AmSurg/Sheridan and Mednax are all highly focused on expansion into new markets and acquisition of new hospital contracts. These companies prove a highly competitive player in the market; because of their size, they can easily offer the economies of scale and service offerings hospitals are seeking to thrive in a highly competitive market.
While M&A activity has been prevalent in the specialty of anesthesia, these groups have increasingly edged their way into the field of radiology. In 2015 alone, Sheridan acquired Radisphere and Mednax acquired vRad, two major players in the radiology market.
This has radically altered the playing field for radiology groups, who now must compete with not only other local practices, but also the national management company down the hall who has the hospital’s anesthesia or emergency medicine contract. This concept of the “fin in the water” proves a direct threat to radiology groups who are trying to stay independent and competitive.
Of course, other local radiology groups are still competitors for the health system contract. If a radiology group is chronically underperforming, clinically inefficient, or is unable to integrate the latest technologies and best practices into its daily operations, it is at risk of being ousted by another, more attractive group across town. Likewise, if a radiology group does not have the necessary subspecialty access critical for accurate and efficient image reads, a hospital may turn to other options.
Technology and Collaboration
In response to these two threats to radiology groups’ independence and survival, there is an emerging practice within the industry that involves the creation of noncompetitive group networks that provide the economies of scale, subspecialty access and service offerings hospitals seek. Leveraging distributed imaging workflow technology as provided by Plexus Teleradiology, radiology practices can collaborate with other like-minded groups to gain the access and services they need at an affordable price.
Because these collaborations are not mergers but rather joint ventures, radiology practices across the country can maintain their independence while remaining an effective and competitive partner for the hospital they serve.
For more information about the Plexus Teleradiology platform and its capabilities, please contact ContactPlexus@plexustelerad.com.