RadNet eyes efficiencies, teleradiology with tech purchase

The biggest player in the imaging center market announced on Monday a technology purchase that will enhance its efficiency as well as expand its reach into the teleradiology field. RadNet also said its acquisition of Image Medical Corporation, the parent of eRAD, for $10.75 million will qualify RadNet for federal stimulus money geared toward adoption of electronic medical records.

ERAD provides PACS as well as workflow solutions to more than 250 hospitals, teleradiology businesses, imaging centers, and specialty physician groups. In addition to purchasing eRAD's radiology software, RadNet has assembled a team of software developers to create radiology workflow solutions to complement eRAD's products.

"Up to this point, our revenue has been earned exclusively through our owned and operated facilities," said Dr. Howard Berger, president and CEO of RadNet. The company operates 191 imaging centers. "With this announcement, we have positioned ourselves to sell products and services to the over 6000 freestanding imaging centers and the 10,000 imaging operations within community hospitals across the U.S. that we do not own."

During a conference call with analysts on Sept. 14, Berger said he expects to see tremendous productivity enhancement in the business because the ability to control software will allow RadNet to achieve efficiencies more quickly and effectively.

The deal also represents a step toward teleradiology, Berger said.

"Teleradiology is a natural evolution for us, given the fact that the company has contracts with more than 350 radiologists who supply professional interpretative services at our existing imaging centers," he said. "The ability for us to expand that into a more typical teleradiology operation is certainly something we could consider somewhere in the future."

Another motivation for acquiring eRAD is to qualify for federal stimulus money under the Health Information Technology for Economic and Clinical Health Act, which promotes the adoption of technology such as electronic health records (EHRs).

"The IT solutions we will now have in-house are consistent with what the Obama administration is trying to achieve with its healthcare IT stimulus programs," Berger said. "We will attempt over the coming quarters to participate in certain government-sponsored IT programs and will apply for several stimulus programs that pertain to our initiatives."

Berger said the firm believes not only will a seamless EHR interface be demanded by the government and patients, but, ultimately, eRAD's software is a marketing tool for doctors. EHRs allow physicians to receive information in the emergency room or at home, if the information wasn't available during the day.

Another motivation for the acquisition is to save costs, Berger said. Currently the company spends $2 million per year for licensing, annual support, and maintenance of its digital infrastructure. By acquiring eRAD and an informatics team, it anticipates saving $20 million over 10 years.

RadNet projects by the end 2011 it will be using eRAD's software at all of its own facilities and that the company will find a ready market in other imaging centers. Berger anticipates the transition to the eRAD- and RadNet-developed system won't be difficult.

"I think most imaging centers today are using some form of PACS, so they are predominantly digital already," he said.

RadNet comes into play on the workflow solutions side, Berger said.

"That's where I believe we, as a company, are better equipped to deal with this development process than probably any other vendor out there, given the experience we have with more than 30 years of running imaging centers," he said.

RadNet's acquisition of eRAD is expected to close by the end of September.