RadNet Profile
RadNet, Inc. is a leading national provider of diagnostic imaging services in the United States. As of December 31, 2022, the comopany operated directly or indirectly through joint ventures with hospitals, centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York.
The company’s centers provide physicians with imaging capabilities to facilitate the diagnosis and treatment of diseases and disorders and may reduce unnecessary invasive procedures, often reducing the cost and amount of care for patients. The company’s services include magnetic resonance imaging (MRI), computed tomography (CT), positron emission tomography (PET), nuclear medicine, mammography, ultrasound, diagnostic radiology (X-ray), fluoroscopy and other related procedures. The vast majority of the company’s centers offer multi-modality imaging services. The company’s multi-modality strategy diversifies revenue streams, reduces exposure to reimbursement changes and provides patients and referring physicians one location to serve the needs of multiple procedures. Integral to the imaging center business is its software arm headed by eRAD, Inc., which sells computerized systems that distribute, display, store and retrieve digital images. Internationally, the company’s subsidiary Heart and Lung Imaging LLC, provides teleradiology services for remote interpretation of images on behalf of providers within the framework of the United Kingdom's National Health Service.
The company seeks to develop leading positions in regional markets in order to leverage operational efficiencies. The company develops its imaging business through a combination of organic growth and acquisitions. The company’s scale and density within selected geographies provide close, long-term relationships with key payors, radiology groups and referring physicians. Each of the company’s center-level and regional operations teams is responsible for managing relationships with local physicians and payors, meeting its standards of patient service, and maintaining profitability. The company provides training programs, standardized policies and procedures, and sharing of best practices among the physicians in its regional networks.
The company has also established an Artificial Intelligence (AI) division, that develops and deploys AI suites to enhance radiologist interpretations of breast, lung and prostate images. The division is led by DeepHealth, and includes the company’s acquisitions of Aidence Holding B.V. and Quantib B.V., both based in The Netherlands.
Diagnostic Imaging Modalities
The principal diagnostic imaging modalities the company uses at its centers are:
MRI
MRI has become widely accepted as the standard diagnostic tool for a wide and fast-growing variety of clinical applications for soft tissue anatomy, such as those found in the brain, spinal cord, abdomen, heart and interior ligaments of body joints, such as the knee. MRI uses a strong magnetic field in conjunction with low energy electromagnetic waves that are processed by a computer to produce high-resolution, three-dimensional, cross-sectional images of body tissue. MRI systems are designed as either open or closed and have magnetic field strength of 0.2 Tesla to 3.0 Tesla.
CT
CT provides higher resolution images than conventional X-rays, but generally not as well defined as those produced by MRI. CT uses a computer to direct the movement of an X-ray tube to produce multiple cross-sectional images of a particular organ or area of the body. CT is used to detect tumors and other conditions affecting bones and internal organs. It is also used to detect the occurrence of strokes, hemorrhages and infections. A typical CT examination takes from 15 to 45 minutes.
PET
PET scanning involves the administration of a radiopharmaceutical agent with a positron-emitting isotope and the measurement of the distribution of that isotope to create images for diagnostic purposes. PET scans provide the capability to determine how metabolic activity impacts other aspects of physiology in the disease process by correlating the reading for the PET with other tools, such as CT or MRI. PET technology has been found highly effective and appropriate in certain clinical circumstances for the detection and assessment of tumors throughout the body, the evaluation of some cardiac conditions and the assessment of epilepsy seizure sites. The information provided by PET technology often obviates the need to perform further highly invasive or diagnostic surgical procedures. In addition, the company employs combined PET/CT systems that blend the PET and CT imaging modalities into one scanner.
Nuclear Medicine
Nuclear medicine uses short-lived radioactive isotopes that release small amounts of radiation that can be recorded by a gamma camera and processed by a computer to produce an image of various anatomical structures or to assess the function of various organs, such as the heart, kidneys, thyroid and bones. Nuclear medicine is used primarily to study anatomic and metabolic functions.
X-ray
X-rays use roentgen rays to penetrate the body and record images of organs and structures on film. Digital X-ray systems add computer image processing capability to traditional X-ray images, which provides faster transmission of images with a higher resolution and the capability to store images more cost-effectively.
Ultrasound
Ultrasound imaging uses sound waves and their echoes to visualize and locate internal organs. It is particularly useful in viewing soft tissues that do not X-ray well. Ultrasound is used in pregnancy to avoid X-ray exposure, as well as in gynecological, urologic, vascular, cardiac and breast applications.
Mammography
Mammography is a specialized form of radiology using low dosage X-rays to visualize breast tissue and is the primary screening tool for breast cancer. Mammography procedures and related services assist in the diagnosis of and treatment planning for breast cancer.
Fluoroscopy
Fluoroscopy uses ionizing radiation combined with a video viewing system for real time monitoring of organs.
Business Strategy
The key elements of the company’s strategy are to maximize performance at its existing centers; focus on profitable contracting; expand its networks; and expand its joint ventures.
Services
The company offers a comprehensive set of imaging services, including MRI, CT, PET, nuclear medicine, X-ray, ultrasound, mammography, fluoroscopy and other related procedures. The company focuses on providing standardized high quality imaging services, regardless of location, to ensure patients, physicians and payors consistency in service and quality. To ensure the high quality of its services, the company monitors patient satisfaction, timeliness of services to patients and reports to physicians.
The key features of the company’s services include patient-friendly, non-clinical environments; a 24-hour turnaround on routine examinations; interpretations within one to two hours, if needed; flexible patient scheduling, including same-day appointments; extended operating hours, including weekends; reports delivered by courier, facsimile or email; availability of second opinions and consultations; availability of sub-specialty interpretations at no additional charge; and standardized fee schedules by region.
Radiology Professionals
In the states in which the company provides services (except Florida and Arizona), a lay person or any entity other than a professional corporation or similar professional organization is not allowed to practice medicine, including by employing professional persons or by having any ownership interest or profit participation in or control over any medical professional practice. This doctrine is commonly referred to as the prohibition on the corporate practice of medicine. In order to comply with this prohibition, the company contracts with medical groups to provide professional medical services in its centers, including the supervision and interpretation of diagnostic imaging procedures.
The company contracts with a consolidated medical group (the Group) which consists of professional corporations owned or controlled by individuals within its senior management that provide professional medical services in Arizona, California, Delaware, Maryland, New Jersey and New York. The company has entered into long-term contracts with third-party radiology groups in the area to provide physician services at those centers. These third-party radiology practice groups maintain full control over the provision of professional services, including supervision and interpretation of diagnostic imaging procedures, in the company’s diagnostic imaging centers. Each medical group maintains control over the physicians it employs, and is responsible for staffing the facility with qualified professional medical personnel.
Under management agreements with the Group or other third-party radiology practices, the company provides the use of its diagnostic imaging equipment, technical and management services, and administration of the non-medical functions of the professional medical practices at its centers, including the provision of non-medical staff, accounting services, billing and collection, medical and office supplies, transcription services, maintenance of medical records, and marketing. As compensation for the services furnished under management contracts with its medical groups, the company receives technical fees for the use of its diagnostic imaging equipment and technical services and an agreed percentage of the medical practice billings for, or collections from, services provided at its centers. The medical groups retain the professional reimbursements associated with imaging procedures after deducting management service fees paid to the company.
Additionally, the company performs certain management services for a portion of the professional groups with whom it contracts who provide professional radiology services at local hospitals. For performing these management services, which include billing, collecting, transcription and medical coding, the company receives management fees, that depending on the agreement are calculated at a fixed or variable rate.
Payors
Commercial Insurance
Generally, insurance companies reimburse the company, directly or indirectly, including through the Group or through the contracted radiology groups, on the basis of agreed upon rates. The patients may be responsible for certain co-payments or deductibles.
Managed Care Capitation Agreements
Under these agreements that are generally between the medical groups and the payor (which in most cases are large medical groups or Independent Practice Associations), the payor pays a pre-determined amount per-member per-month in exchange for the radiology group providing all necessary covered services to the managed care members included in the agreement. These contracts pass much of the financial risk of providing outpatient diagnostic imaging services, including the risk of over-use, from the payor to the radiology practice group and, as a result of its management agreement with the radiology practice group, to the company.
The company through its comprehensive utilization management, or UM, program has become highly skilled at assessing and moderating the risks associated with the capitation agreements, so that these agreements are profitable for it. The company’s UM program is managed by its UM department, which consists of staff who are actively involved with the referring physicians and payor management in both prospective and retrospective review programs. The company’s UM program includes features, such as physician education combined with peer review procedures which are designed to manage its costs while ensuring that patients receive appropriate care.
Medicare/Medicaid
Medicare is the federal health insurance program for people age 65 or older and people under age 65 with certain disabilities. Medicaid, funded by both the federal government and states, is a state-administered health insurance program for qualifying low-income and medically needy persons. For services for which it bills Medicare directly or indirectly, including through contracted radiologists, the company is paid under the Medicare Physician Fee Schedule. Under the Protecting Access to Medicare Act of 2014, Congress introduced a new quality incentive program that, effective January 1, 2016, reduces Medicare payments for certain CT services reimbursed through the Medicare Physician Fee Schedule that are furnished using equipment that does not meet certain dose optimization and management standards. Medicare patients usually pay a 20% co-payment unless they have secondary insurance. Medicaid rates are set by the individual states for each state program and Medicaid patients may be responsible for a modest co-payment.
Contracts with Physician Groups and Other Non-Insurance Company Payors
For some of its contracts with physician groups and other providers, the company does not bill payors, but instead accept agreed upon rates for its radiology services.
Imaging Centers
The company’s centers are primarily located in geographic networks that it refers to as regions. The majority of the company’s centers are multi-modality sites, offering various combinations of MRI, CT, PET, nuclear medicine, ultrasound, X-ray, fluoroscopy services and other related procedures. A portion of its centers are single-modality sites, offering either X-ray or MRI services. Consistent with the company’s regional network strategy, it locates its single-modality centers near multi-modality centers, to help accommodate overflow in targeted demographic areas.
Sales and Marketing
The company’s sales and marketing team employs a multi-pronged approach to marketing, including physician, payor and sports marketing programs, each of which are described below:
Physician Marketing
Each customer service representative on the company’s physician marketing team is responsible for marketing activity on behalf of one or more centers. The representatives act as a liaison between the facility and referring physicians, holding meetings periodically and on an as-needed basis with them and their staff to present educational programs on new applications and uses of its systems and to address particular patient service issues that have arisen. In its experience, consistent hands-on contact with a referring physician and his or her staff generates goodwill and increases referrals to its centers.
Payor Marketing
The company’s marketing team regularly meets with managed care organizations and insurance companies to solicit contracts and meet with existing contracting payors to solidify those relationships. The comprehensiveness of the company’s services, the geographic location of its centers and the reputation of the physicians with whom it contracts all serve as tools for obtaining new or repeat business from payors.
Sports Marketing Program
The company’s west coast operations renders in stadium digital X-ray for the following organizations: Los Angeles Clippers, Dodgers, Kings and Lakers. In exchange, the company receives season tickets and parking. Contract lengths vary from yearly up to five years. The company also provides radiology services at select imaging centers for the Anaheim Ducks, Los Angeles Angels, Los Angeles Rams, Oakland Athletics, San Francisco 49ers and student athletes of the University of Southern California.
Through its east coast operations, the company has entered into sponsorship agreements with the Baltimore Ravens of the National Football League and the Baltimore Orioles of Major League Baseball which permit the company to state it is the imaging partner to each organization. Both agreements last through 2023.
Suppliers
The company employs direct purchase or finance arrangements to accomplish its needs with such firms as GE, Hologic, Key Equipment, Philips, Siemens and Spectrum.
Competition
The company’s competitors include independent imaging operators, such as Akumin, Inc., which acquired Alliance Healthcare Services, and smaller regional operators, as well as hospitals, clinics and radiology groups that operate their own imaging equipment
Regulation
The U.S. Food and Drug Administration (FDA) has issued the requisite pre-market approval for all of the MRI and CT systems the company uses. The company’s mammography systems are regulated by the FDA pursuant to the Mammography Quality Standards Act of 1992, as amended by the Mammography Quality Standards Reauthorization Acts of 1998 and 2004 (collectively, the MQSA).
History
RadNet, Inc. was founded in 1981. The company was incorporated in Delaware in 2008.
