Many customers told Evenson that they were in the midst of a capital freeze that would not allow them to move forward with any project involving capital spending. Writing for the RSNA News, Dr. James Thrall, chair of the American College of Radiology board of chancellors, noted that nearly everyone he met at the 2008 RSNA meeting in December faced capital spending cutbacks. Many told Thrall that their hospitals simply would not have capital programs this year.

As access to capital tightened, imaging center owners learned that they would be required to invest more of their own money to finance future growth. Before the crash, some facilities were financed entirely with nonrecourse loans that did not require the project owners to guarantee their repayment. With most of the financial risks shifted to other parties, owners were required to contribute only working capital, said Robert Maier, president of Regents Health Resources, a consulting firm in Brentwood, TN.

“You can't get a deal done that way any more,” he said.

To qualify for loans, owners now must contribute enough cash to cover at least four months of working capital and up to 40% of the value of the imaging equipment or real estate, he said. All this affected sales. Fourth quarter U.S. imaging device industry revenue totaled $1.27 billion, down 18% from the same period in 2007.

WORST OF THE DOWNTURN

GE Capital saw the worst of the downturn, partially because of misfortunes of its own making. The wholly owned subsidiary of GE made a fast transition in 2008 from its status as a major contributor of profits to its parent company to a source of monumental losses.

GE required an emergency infusion of $15 billion in early October to counter a 38% drop in earnings from financial services in the third quarter. Many of the losses stemmed from GE Capital's investments in subprime mortgage loans and financial derivatives.

Competitors claim that GE stopped adding new loans to its $8 billion portfolio of imaging equipment financing for several weeks in December, but James Ambrose, president of GE Healthcare Financial Systems, said in an interview that the company never faltered.

“While the rest of GE Capital was really reluctant to put new money out, we in the healthcare services space did continue to lend,” he said. “We are strategically important to the company, and GE Healthcare's customers need us more than ever.”

In early 2009, GE also recognized an opportunity to arrange private financial placements for hospital and health systems that no longer had access to low-cost
bond financing.