"There are pressures in the industry so that the profitability of diagnostic imaging is unlikely to be as high as it has been in the past because payers are clamping down," said Scott Clay, senior principal at Noblis Center for Health Innovation. "But most providers will still view diagnostic imaging as a good investment."

Companies that finance imaging systems could afford to be cautious or even relatively optimistic. Roland Chalons-Browne, CEO of Siemens Financial Services, acknowledged the challenge facing the imaging community but reaffirmed the company's commitment to the market and its customer base. Others in the industry are also likely to weather the storm thanks to an extraordinarily broadbased financial foundation.

Philips Medical Capital is a joint venture between Philips Medical Systems and De Lage Landen International, a Dutch leasing company whose parent Rabobank was recently rated as one of the top four safest banks in the world.

"We have zero subprime exposure, so we haven't been affected like the rest of the economy," Evenson said. "That wasn't to say that there would not be some fallout. Everything is linked and interconnected, so even though we are in a position where we could be lending like crazy, we're being a little more cautious as well."

Borrowers are equally skittish. Diagnostic imaging products can be a component of major hospital expansions or renovations that require $25 million to $200 million or more in financing through the capital markets. For the most part, however, capital purchases of imaging equipment are done on an almost routine or special project basis.

"Hospitals generally don't issue debt for $2 million to $3 million projects to expand, replace, or upgrade diagnostic imaging," Clay said. "That's normally funded out of their capital budgets, cash on hand, or earnings from operations."

Healthcare organizations are taking a closer look at financing options that operate outside of capital markets, according to industry executives. One option is leasing. This option was also being affected by the credit crunch, however. Scrutiny is now being applied not just by the lessors but by those signing for the leases.

"There is definitely a higher level of due diligence being conducted by practices to be certain that an imaging acquisition makes sense in light of the current economic climate," said Mike Sweeney, general manager for healthcare finance at US Express Leasing, which makes leasing arrangements with private physician group practices.

Potential lessees were making sure that the presumed economics of an imaging acquisition were in line with expectations concerning reimbursement amounts and patient volumes. Nevertheless, the demand for leasing was at the same level as it was in 2008, Sweeney said.

"We have some examples where clients have been able to acquire equipment during 2008 and make lower or no payments until 2009 by taking advantage of tax benefits and begin their cash flow applications once the equipment is in and generating income," he said.

Both sides of the lender/borrower equation most likely will be wary well into next year and possibly even the year after. Pockets of financial activity will not expand unless the macroeconomic climate improves.

Structural issues associated with mortgage-backed securities will take at least a year to address, Chalons- Browne said. The bigger question is the depth of the economic recession the country appears to have entered. This recession could lead to reduction in demand for health services, reduced hospital revenues, lower rates of philanthropy, and decreased funding from Medicaid.

"It looks like hospitals, just like everyone else, will have to make tough choices about what they spend and how they need to make investments to remain competitive," Clay said. "Hospitals will be more careful to make capital allocations on projects that have a greater return on investment. The good news is that, historically, diagnostic imaging has had a good return on investment."

By Greg Freiherr