Alliance restructures to upgrade aging MRI fleet

September 16, 1993

Mobile imaging services provider Alliance Imaging last week announceda restructuring plan to modernize its fleet of MRI scanners. TheOrange, CA, company plans to put 21 magnets out to pasture andreplace many with new 1-tesla scanners, according to

Mobile imaging services provider Alliance Imaging last week announceda restructuring plan to modernize its fleet of MRI scanners. TheOrange, CA, company plans to put 21 magnets out to pasture andreplace many with new 1-tesla scanners, according to TerrenceM. White, chief financial officer.

Alliance decided it needs to update its fleet to improve themarketability of its mobile service. A number of the company'smobile contracts are expiring, and customers are less than enthusiasticabout locking in a new contract with an older scanner.

"The older units have no market acceptance," Whitesaid. "A lot of our customers won't take these units. Theysay, `Get me a better unit or we'll go to another company.'"

The units being replaced are Picker Vista M series and ToshibaMRT-35A scanners. Alliance will try to trade in the units or findnew homes for them, either in overseas markets or in nontraditionallocations such as chiropractors' offices. Alliance may also sellsome of the units to equipment brokers for resale.

Alliance is negotiating with GE Medical Systems and PickerInternational for new scanners to replace the older units, andthe company is particularly interested in GE's new 1-tesla SignaAdvantage 1T (SCAN 7/28/93). Alliance plans to purchase 10 to12 new scanners and may try to secure a bundled deal on the units,White said.

Alliance will take a pre-tax charge of $15 million in the quarterending Sept. 30 to cover the costs of the restructuring plan.The restructuring should not result in a substantial reductionin the company's work force, White said. Alliance will be increasingits sales staff to boost marketing efforts, according to the company.

The company also reported that it has experienced collectionproblems with accounts related to its retail business, in whichit bills patients and payers directly. Alliance has written offsome older receivables and increased reserves for doubtful accountsby taking a pre-tax charge of $2.2 million. The firm severed itsrelationship with an outside billing service that had been handlingmany of the accounts.