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Firm plans slow but steady expansionNature abhors a vacuum, and the imaging center market is no exception. Several smaller companies are looking to fill the void left by the temporary withdrawal of U.S. Diagnostic and Medical Resources from active
Firm plans slow but steady expansion
Nature abhors a vacuum, and the imaging center market is no exception. Several smaller companies are looking to fill the void left by the temporary withdrawal of U.S. Diagnostic and Medical Resources from active imaging center consolidation. One of these firms is Cardiovascular Laboratories, which hopes to expand from its base in offering ultrasound services by acquiring imaging centers that provide a broader range of modalities.
Founded in 1991, the Wayne, PA-based firm has since grown to 11 vascular and echo fixed-site ultrasound laboratories across the northeast, specifically in Pennsylvania, New York, and New Jersey. Cardiovascular Laboratories owns 14 ultrasound scanners and performs approximately 15,000 procedures each year. The publicly held company expects to post revenues of about $4 million in 1998.
The company had been seeking diversification by developing a medical information management business, but it decided last month to call off that effort. Cardiovascular Laboratories found that the IS market is still too new and ill-defined, and is already dominated by large competitors. The big fish in imaging services, on the other hand, are experiencing a prolonged period of inactivity.
"The environment for acquiring MRI fixed-site centers right now seems to be relatively positive, particularly as a result of a couple of the big consolidators now being out of the market for a variety of reasons," said Timothy Cunningham, chairman of the company.
Since about 65% of the company's revenues come from Medicare patients, the firm would like to diversify into modalities that are not as age-specific as vascular ultrasound. Cardiovascular Laboratories plans to pursue the acquisition of fixed sites with MR, CT, or nuclear medicine capability.
Despite its desire to diversify into other imaging modalities, Cardiovascular Laboratories doesn't plan to forgo developing its core ultrasound business and, in fact, will continue to seek acquisitions of more vascular and echo labs. The company's labs and technologists are either accredited by the Intersocietal Commission for the Accreditation of Vascular Laboratories (ICAVL) and the Society of Vascular Technologists (SVT) or are pending accreditation, which the firm believes gives it a competitive edge.
Because of ICAVL's accreditation standards and ultrasound's emerging technological breakthroughs, the modality may provide the company with acquisition and upgrade opportunities. Industry watchers expect ultrasound applications to grow as patients demand alternatives to more invasive imaging modalities.
Cardiovascular Laboratories hopes to acquire one or two new imaging businesses in the coming year, preferably established, recently upgraded centers that don't require large capital improvements.
"My feeling is that 1999 is the year that we learn how to manage some of these other modalities and how to integrate acquisitions into our existing organization," Cunningham said. "If you look at existing consolidators, they acquired businesses too quickly, they didn't have the administrative infrastructure to deal with them well, and they paid too much. I'd just as soon start a bit slower and build up a head of steam on a stronger base."