Center firm president offers operations focus

November 4, 1992

Imaging centers are getting restless. Independents may be readyto pass from wait-and-see to sell-and-cash-in. Changes afoot inWashington have caused some to seek an exit path by the end ofthis year, according to Thomas D. Cleary, president of

Imaging centers are getting restless. Independents may be readyto pass from wait-and-see to sell-and-cash-in. Changes afoot inWashington have caused some to seek an exit path by the end ofthis year, according to Thomas D. Cleary, president of MedicalVentures.

Cleary was picked to head the Solana Beach, CA, imaging centercompany last month, replacing Terrance M. Gill. He served previouslyas president of MedServe, an imaging center management and consultingcompany spun off from Medical Ventures at the start of this year.

The new president brings an operational focus to Medical Ventures.He originally served at Medical Ventures as director of centeroperations before transferring to MedServe. Prior to that, Clearywas president of a successful imaging center, Center for DiagnosticImaging of Minneapolis, and has also worked as a hospital administrator.

The market for center acquisitions appears to be looseningup, compared to earlier in the year, although negotiations arestill in process, he said.

"We have talked to over 200 centers over the last year.There was a lot of interest but not a lot of movement," Clearytold SCAN. "Right now, though, we have about 25 prospectsthat would like to do something by the end of this year. Withthe election coming up, people are beginning to focus on the ideathat there will be change regardless of who wins--and that itmay be better to position themselves now for a change in (center)ownership."

Medical Ventures owns 100% of two centers, greater than 65%of two more and lesser interests in four others. While the firmhas positions in centers on both the East and West Coasts, itplans to focus on regional-based growth of its center chain, Clearysaid.

"I believe, as do members of my board, that health careis regional. We are focusing now in the southwestern region. Ifthere are going to be national companies, that is not going tohappen right away," he said.

Although Medical Ventures does not have a specific goal asto how large a center network it should have, the firm would liketo add five to 10 new centers over the next year, he said. MedicalVenture's primary objective is to acquire centers with sound operationsand a wide base of referrals.

Some existing centers may not succeed without a referring-physicianownership structure, but these appear to be exceptions ratherthan the rule, he said.

"We have seen a few like that, but the majority are centersthat can continue to be viable," Cleary said. "Our acquisitionstrategy is to do our homework well and pick centers that willcontinue to be good operating centers and contribute to theircommunities."

Medical Ventures aims for 100% asset acquisitions, using acombination of cash and stock in a company being created to holdownership in the centers, he said. The firm will work closelywith physician groups to maintain existing relationships and willseek to continue existing radiology and management contracts.

But Medical Ventures also brings operational experience tothe table that provides added value to an acquired center, hesaid.

"Our competitors are bigger and more bureaucratic organizations,"he said. "We try to keep lean and efficient and focus onproviding services for referring physicians so that they comeback next time for their scans. We want to provide good serviceto patients, who will then tell the physician that it was a goodexperience."

Physicians are sought out for input on who is using MRI ina community and what educational materials and seminars mightbe helpful for the center to offer, he said. Costs can be keptdown through effective use of staffing and contracting with suppliers.

New areas of service, such as MR angiography, are being explored,he said.

"Two years ago, nobody was doing (MR) angio procedures.Now this is a whole new area we can be marketing to, so we canincrease throughput in our centers," Cleary said.

Service to referring physicians is the key to any successfulcenter strategy, he said.

"You have to get reports out on a timely basis, workingwith radiologists to call reports if that is what referring physicianswant. We run an inventory of our referring physicians and tailorthe service to their specific needs."

Teleradiology is growing in importance as referring physicianscome to expect this service, he said.

"We are experiencing some situations where referringphysicians say, `You get a big book of business from me. Let'stalk about putting some teleradiology equipment in, so I can lookat the images and talk to you on the phone at the same time.'There is movement in that direction," Cleary said.