Former scanner execs start MRI firm

January 30, 1991

Three former Fonar executives have joined with a fourth partnerto form Imaging Systems International of Boca Raton, FL, a magneticresonance imaging center firm. ISI's first center, North GeorgiaDiagnostic Imaging of Atlanta, opened in June, according to

Three former Fonar executives have joined with a fourth partnerto form Imaging Systems International of Boca Raton, FL, a magneticresonance imaging center firm. ISI's first center, North GeorgiaDiagnostic Imaging of Atlanta, opened in June, according to JoelStutman, ISI president and former executive vice president andco-founder of Fonar.

Although Stutman left the MRI vendor three years ago amidsta disagreement over company strategy, the first MRI unit ISI installedwas a Fonar system, he said.

The other two ISI partners with a history at Fonar are vicepresidents Robert Quigley (former manager of a Fonar subsidiaryset up to own and operate MRI centers) and Roger Hampton (formerdirector of communications for Fonar). The fourth partner in theprivate firm is Robert Miller, president of Creative Leasing andFunding of Roslyn, NY. Miller is a director of ISI.

ISI plans to develop MRI centers rather than acquiring existingpartnerships, Hampton said. The Atlanta center was formed intoan intrastate public company with over 200 physician and nonphysicianinvestors. Shares cannot be sold outside of Georgia, he said.

There are referring physician partners in the Atlanta venture.However, the financial stake of the physician owners in the centeris minimal, as shares sell for $2000, he said. Funding was alsoarranged with a loan from Philips Credit.

Scanner vendors are usually closely involved with the establishmentof imaging centers, so executives at the companies develop a start-upexpertise that can be easily translated to the imaging servicesfield, Hampton said.

"We saw over 150 centers established while at Fonar. Youlearn quickly the benefits and pitfalls of this business,"he said.

Fonar moved away from direct sales and marketing of its MRIsystem in 1989 and concentrated on revenue from service and upgradesto existing systems as well as the establishment of company-ownedMRI centers (SCAN 2/14/90).

ISI is happy with the performance of the Fonar system and Fonar'sservice at its first center, Stutman said. The firm is not concernedabout maintaining the unit in the future.

"I believe the service will continue. If it does not,there are a half-dozen companies ready to step in and take overthe service commitment," Stutman said.

ISI is not wedded to Fonar as an MRI supplier, however. Thefirm is interested in mid-field units supplied by Hitachi andPhilips, he said.

"Our intention is to get the best equipment for the dollar,"Stutman said.

The Hitachi 0.3-tesla system introduced at the 1990 RSNA meeting(SCAN 12/12/90) looks good to ISI, although the center firm isnot sure if the vendor is ready to deliver. The Philips T5 hasimpressive images, but the console design needs work, he said.

ISI is convinced that there is room for new MRI centers inthe U.S. They must be built to satisfy actual imaging needs ratherthan investment criteria, Stutman said.

"According to our market research, one center can provideservices at a profitable level for (a general population of) 75,000to 100,000 people or less, depending on applications growth inMRI. There is a potential for about 5000 MRI centers in the U.S.We are only 50% to 60% saturated," he said.