HealthSouth to add to imaging network with acquisition of NIA's eight centers

September 17, 1997

Kyle continues with MedSolutions utilization management businessHealthSouth is on the move again in medical imaging services. The Birmingham, AL, outpatient healthcare service provider has signed a definitive agreement to purchase National Imaging

Kyle continues with MedSolutions utilization management business

HealthSouth is on the move again in medical imaging services. The Birmingham, AL, outpatient healthcare service provider has signed a definitive agreement to purchase National Imaging Affiliates of Nashville and its eight imaging centers. The deal should be closed by early October, according to NIA president Frank Kyle. HealthSouth would not comment on the pending acquisition.

While HealthSouth continues to build its imaging center network, Kyle is moving in another direction. Over the past year and a half, he has been building a radiology benefits management business called MedSolutions, which has operated under the umbrella of NIA. Concurrently with the sale of the imaging center company, however, MedSolutions will be launched as an independent company. Kyle will continue as president of MedSolutions.

A 15-year veteran of the imaging center business, Kyle was formerly president of MedInc of Nashville. Renamed MedAlliance, the firm was eventually sold to Health Images in 1995 (SCAN 1/18/95). Health Images, in turn, was purchased by HealthSouth earlier this year (SCAN 3/19/97). It seems that what goes around comes around in the consolidating imaging center business.

"Virtually everything I have done is going to end up in the HealthSouth camp," Kyle joked. "And now I am turning around and contracting to HealthSouth to be a provider to our new company."

MedSolutions takes on the risks involved with providing radiology services for managed-care groups. A central concept behind this business is that managed-healthcare providers require help in bringing their radiology utilization rates under control, Kyle said.

"There is enough documented information around to confirm that imaging is 40% to 50% overutilized in terms of exam counts," he said. "There is a tremendous opportunity here to better rationalize the use of this technology."

MedSolutions is under contract for the provision of radiology services to about 220,000 HMO members. Letters of intent have been signed for a further 325,000 members, which should be in effect by the end of this year, Kyle said.

Through careful monitoring and analysis of the radiology services provided on a capitated basis, MedSolutions expects to reduce unnecessary imaging tests, particularly in the private-office sector, and bring greater consistency to the prices paid for imaging procedures, he said.

The only medical imaging modality not overutilized is mammography, Kyle said. MedSolutions does not include mammography screening for breast cancer in its efforts to control utilization.

Imaging exam prices vary widely around the country, Kyle noted. In some areas with a strong managed-care presence, imaging procedure prices are 65% of the Medicare rate. At the other extreme, prices charged private payors may be as much as three times what Medicare pays. As these prices are standardized, average imaging costs will continue to sink, he said.