Mobile imaging remains on growth path

November 6, 1991

Prospects for mobile medical services are strong in light of severalfederal and state regulatory trends, said William L. MacKnight,chairman and CEO of Maxum Health, a Dallas-based imaging servicesprovider. Changes in Medicare capital reimbursement and

Prospects for mobile medical services are strong in light of severalfederal and state regulatory trends, said William L. MacKnight,chairman and CEO of Maxum Health, a Dallas-based imaging servicesprovider.

Changes in Medicare capital reimbursement and the reinstitutionby some states of certificate-of-need requirements for medicalequipment purchases may benefit mobile providers, he said.

Efforts by federal and state governments to crack down on referralfraud and abuse among physician joint ventures could also reduceincentives for use of fixed-site imaging centers. Texas is implementinglegislation that prohibits all payments--not just by Medicare--thatviolate guidelines on referring-physician-owned medical facilities,he noted (see story, page one).

"We see broad implications. All the various ways of potentiallyimpacting referrals are going away," MacKnight said.

Ultimately, hospital customers care little whether servicesare provided on a mobile or fixed-site basis, he said.

"The significant difference is in the services you provide.The issue (for customers) is availability of assets, whether youoffer equipment in a permanent facility or on a mobile basis.We try to make our assets available to customers as much as theirneeds for services require," MacKnight said.

If customers are to be ensured access to shared imaging services,the equipment must stay up and running. Maxum operates its ownscanner maintenance operation and services half of its fleet in-house,he said.

"We found that the (maintenance) needs of a mobile vendorwere not being addressed by the equipment manufacturers,"he said.

Scanner vendors are accustomed to meeting the service needsof their traditional hospital customers, which usually run fixed-sitemachines around the clock. Mobile providers need a high levelof uptime during the hours when they offer their primarily outpatient-basedservices. Maxum has achieved a 98% uptime rate on its scannersrunning 12 hours a day, MacKnight said.

Revenues for Maxum in the third quarter (end-September) of1991 rose 24%, from $7.3 million in the same period last yearto $9 million. The firm's net loss declined from $639,000 in thethird quarter of 1990 to $30,000 this year (see graph). This slightloss for the quarter came after Maxum wrote off the last $346,000of its $8.6 million in intangible assets related to the firm'sdivestiture from Voluntary Hospitals of America two years ago.

Maxum successfully completed an initial public stock offeringin September (SCAN 10/23/91). The firm's evolution as a publiccompany will continue to rely on growth in revenue from existingcustomers as much as on establishing new routes and centers. Imagingservice providers can stimulate revenue growth by helping theircustomers stay competitive as MRI applications grow and by searchingfor new ways to provide value-added services, MacKnight said.

Twice during the last two years, Maxum used an outside researchfirm to survey 1000 users of its own and competing services. Thesecustomers included hospital administrators, radiology managers,radiologists and referring physicians.

"We identified significant changes in our service components.This has helped us hone our skills and differentiate us from competitors,"he said.

One surprise from the survey was that customers are interestedin mobile renal lithotripsy services.

"We thought renal lithotripsy was a declining business,but since there was interest from our customers, we pursued that,"he said.

Maxum operates five lithotripters in addition to 41 MRI systemsand three CT units. Survey respondents also showed interest inmobile cardiac services, which Maxum does not offer, he said.

Surveying customers can also warn a service provider when anappealing option may turn into a dead end. For instance, Maxumrecognized that radiology has a relatively low level of contractservices and might be a way to expand its business. The firm questionedcustomers about this method of delivering services.

"We inquired if there was an interest in contract serviceson the radiology side. All the customers said a very clear no,"MacKnight said. "There is a desire on the part of hospitalsto control their radiology services."