Renaissance Medical sets sights on distressed imaging centers

Renaissance Medical Ventures wants to help struggling outpatient imaging clinics. It wants to show them how to improve their accounting, management, and marketing. But the payoff for doing this will not be consulting fees.

The Seattle company, barely two months old, is determined to acquire, turn around, and integrate 20 distressed facilities into a nationwide network of outpatient centers within five years. Most will likely be focused on diagnostic imaging, although Renaissance is also looking at other medical targets, including outpatient surgery centers and endoscopy suites.

Company cofounder Scott Halliday expects to find these properties in the worst of shape - facing bankruptcy or in its throes. Outpatient facilities are prone to this type of financial malaise due to mismanagement that can be traced to the physicians who own them, he said.

"It's not that doctors don't have business ability so much as they lack business focus," Halliday said. "These are very bright people and they probably all got As in math, but they seem to forget the math after they get their M.D.s."

Radiologists tend to hire as managers techs and radiology administrators, who generally don't have much financial acumen, he said. Failing centers typically have a mismatch between billing and collections. There's trouble tracking down revenue. Contracts with managed care and third-party payers go awry.

Renaissance plans to solve these problems by leveraging the resources and expertise of its affiliated company, National Medical Development Inc. NMDI is expert in coding, billing, collections, and accounting practices, as well as expense and systems analysis. It offers comprehensive information technology systems, management tools, and capital restructuring resources.

NMDI has 15 years of experience developing and running imaging centers in partnership with hospitals and medical groups. With those partners, NMDI has worked on more than $90 million worth of projects involving some 40 centers in eight states.

"When you talk to financial institutions that have a poorly performing asset, they want an entity that has a proven track record of historical operations to come in and turn this asset around in a sustainable way," said Halliday, who is the chair of both NMDI and Renaissance.

Renaissance Medical Ventures will find ailing outpatient centers from any of several sources. Imaging centers in default on lease payments or financing are referred to "work out" teams, which must explore ways of recouping lost revenues. These teams will contact Renaissance, said Antony Clarke, CEO and cofounder of Renaissance Medical Ventures. So will bankruptcy attorneys who specialize in helping creditors.

"We have strong relationships with many in the marketplace, and they will call us directly," he said.