Safe harbors may shift MRI to private offices

November 6, 1991

The safe harbor regulations have apparently dampened U.S. medicalimaging equipment sales. Some scanner purchases have been delayedas doctors who had been close to finalizing center limited partnershipspaused to consider the structures of their joint

The safe harbor regulations have apparently dampened U.S. medicalimaging equipment sales. Some scanner purchases have been delayedas doctors who had been close to finalizing center limited partnershipspaused to consider the structures of their joint ventures in lightof the new regulations.

The Department of Health and Human Services issued the safeharbor rules three months ago.

"Consider the customers who were poised to make a purchase.Everything was in place, and the site was about to be completed.Suddenly, they find their limited partnership might not be acceptableunder safe harbor conditions. Everything is stopped. The nextthing they do is contact their attorneys," said Ronald B.Schilling, senior vice president and general manager of ToshibaAmerica Medical Systems.

The resulting market slowdown, which has hit MRI and CT saleshardest, should be a temporary phenomenon. Over the longer term,however, safe harbors and other restrictions on referring-physicianparticipation in medical joint ventures could create a "paradigmshift" within the medical imaging equipment market, Schillingsaid. Ownership of large capital equipment may move into the privateoffice market--and out of the hands of radiologists.

"That has been a part of the ultrasound market for yearsand now it may be the way MRI is going to go," he said.

Private-practice specialists in neurology, orthopedics andother fields own scanners in their offices outright and bear therisks associated with the imaging equipment. Depending on thevolume of scans, private physicians may decide to purchase theirown low-, mid- or even high-field MRI systems rather than participatein a center as limited partners, he said.

Radiologists could lose a portion of their imaging turf ifthis trend develops. Vendors would not necessarily lose customers,but they would have to react to a shift in users. For instance,private-practice users might not be as familiar with the imagingequipment as radiologists, and vendors could be called on to providemore training, he said.

"The radiologist is trained very thoroughly and scientificallyin how to read images. That is not necessarily the case with othertypes of clinicians," Schilling said.