TeleQuest lands new partner with investment by Wendt-Bristol

August 1, 1999

TeleQuest lands new partner with investment by Wendt-BristolLongtime customer set to acquire up to 40% equity positionTeleradiology services firm TeleQuest has a new partner: Wendt-Bristol Health Services. The health system has reached an

TeleQuest lands new partner with investment by Wendt-Bristol

Longtime customer set to acquire up to 40% equity position

Teleradiology services firm TeleQuest has a new partner: Wendt-Bristol Health Services. The health system has reached an agreement to acquire up to a 40% equity stake in TeleQuest. Closure of the deal is expected by Aug. 1; terms were not released.

The two parties are well known to each other, as Wendt-Bristol was TeleQuest’s first customer three years ago and remains its largest client. TeleQuest provides primary diagnostic reading services for MRI and CT studies conducted at Wendt-Bristol’s six imaging centers.

As a result of this arrangement, Wendt-Bristol has become aware of the benefits of accessing subspecialty expertise at leading academic institutions, said Marvin Kantor, Wendt-Bristol chairman. TeleQuest comprises the University of California, San Francisco, University of Pennsylvania in Philadelphia, Brigham and Women’s Hospital in Boston, Emory University in Atlanta, and Bowman Gray School of Medicine in Winston-Salem, NC.

“Teleradiology gives you the opportunity to access centers that have maintained a reputation for outstanding reading of specific films,” Kantor said. “We’re great believers in teleradiology and think it will have an expanding future. And we wanted to be part of it.”

TeleQuest was formed in 1994 with the goal of establishing a nationwide network of luminary sites that would provide subspecialty interpretation services to hospitals, imaging centers, and other healthcare providers, via teleradiology links. The launch of the company was seen by many industry analysts as an example of how teleradiology would change healthcare by bringing high-quality radiology interpretations to medical facilities.

The launch of TeleQuest engendered controversy among some radiologists, however, who viewed the company’s business model as an intrusion on their turf and were loath to give up lucrative subspecialty interpretations to an outside provider. In addition, several other teleradiology service providers launched soon after TeleQuest, creating heavy competition for potential customers.

In July 1997, TeleQuest underwent restructuring because of slower than expected growth in new overread contracts (PNN 8/97). At that time, high-ranking executives, including CEO William Straub and president Michael Moore, left the company. Representatives of TeleQuest’s main financial backer, Fidelity Investments of Boston, were reportedly behind the company’s restructuring effort. A TeleQuest representative declined to return phone calls seeking comment on the number of clients TeleQuest currently serves.

One of the changes made during the 1997 restructuring was the transfer of management and associated support function of the company’s teleradiology network to Access Radiology of Lexington, MA. That relationship continues, Kantor said.

As a result of the equity investment, Wendt-Bristol will take over operational management of TeleQuest. A realignment of TeleQuest’s equity will occur, with Fidelity and the member institutions holding the remaining shares. Kantor declined to disclose the new ownership breakdown, pending closure of the deal.

Marketing and maintenance will be performed out of TeleQuest’s Philadelphia offices. Following the acquisition, Wendt-Bristol plans to expand TeleQuest’s sales and marketing focus to target freestanding imaging centers and 100-bed to 200-bed community hospitals. Previously, TeleQuest had also set its sights on larger hospitals and diagnostic imaging departments, Kantor said.

Access to subspecialty expertise should be a better selling point for the smaller sites, allowing them to market this capability to their own clients, he said. Wendt-Bristol will also expand TeleQuest’s range of services beyond primary reading to encompass tasks such as second opinion and peer review.

Since the launch of TeleQuest, the technology and market dynamics have evolved to the point where the company has a bright future, Kantor said.

“In the beginning, yes, there was (market) resistance,” he said. “But when it became apparent that the trade-off is for very high quality reads on very sophisticated emerging diagnostic equipment, it became no contest.”