Are Big Radiology Groups the Specialty’s Future?

The number of radiology practice consolidations is rapidly growing, causing the valuations for physician groups to significantly increase, says a report from Forbes.

According to investment experts, seven of the top 20 radiology practices have completed merger and acquisition deals in the last year and a half. The spike in consolidations can be attributed to the disheveled market, rearranging reimbursement models, hospital consolidation, the emergence of artificial intelligence and other high-tech systems, and a heightened demand for “services and coverage by health systems,” according to Forbes.

There are a number of factors that push radiology practices to put themselves on the market, including the stress to keeping up with technology updates, competition with bigger groups such as RadPartners and Envision Healthcare, and frustrating billing and coding requirements. Investors are drawn to large radiology groups for their potential to grow through continuous acquisitions and the “relatively stable” governmental and commercial reimbursement rates for imaging services.

RadPartners, which came on the scene in 2012, is one of the largest radiology groups at the frontier of this consolidation movement with over 900 radiologists in almost 600 facilities. They have raised over $430 million from major investors including New Enterprise Associates and Future Fund, and scheduled a $1 billion term loan facility from Golub Capital back in February.