How the First MRI Got Its Start in a McDonalds

It was 1983 and Bob Kagan wanted to revolutionize medicine. That year, after seeing a MRI at a conference in Colorado, Kagan sought to bring the technology to Holy Cross Hospital in Ft Lauderdale, Florida, where he worked as a pathologist. His supervisors passed on the idea, and so he took the machine to a defunct McDonald’s building where he started the first outpatient medical imaging center in the country.

In an in-depth history of MRI for Forbes, journalist Ellie Kincaid describes how Kagan turned MRI services into a $5 billion global industry. For the first three years after he converted the McDonald’s space, Kagan didn’t see a profit. At the time, physicians were only interested in using MRI scans if they couldn’t determine a diagnosis. In the late 1980s, just after Medicare was implemented, the MRI business began to thrive. Government reimbursement came out to $1,800 a scan, and patients were booking appointments at Kagan’s center from 7 am to 11 am, seven days a week.

“Doctors get more information from MRI, and patients want the best care possible, so that can lead to more spending very quickly,” said Joseph Dieleman, PhD, assistant professor of the Institute for Health Metrics and Evaluation at the University of Washington. A 1985 article in the Los Angeles Times echoed this premonition, “Some places are going to make so much money it is going to be obscene.”

Kagan eventually opened up six more facilities, including a few mobile centers, but sold them all off except for his original McDonalds outpost. Due to rising costs and competition, he expanded services to include CT, PET, and ultrasound. Although his center makes at least $5 million a year, scanning expenses often leave him breaking even.