M. Donald Blaufox, MD, PhD, chairman of the Department of Nuclear Medicine at the Albert Einstein College of Medicine and Montefiore Medical Center, New York City, and Ronald Lissak, president and CEO of Integral PET, New York City.

Can positron emission tomography-an imaging modality with a national utilization average of just 1.8 studies per day per installed site, according to one supplier of radioisotopes-form the basis of a dynamic, financially viable enterprise? Ronald Lissak is confident the answer is yes.

It had better be, because Lissak has much riding on being proved right. He is the CEO and president of a New York City-based company that owns and operates PET centers at nine fixed sites in New York, New Jersey, Pennsylvania, and the District of Columbia, along with a pair of mobile units serving about a half-dozen small hospitals in those same states. And Lissak has plans to add more fixed sites and mobile units, perhaps doubling their numbers by year’s end.

Freestanding PET

Adirondack Diagnostic Imaging in Albany, NY, knew it would be taking an unusually big gamble by adding a PET suite, given that the freestanding imaging center had no previous experience with nuclear medicine and was exclusively an open-MRI enterprise. Nevertheless, PET found a home at Adirondack.

“We felt that PET could help us provide enhanced quality of care for cancer patients, who form a significant part of our patient population,” says Jim Quinn, vice president and senior administrator.

Quinn was instrumental in bringing PET to Adirondack, although the center’s radiologists were at first reluctant to go along.

“I began to think about how valuable PET could be in our market from about the time the modality was going through clinical trials and especially after it gained Medicare reimbursement status,” Quinn recalls. “Initially, I was the only one who was excited about it. My partners were cool to the idea because virtually no one was doing PET on a freestanding basis. That made PET seem like an unusually risky proposition for us.”

Still, in deciding to incorporate PET at Adirondack, Quinn says the financial concerns took a back seat to the question of whether the modality would enhance the quality of care delivered by the facility.

“More important to me than the return on investment was the value inherent in being able to provide a greater service to the community, cancer patients in particular,” says Quinn. “However, based on the size of the market’s cancer-patient population and on our historic MRI volume with oncology cases, I was confident that PET could, over time, generate enough referrals to let us at least break even with it.”

Key to making that possible was the relationship Quinn formed with Ronald Lissak, CEO and president of Integral PET Associates, LLC, in New York City. The two met in 2000. And it was Lissak who helped Quinn persuade the Adirondack Diagnostic Imaging radiologists to bring aboard PET.

“Ron’s passion and enthusiasm for PET made his outlining of the benefits of PET and his descriptions of where he thought PET was headed really resonate with my partners,” says Quinn. “But the clincher was Ron’s expertise-he was able to demonstrate a record of success with his other PET centers. He also had the right contacts in the industry as far as being able to obtain things that would be needed to make a successful go of a PET operation, such as timely and reliable access to FDG.”

Soon thereafter, Adirondack entered into a joint-venture agreement with Integral PET. The deal, which has no termination date, obliged Integral PET to lease space in Adirondack’s main facility and provide the equipment and technologists. To ensure that scans would be properly interpreted, Adirondack worked with a PET-experienced nuclear medicine physician based at Albany Medical Center. Adirondack, meanwhile, agreed to handle marketing and billing.

“This arrangement has worked out very well for us, for the community we serve and for Integral PET,” says Quinn. “The beauty of it from my perspective has been that I don’t have ownership responsibility for a $1.6-million piece of equipment. That was especially advantageous during the initial months of operation, when I didn’t know for sure whether this service would prove successful.” Encouraged by the brightening reimbursement picture, Adirondack expanded its PET commitment by working out terms with Integral PET to add a pair of mobile units.

“This allowed us to cover outlying sections of our market where there are patients who need PET service but where the numbers of those patients were too few to justify setting up a second fixed site,” says Quinn.

Adirondack currently performs an average of five PET studies per day, counting the fixed site and mobile units together. Reimbursement varies by payor, but Medicare, as one example, pays approximately $1,900 for each study. Adirondack bills globally and, of the reimbursement received from each claim, an undisclosed portion goes to Adirondack, another part to the Albany Medical Center nuclear physician as a professional fee, and the remainder to Integral PET. Eventually, the partners in this joint venture will share in any profits it generates (Quinn will not say whether it has yet started operating in the black.)

In the original contract negotiations between Adirondack and Integral PET, the imaging center requested no special provisions or protections, save for a noncompete clause that prevents Integral PET from setting up PET operations in other centers or in institutions within Adirondack’s market area unless Adirondack will be included as a joint-venture partner.

Quinn says it is unlikely that Adirondack would ever want to go into the PET business as a solo player. “Being partnered with Integral PET is too advantageous for us to do anything else,” says Quinn.
-Rich Smith

This is risky business, but Lissak is off to a good start. His relatively young company-Integral PET Associates, LLC-reports its sites now average about five scans a day and the trend line is moving in an upward direction from quarter to quarter. Moreover, Integral PET’s cash position is surprisingly strong: the explanation-and this has been key to the firm’s prospects for survival-is that none of the installations have required construction of new facilities.

“All of our sites are located in space we’ve leased from academic medical centers, community hospitals, and freestanding imaging centers,” Lissak says. “Granted, there are some build-out costs associated with these leases, but the costs are minimal compared to what we would have encountered constructing new facilities from the ground up.”

In addition to minimizing construction costs, situating within an established institution or center also gives Integral PET immediate access to a community’s referring physicians and patients. This helps the company quickly build the market for PET, far faster than would be likely were the PET center to be built as a stand-alone entity.

“The fact remains that PET is a modality not yet well enough understood and accepted to be viable in a facility constructed exclusively for and dedicated solely to it,” Lissak believes.


Essentially, the Integral PET strategy is to identify institutions and freestanding centers interested in rounding out their existing complement of imaging modalities with the addition of a PET suite, which Lissak’s company will own and operate. This is an attractive proposition for the enterprise that signs on, Lissak contends.

“Integral PET assumes all the risk,” he says. “We provide the capital equipment, the technologists to run it, the staff to do the billing, and the expertise to develop the local market for the PET service. At some sites, depending on the terms of our arrangement, we may also provide the administrative personnel to handle the patient scheduling. The only thing we don’t provide is the physicians to do the interpretations-that’s a task performed by the nuclear medicine physicians already on-site.”

Under the terms of these pacts, the host facility gets to keep the professional fees generated by each PET study, and is, of course, paid the sum owed by Integral PET for the lease of facility space (Integral PET makes money from the collection of reimbursement on technical fees). However, there is opportunity for the host to increase its income by entering into a joint-venture arrangement with Integral PET.

“As a joint venture, our partners invest some of their own money in the PET unit and share in the profits,” says Lissak.

Several of the Integral PET hosts have thus far opted for a joint venture, although Lissak will not disclose which ones at this point are turning a profit. And, while terms of the joint-venture arrangements vary from site to site, two points always remain the same: first, that Integral PET holds majority ownership and, second, that Integral PET functions as the managing partner.

“Having majority rights and being the managing partner let us ensure there will be continuity in the operation of each site,” Lissak says. “This allows us to more easily develop processes and materials that can be utilized at all the sites. We achieve economies of scale in this way. And, when those economies of scale are coupled with our expertise in PET operations, we’re able to rapidly get each new PET unit up and running and on its way toward success.”


Lissak indicates that the enterprise most apt to prefer a joint venture with him is the one in which the potential of PET as a clinical application and as a business opportunity is readily understood.

That was precisely what Lissak found at Montefiore Medical Center in The Bronx, NY, his first joint-venture partner and the institution that helped give Integral PET its start.

Lissak’s introduction to Montefiore came in 1996, back in the days when he was a venture capitalist involved in helping medical practices finance acquisition of promising technologies. At the time, Montefiore was debating whether to branch into PET. M. Donald Blaufox, MD, PhD, professor and now University Chairman of the Department of Nuclear Medicine at the Albert Einstein College of Medicine and Montefiore Medical Center, was a proponent of PET who had tried without success since the early 1990s to persuade his institutions to purchase the modality. Each time he proposed an acquisition of PET, administrators turned him down, citing the costs of the technology and the fact that Medicare did not reimburse for PET studies. Still, Blaufox kept trying.

“I was such a big advocate because of what PET was able to achieve in a wide variety of conditions, but especially in patients with cancer,” Blaufox tells. “For example, let’s say you’re looking at a CT scan of a patient with lymphoma. You probably won’t be able to say with any certainty whether that lymphoma is under control because the lymph nodes shown in the CT scan look pretty much the same as they did 6 months earlier. But then you do a PET scan. Immediately, you see nodes lighting up, telling you without any doubt that the patient is having a recurrence or is experiencing lesions that you couldn’t even see on the CT. You see more than structures; you see metabolic activity.”

Figure 1. Advertisements developed for Integral’s partners focus on education.

In 1996, Blaufox learned that funding for PET was never likely to be authorized by the hospital. But rather than send him away discouraged, top decision-makers suggested to Blaufox that he should attempt to attract an outside collaborative partner-venture capitalists, perhaps.

The Radiopharmaceutical Connection

When Integral PET Associates, LLC, was in the process of piecing together its first site deals, there was concern that obtaining sufficient quantities of the radiopharmaceutical fluorine 18-labeled deoxyglucose (FDG) would prove difficult-difficult to the point of threatening the ability of the locations to conduct studies at the dates and times scheduled.

“Turning away patients would have been the kiss of death for us as an enterprise trying to build our market,” Integral PET CEO and President Ronald Lissak says. So the company devoted much energy to identifying the most reliable source of FDG.

“It was important to find a supplier that would be able not only to deliver FDG in the right quantities on time but also to provide us with FDG of the highest quality,” Lissak recalls. “Once we found the supplier that could satisfy both these requirements, we negotiated a commitment to treat us as a key customer. That supplier has since played an important role in our success.”

Storage and disposal of nuclear materials are not a problem for Integral PET, since the FDG it buys comes in unit-dose form and, as a rule, does not arrive at the PET sites until the day it is to be administered to patients.

“Each site does have its own hot lab for handling the materials once they’re dropped off by the supplier,” Lissak adds. However, because the sites are handling a radiation-emitting isotope product, they fall under the jurisdiction of the federal Nuclear Regulatory Board. On top of that, the locations also are overseen by state licensing agencies that have authority over nuclear-oriented facilities.

“Each state has its own licensing requirements, and these are invariably very strict,” Lissak says. “Generally, the state regulations-like the federal ones-cover how and where in your facility the nuclear materials can be used, how they are to be stored, how the equipment is installed. We have a full-time health physicist whose job is making sure we are in compliance with the licensing regulations-it is a daunting job since each state also has its own mechanism for monitoring our quality and safety. The physicist’s biggest challenge is making sure the correct processes have been followed and that the hundreds of pages of mandatory report forms are correctly filled out.”

Blaufox proceeded to contact several. Among them was Lissak, who not only was receptive to Blaufox’s proposal, but also readily volunteered ideas to help him ensure the success of the envisioned excursion into PET.

In short order, Blaufox and Lissak reached an agreement calling for the PET center to be administered as a private venture by Lissak but under the operating license of Montefiore Medical Center. For his part, Blaufox agreed to provide the professional staff and clinical expertise to match Lissak’s provision of the PET scanner, the technologists to run it, and a lease fee for the facility space. Additionally, Lissak works with the nuclear medicine department to identify PET research opportunities, including the development of PET protocols.

The company Integral PET Associates was born of this relationship and nourished by Medicare’s 1998 decision to begin reimbursing for PET.

“Medicare reimbursement meant it would be financially feasible to replicate at other locations what we had achieved at Montefiore,” says Lissak.

Of the deals that have been worked out since, about a third of the Integral PET sites are in academic institutions, another third are in community hospitals, and the remainder are in freestanding imaging centers. Lissak recently inked an agreement to operate PET scanners at cancer network sites allied with the University of Pennsylvania (at least initially, this will entail providing mobile services at two community hospitals in the network and setting up fixed sites at two others).

About a year ago, Lissak took over a failing cardiac diagnostic business headquartered in Paoli, Pa, and now uses its administrative infrastructure to conduct operations-including claims preparation-for all of the Integral PET installations.


Integral PET’s site partners each contribute something toward the success of the company, but Montefiore Medical Center is the flagship site where radiologists and nuclear medicine physicians from each newly added Integral PET location go to receive training in the science and art of interpreting PET images.

Before allying with Integral PET, M. Donald Blaufox, MD, PhD, had tried without success to bring PET to Montefiore Medical Center since the early 1990s.

“PET images are of sufficient complexity that it takes about a week of instruction for most physicians to begin understanding what they’re looking at when they pick up a study,” says Lissak. “It takes quite a while for physicians to be fully trained in PET reading. We consider that first week of training to be just the beginning of the process.”

Following completion of the training course and their return home, these clinicians continue to be supported for a time by Montefiore.

“The PET specialists at Montefiore provide an over-read service as a way to continue the training and to make sure that newcomers to PET are confident they are providing the highest quality service,” says Lissak. “It also helps reinforce relationships between the clinicians who received training and the Montefiore team that administered it. We want these relationships to develop so that the clinicians we trained will feel comfortable about contacting Montefiore any time they have questions about interpreting PET images.”

Montefiore also administers a quality-control program on behalf of Integral PET by engaging in blind readings of previously interpreted images culled at random from the various sites. But, in the long run, perhaps the most important contribution of Montefiore is its development of clinical protocols for use by the Integral PET sites.

“Protocols are crucial to the success of a PET site,” says Lissak. “Although PET has been used in research for many years, it is just now entering what I would characterize as mainstream medicine and our knowledge of its potential applications is expanding rapidly. As such, it’s incumbent on us, as PET advocates interested in providing a quality medical service, to do the research to help us take the technology as far as it can go in mainstream medicine and utilize it to its fullest advantage. That’s where the protocols come in.”

Market development

Because PET is so new to the mainstream, Lissak says it has been a challenge to persuade referring physicians to utilize the modality. Accordingly, education-getting referring physicians to understand what PET can mean for their practices-is an essential part of developing a PET enterprise into an economically successful venture, he reveals.

“Our strategy for helping referring physicians get beyond their hesitancy to embrace PET entails providing them with information-journal articles, mainly-that succinctly summarizes PET’s capabilities and details the ways in which it can have a positive impact on their management of patients,” he says. “Our strategy also involves the development of relationships with referring physicians who can act as advocates of PET whenever they gather with their colleagues, such as at pulmonary conferences and pulmonary tumor boards.

“There also is quite a bit of physician-to-physician marketing. We start by conducting lectures and grand rounds for the prospective referring physicians. Delivering these lectures and leading these grand rounds will be a nuclear medicine physician who is a recognized PET authority and someone with whom we have an existing relationship. Step two involves dispatching our marketing team to the offices of individual referring physicians. This affords us an opportunity to explain the technology and the processes of how to schedule these studies, how to obtain preapproval from payors, and how to use the test appropriately.” Integral maintains a marketing staff of eight people.

To further promote PET’s potential, Lissak and Blaufox are serving as cochairmen of a committee of the New York chapter of the Society of Nuclear Medicine that is responsible for developing better ways of making the public and referring physicians more aware of PET.

The marketing strategy also targets patients, even though PET is not available without a medical referral.

“We place print advertisements and broadcast commercials in consumer media, and always they have an educational focus so that patients will better understand the test when their physicians request they get a scan-and know to ask about it as a diagnostic option,” says Lissak. “The advertisements also are site-specific in order to build awareness of our local PET center. Above and beyond that, we leverage our advertising as a means of supporting community causes and generating goodwill-for example, in joint promotional programs with stations, we purchase advertising and make a donation to a local cancer group; these stations then air public-service announcements and favorable news reports that increase the visibility of the local cause.

“We’re also in the process of becoming the PET sponsor for a web site known as OncoLink. That’s the number-one portal for people in search of information about cancer-the site receives up to 10 million hits a month. We can send our patients to that site to find out more information about our delivery system.”


Payors, it seems, need educating too. Although PET today is generally accepted as a reimbursable procedure by all types of health plans, getting paid fully is seldom an assured matter.

“Payors subject claims for PET services to tight scrutiny,” Lissak says. “A few even persist in calling PET an investigational device, using that as a pretext for denying claims. So we still sometimes have to fight to get paid.”

Of course, problems with payors are not the only challenge confronting Integral PET. The company also grapples with the problem of technologist recruitment.

“There’s a shortage of PET technologists, and that’s because, until fairly recently, nuclear medicine has been seen as a field with no future,” Lissak notes. “As such, people going to technologist schools were choosing to focus on other diagnostic imaging subspecialties.”

Integral PET is giving consideration to proactively addressing the technologist shortage. One strategy on the table is the possibility of visiting schools to encourage first-year student technologists to specialize in nuclear medicine and PET. A related idea is to offer students who express interest in becoming nuclear-medicine technologists hands-on training in an Integral PET-operated center.

“There’s a lot of excitement being generated around nuclear medicine now, so we’re beginning to see an increase in the number of students wanting to become trained in this field,” Lissak says. “PET is part of the source of that excitement.”

Technologist shortage or not, Lissak remains convinced that Integral PET is going to fly high.

“We’re still just at the forefront of the explosion of PET’s integration into medical practice,” he says. “I see us branching out into relationships with radiation oncologists and radiation therapists as well as possibly doing joint ventures with oncology groups. Five years from now, I see Integral PET as the same company it is today, with the same commitment to quality of care-only I see it as a much bigger company.

“I’m looking at PET as a long-term business, and I don’t envision failing at it. That’s one reason why I don’t have an exit strategy.”

Rich Smith is a contributing writer for Decisions in Axis Imaging News.