By Karen Appold
With assistance from Siemens Financial Services (SFS)—the financing arm of Siemens—Jenkintown, Pa-based Tri-State Imaging Group (Tri-State) has increased its number of medical imaging centers by over 50%, to 48 centers, more than doubling its total revenues. With a 5-year $50 million loan, Tri-State was able to refinance its existing debt and purchase 16 new facilities along Florida’s east coast.
Michael R. Clair, MD, Co-Managing Partner, Tri-State Imaging Group
“SFS understands our business,” said Michael R. Clair, MD, co-managing partner of Tri-State, “As a vendor whom we already liked and trusted, they have acted like an interested party and partner. Our agreement will give us greater flexibility, sustainability, and future opportunity.”
According to Anthony Casciano, global head of healthcare finance, SFS, Iselin, NJ, “Not only was it a well-structured transaction for SFS, but it also helps strengthen the larger Siemens relationship with Tri-State, [with Siemens] becoming the primary supplier to the company. The two companies that Tri-State purchased, Signet Diagnostic and Elite Imaging, used Siemens’ technology, and we wanted to preserve that relationship.”
Tri-State believes that growth is the key to survival because medical imaging providers can’t control their reimbursement structure. “But one thing we can control is our cost structure,” said Clair. “The larger you are, the better you can control your cost structure and maintain profitability and sustainability.”
TriState, founded by a group of radiologists, opened the first outpatient open MRI in Philadelphia in 1998. In 2002, it joined with a former associate and added six centers in Delaware.
In addition to offering a specialized niche, Clair says Tri-State’s growth strategy includes clustering centers in a geographic area three to 10 miles apart. “It gives us a marketplace advantage and allows us to control our overhead. We can quickly and inexpensively adjust and move around our local resources of staff, material, and hours to meet changing needs and demand. Moreover, if you saturate a geographic area, that market will only think of your name when needing imaging services. It makes it very difficult for a competitor to come in.”
Due to changes in the reimbursement climate and referral patterns, Tri-State grew again when it acquired eight Medical Resources centers in 2010 in the greater Philadelphia region, which included southern New Jersey. “We were able to buy centers instead of develop de novo centers at a comparable cost,” Clair said.
When looking to expand again, Tri-State stuck to a strategy that had already proven successful and looked for clustered centers. Two companies in Florida fit the bill, enabling two clusters to be added with 16 centers total, predominantly in the Jacksonville and northern Miami areas.
In addition to growing its number of centers, Tri-State has kept on the cusp of technology with its offerings. Its open MRI facilities have expanded to full-service centers equipped with ultra high-field 3T MRIs. Tri-State was also among the first in the area to offer a picture archiving and communication system (PACS), voice recognition, ACR accreditation, CT 3D independent workstations, subspecialty reads, and electronic medical record integration with referrals. Centers are usually located in high traffic areas such as small malls and professional office park settings.
Looking ahead, “Tri-State plans to continue to acquire centers in clusters that will provide marketing leverage,” said Clair. As its equipment ages, Siemens will be its vendor of choice for all purchases—although it is not obligated to purchase from Siemens. “It is in their best interest to have us make decisions that are best for business,” he said, adding, “I hope it’s in their best interest to give us the best deal.”
As for other imaging center owners, Clair advises them to grow in order to stay in business. “Choose a financier who, by understanding your business, can truly be a partner in sustaining and growing your business,” he said. “We had been to many banks; it was a struggle for them to understand our business and our needs.”
Anthony Casciano, Global Head of Healthcare Finance, Siemens Financial Services
Casciano adds that the transaction was rewarding because it demonstrated SFS’ ability to act as a leading financier within the healthcare industry. “We have the unique ability to structure loans across a broad spectrum, from equipment leasing to a senior debt package such as this loan to equity investments in large-scale projects,” said Casciano.
