Investors Seek Out Radiology Practices: Why it is a great time to look into selling your practice

Even before the Covid-19 pandemic, Radiology practices had emerged as a leading target for many investors in the United States. Similar to other physician organizations, including group practices in Dermatology and Ophthalmology, a radiology practice offers significant opportunities to investors as it relates to scalability and roll-up potential. Money is flowing into these opportunities for acquiring Radiology practices and creating some of the highest valuations that sellers have ever seen.

The trend to invest in Radiology practices began to take off in 2013 and is continuing to accelerate.  The demand has caught the attention of publicly traded companies and private equity groups such as MEDNAX, Envision Healthcare, Radiology Partners, US Radiology Specialists, LucidHealth and a variety of others.

Radiology offers a diverse revenue stream from multiple sources including hospitals, imaging  centers, urgent care and physician clinics.  All age groups are utilizers of Radiology services and the large and growing age group is those eligible for Medicare.

Outside of the large valuations on sale, there are plenty of other reasons why Radiology practice leaders are considering taking a look at selling their practice.  Among them is a fragmented market, changing reimbursement models, hospital consolidation, increasing demand for services and coverage by health systems, and advancing technology in areas such as artificial intelligence are all contributing to M&A activity.[1]

Group leaders, especially in small-to-mid-size practices, look at the infrastructure requirements necessary to remain competitive and grow – PACS, RIS, EHR, AI, revenue cycle management functions and ask themselves if they want to spend millions or look for outside investment.  Added on to these infrastructure cost, is the potential for Medicare reimbursement for radiologist to drop over 10% in 2021.[2]

Lastly, Merrit Hawkins, a leading expert in the physician recruiting industry has stated that there is a shortage of Radiologists with close to 53% of radiologist being 55 years and older.[3]  This is an especially troubling statistic to consider as many radiologist are nearing retirement age and some are choosing to retire early.

Given the potential challenges that face many Radiology practices combined with the high valuations paid on sale, it is prime time to consider selling your practice.

In making that decision, Radiology practice owners should seek out a merger and acquisition (M&A) advisor with experience in healthcare related transactions. An experienced advisor is able to help a seller achieve their goals on sale by leading them through every step of the process. An advisor also protects you from the common pitfalls and nuances associated with these types of transactions. The right M&A advisor ensures the transaction price and terms has factored in all pertinent value drivers and will position and market the practice to a vast array of potential buyers in order to obtain the highest value and best terms in a competitive process.

Turning Point Advisors is uniquely qualified to lead the sale of Radiology practices with a team that includes both a former President of a large radiology group and a former COO of two large radiology groups.  A team that combines both years of M&A experience in healthcare with years of running Radiology practices lets any seller know they will be the best hands possible through this process.

[1] https://www.forbes.com/sites/mergermarket/2018/07/13/consolidation-among-radiology-services-providers-hitting-fevered-pitch/#7f5c7d7a21df

[2] https://www.dotmed.com/news/story/52238?utm_campaign=2020-08-20&utm_source=DOTmed+News&utm_medium=email

[3] AMA Physician Master File 2018