Mednax ($MD) has built its $6.7 billion business by providing specialized, outsourced services to hospitals for everything from neonatal, anesthesia, maternal-fetal to pediatric physician subspecialties. Now it's added teleradiology to that mix with the purchase of Virtual Radiologic (vRad) for $500 million in cash.
The acquisition will enable Mednax to offer round-the-clock access to radiologists--even if the hospital doesn't have the budget to staff this position overnight or requires a radiologist with a specific subspecialty.
"Having a teleradiology provider handle overnight and weekend reads used to be a luxury for radiology groups. But it is quickly becoming a necessity," said Mednax CEO Roger Medel on a conference call about the deal. "Hospitals increasingly are demanding 24x7 coverage, as well as access to subspecialty trained radiologists, as the standard of care, and just like they're doing everywhere else, hospitals are looking for improvements in clinical quality and the ability to demonstrate those improvements."
VRad has about $185 million in annual revenue generated through its network of more than 350 radiologists, more than three-quarters of whom are trained in a subspecialty. It reads and interprets more than 5 million diagnostic images annually via vRad's picture archiving and communication system. It currently works with more than 2,100 healthcare facilities globally. The transaction is slated to complete this quarter and to be accretive to earnings.
Teleradiology may be well-positioned to cash in as hospitals look to provide radiologists at off times and with specific subspecialties without taking on the costs associated with a dedicated staff position.
"Teleradiology will play a central role in the radiology industry's future. Based on the combination of hospitals' demand for 24x7 coverage, improved technology to connect teleradiologists with on-site groups and facilities and the need for scale to effectively recruit radiologists nationally and for data analytics, we believe we're past the tipping point of a rapid evolution in the radiology industry," Mednax's Medel said. "And we think that as part of that, teleradiology will grow much faster than the radiology industry as a whole and make-up a growing proportion of overall interpretations."
- here is the release