Building an imaging center: laying the foundation

In Spring 2003, Central Louisiana Imaging, Inc. (CLII), an 11-member radiology group, decided to create a properly configured freestanding imaging center. Before moving forward with the project, CLII conducted extensive market research and learned the following: CLII's ability to draw patients from a broad geography (central Louisiana) would work in its favor While the defined market was shrinking slightly and made up of middle-income households, the population was fairly well insured and aging at a rate comparable to the nation. Given an aging population and advances in technology, market demand for imaging was projected to grow despite the shrinking population. There were opportunities to differentiate on quality technology, service offering, and customer service; the sophistication and positioning of competitors is more important than the sheer number of competitors. CLII's relationship with key referring physicians was likely portable and would translate into volume within the new center. The group measured each potential service or modality against 5 evaluation criteria to determine whether a market opportunity existed: demographic fit, projected market demand, competitive positioning, "anchor service," and synergy with CLII's strategy. Once the market opportunity was confirmed and the service offering was set, CLII completed a 5-year proforma in order to project cash flows, capital costs, and the anticipated return on investment. CLII opened the imaging center in September 2004. Ten months into opeations, the center was a measurable success. The levels, and break-even by month 4, volumes are currently at year 2 levels, and the center recently added nuclear medicine and its second magnetic resonance imaging system-11 months ahead of schedule.