Medical Device Daily

The global economic turmoil hasn't hindered the momentum of the diagnostic imaging market just yet, according to a panel discussion during the RBC Capital Markets (New York) HealthCare Conference at the Westin New York at Times Square.

In fact, the hardships just might, along with a new Democratic administration coming in to power, lead to a significant boost in the market and help rocket some smaller companies to the forefront.

One of the biggest threats to the economic safe haven of imaging companies, however, comes from legislation that could significantly lead to a paradigm shift in reimbursement amounts, panelists said during the webcast session late Wednesday afternoon.

The panel consisted of Paul Viviano, chairman/CEO of Alliance Imaging (Newport Beach, California); David Sankaran, CFO of NightHawk Radiology Holdings (NHWK; Coeur d' Alene, Idaho); Kip Hallman, president/CEO of InSight Health (Lake Forest, California); and Sean Casey, CEO/founder of Virtual Radiologic (Minneapolis).

"The current economic (conditions) haven't had a negative impact on our revenues or volume scans that are being referred to us in our imaging business," Viviano said. "And certainly not in our oncology business either."

Viviano's statements were echoed by other panel members, who said that the market was still strong and sales continue to go as normal, and uninterrupted.

"I think going forward, given the opportunity or risk of rising unemployment that there will be a number of cross-currents in our future," Viviano added.

Those cross-currents include a reduction in reimbursements and tightened pressure from an already strained Medicare. But the saving grace comes from the number of hospitals that can no longer fund their own projects and could turn to these companies as a source of potential revenue.

"We think there's a very significant opportunity for us ... as hospitals are capital-strained, their cost has gone up dramatically and they're going to need someone to partner with for their needs," Viviano said.

"We're in the middle of a paradigm shift in radiology and this sort of legislative change and cost reimbursement pressures serve as catalysts," said Casey. "Conventional practices of radiology that is practiced basically in a cottage industry approach on inferior heterogeneous systems ... will become the ways of the past over time."

The Obama administration could be another significant opportunity not only for diagnostic imaging companies, but healthcare reform as well, according to panelists. And the recent request to add the State Children's Health Insurance Program (SCHIP) in the upcoming stimulus package would be a potential boost of support for diagnostic companies and the healthcare industry overall.

Those who support the measure say moving SCHIP into the stimulus package would give Congress more time to advance the comprehensive health reform bill, which would include a long-term expansion of the popular children's program.

"It's too early to tell in much detail but generally Democratic administrations are better for healthcare service providers than Republicans administrations," Hallman said. "And I think this will ... be the case again and if they do succeed in bringing a whole bunch more uninsured people under the (insured) umbrella, that means a lot more demand for healthcare which translates into more volumes for us up here."

On the other hand, he said that diagnostic imaging could be hindered in some respects.

"On the flip side, the reimbursement side, clearly the fact that Medicare is looking to spend money on lots of different things," Hallman said. "Imaging will likely be in the crosshairs again and it usually is to one extent or another. We happen to think the volume changes will more than offset the reimbursement or payment charges."

Viviano echoed similar statements, but said that there would be a greater spotlight on healthcare reform and that would be the saving grace for med-tech companies.

"Virtually every provider could be subject to reductions in reimbursements the tradeoff will be that about 45 million people will be hopefully have insurance, which will have increased volume along with the aging of the population and other things that will help grow the demand in our business," he said.