CXOFiles No.6 Q & A: Scott Arant American Health Imaging: Bulwark of Single-Modality Model

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Scott Arant, CEO of American Health Imaging (AHI), a 20-center chain based in Decatur, Ga, started operations in June of 1998 in Decatur, Ga, an eastside suburb of Atlanta, with an open MRI, as did many other entrepreneurs around the nation. The facility flourished in short time, and AHI sold a portion of the company to private investors to further develop the company. Over the next five years, the company opened five more imaging facilities in Georgia, Alabama, Dallas, Tex, and Tallahassee, Fla. With competition intensifying, AHI switched from a de novo model to an acquisition model and acquired three centers from Radiologix around 2002 (two of which were recently sold in Orlando). The company subsequently got back into de novo development, building two centers in Indianapolis and one in Columbus, Ohio. It subsequently acquired five centers in Texas, and opened two additional centers, one in Austin, Tex, and one in Omaha, Neb. AHI is currently in a holding pattern, focusing on efficiency and keeping an eye on the market.

“We don’t have any aspirations about being the largest in the business. We’ll let RadNet and MedQuest chase that dream. We are committed to having quality facilities in markets that truly need these services or markets where we truly believe we can provide a competitive advantage, and therefore track the business. Size is not our game. Quality is our game.”
—Scott Arant, CEO, American Health Imaging talked with Arant about quality imaging and strategies to maintain quality in the current reimbursement environment.

ImagingBiz: How does AHI define quality?
Arant: Obviously, you will define it in your images, in the radiologists you use: are they board certified, are they fellowship trained? There are some companies that are doing it in India and I think that’s a big mistake. Let’s face it, MRI machines for the most part are MRI machines. There’s not a lot of difference [between vendors]. So quality comes down to the patient experience more than anything. In health care, there’s not a lot of customer service. You walk into a doctor’s office and they open a little window, say sign this, and then they close the window. Then of course you wait for an hour. That’s not service.

We believe that patients and referring physicians have a choice, with all of the competition out there. We believe our experience has to be different. So when you walk into one of our facilities, you are going to walk into a significantly large waiting room that has been decorated to feel warm, inviting, and comfortable. It’s going to have nice furniture, it won’t be from the ‘60s or ‘70s. You will not find any tile, such as hospitals use, and you won’t find any white paint. We really want our centers to be warm and inviting. And all of our people, are trained to focus in on the customer and treat them as a customer, not a patient. Again, they have choices, and they can go spend their money elsewhere. MRI and CT scans are cheap, they are getting cheaper, but they are not necessarily cheap. If you go into a store to spend $500, you want to feel like you are being well taken care of. What is your current business model and how has it changed over the years?
Arant: It is to do nothing more than get our house in order and run as efficient a business as we possibly can, due to the changes in the industry. That has been our focus in the past year and a half since the DRA was announced in February of ’06, and it is going to continue to be our focus probably for the next year, year and a half. We are doing little-to-no development, no acquisitions at this time, although we are staying knowledgeable about what is going on in the market and keeping our pipeline full. We don’t have any growth plans right now, because we want to see how all of this shakes out.

Going forward, as this DRA cloud and some of the reimbursement troubles move off, we will probably get back to some form of development, probably in the way of acquisitions. I don’t think de novo is the way to go. But we will be very, very strategic in that. We are not going to buy centers just to buy centers. We are going to backfill where our current footprints are: ie, Georgia, Texas, and the Midwest. Beyond that we are going to begin looking at diversification and not bank on imaging for the next 10 years. Imaging is going to continue to feel pressure. So we feel as a health care company, we have to diversify and get into other things, and what