Liftoff at last for JV many months in the making

Two independent radiology practices in New York’s Hudson Valley have finalized a plan, three years in the works, to form a joint venture and begin actively inviting other groups to climb aboard.

Empire Health Support Services announced its own birth March 30. The formal launch marked the culmination of a process that began in 2012 over an informal chat between Joseph Racanelli, MD, president of Radiologic Associates in Middletown, and Scott Luchs, MD, president of Suffern-based Ramapo Radiology Associates.

The JV arrangement will allow each group to maintain its independence while pooling resources, sharing clinical capabilities and enjoying economies of scale in purchasing.

In a joint announcement, Empire noted that hospitals and integrated delivery networks, adjusting for life under the Affordable Care Act, continue to consolidate. As they do so, they increase their leverage to demand better performance from radiologists around efficiency, accuracy and alignment with the hospital’s mission.

The Empire JV brings together 38 board-certified radiologists to better align with affiliated hospitals and offer them subspecialty reads around the clock. The deal was co-initiated, and largely facilitated, by Milwaukee-based Integrated Radiology Partners (IRP).

In a post-announcement interview, Racanelli spoke with ImagingBiz about the JV’s tentative beginnings and ambitious plans.

“We had been working with [IRP parent company] IMP as our billing company,” Racanelli recalled. “Their president, Bill Pickart, came to us and said he’d been kicking around an idea with other groups. Coincidentally, right around this time, Ramapo Radiology called to remind me that we’d been talking about getting together for dinner for some time. Dr. Luchs said, ‘Why don’t we do that now?’”

They started fleshing out the particulars fairly quickly after that, Racanelli said, although it did take those three years to dot all the i’s and cross all the t’s. “Everything in healthcare had been changing, and not to my benefit,” he said. “I knew I had to do something to strategically position myself to keep going, to be viable.”

Preserving autonomy

Asked what aspects of IRP’s approach to the JV option made it the right blueprint for Empire, Racanelli answered with one word: autonomy.

“We are not unique like that,” he said. “If you have a room full of doctors my age and older—I’m 53—and you say the word merger, you will clear out that room in half a millisecond. Most doctors in [an established] practice, and this is especially true in radiology, think that the way they do things is the best way to do things. If we can find a way to keep that going in a changing world, why wouldn’t we?”  

Racanelli said he hopes the JV will grow quickly as new groups are recruited from all around the country to sign on. “We’d like it to get as big as it wants to be,” he said.

Groups mulling JV exploration stand to benefit from Empire’s three years of experience putting one together, he added. “We have broken the ice, and people coming up behind us are welcome to learn from what we’ve learned. They have a chance to get an accelerated ride” to the starting gate.

If not for a JV as an option, Racanelli would be pessimistic about the future. “It would be a waiting game, watching for some other shoe to drop,” he explained. “Because I have this option, I’m excited about the future.” Not least, he said, because there are advantages in collaborating with one another.

“I don’t think we’ve exhausted our store of ideas on how to improve—how to improve our practices and how to improve the JV. Bringing in new people is going to bring in even more new ideas.”

Then too, the bigger they get, the better the deals on supplies, equipment, insurance and other operational necessities, not to mention office niceties.

Is he concerned about confusing referrers and patients as Empire Health Support Services grows into a brand while Radiologic Associates and Ramapo Radiology—and any other groups that join the JV—hum along as usual?

“No, we’re not concerned about that,” Racanelli replied. “With Empire, it’s not just the radiology we’re providing. We can also provide some elements of business consulting. For example, we have a higher-level businessperson who helps run our practice. So if a JV member group doesn’t have that business expertise—they can’t afford it because they aren’t big enough for it—now they can easily get it.”

Racanelli wrapped up the interview by pointing out that, in the Northeast as in some other parts of the country, practices with five to 20 radiologists are the norm. “If you’re a practice of five right now, you are in jeopardy. There are no two ways about it. You’ve got a problem. And there’s only one good way to solve it. Either somebody buys you or you take that big leap and merge with somebody. Or you can do what we’re doing. Because as rural as you think you are, you won’t be rural in another year or two. You’ve got to do something.”

Click here to hear from Racanelli’s JV business partner and here for an overview of the JV option by IRP’s CEO.