The Loneliest Number
It has been said that the number one is the loneliest number, and it just may be that it is getting a whole lot lonelier. Illustrating this, the recently released 2007 Verispan Diagnostic Imaging Center Market Report features a section that depicts a dramatic change in the number of imaging centers describing themselves as being affiliated with chains, rather than operating as independent, solo organizations. In 2003, 46% of the respondents to the survey identified themselves as being affiliated with chains; a mere four years later, that number had grown to a whopping 73%. What, then, are the implications? Is the solo imaging center dead and gone forever? Are the chains eating up mom-and-pop centers in a Pac-Man frenzy? Can one only survive in the market by merging, affiliating, or joining up with a regional or national chain? Although it is clear that the number of independents is declining, it is by no means clear that the ones that remain are at any serious market disadvantage simply because they remain independent. Many other factors converge to create success or failure. The overall number of imaging centers increased in 2007 by 6.2%, growing by 377 centers to a total of 6,414. In an interesting example of how the market is transforming, the number of new centers continues its methodical pace, in spite of the tensions that exist due to reimbursement pressures. This means that the competitive landscape is getting more complex as new players try to get a piece of the action in what is fast becoming a crowded marketplace in most areas. Flying Solo This does not mean, however, that the solo practice or center is dead—far from it. Just as in any similar business, the chains have certain advantages, but also have some significant disadvantages. In differentiating each of these businesses in any given location, no matter which of these models exists, it is imperative for the imaging center to offer a value proposition that exploits these distinctions while minimizing the respective weaknesses. Some of the most successful practices at providing best-in-class customer service are practices that have one or two centers and a very focused niche that has been carefully carved out over years of attention to the needs and expectations of the referral community. These practices are not likely to feel the impact of a larger and more organized regional player that may not have the same local reputation. Conversely, certain chains that I know that have dedicated themselves to integrating meaningful core values into a highly polished and professional operation have succeeded in identifying competitive soft spots that have been ignored by complacent local practices that had previously been untested by the rigors of tough competition. Depending on the particular strategic plan, one could make that case for a success formula in either market scenario. Indeed, I have worked with many practices in each category to identify opportunities and threats posed by tough competitors. In each case, the added value, market differentiation, culture of innovation and accountability, and ability to focus on superior customer service have been more predictive of success than the size (whether small or large) and scope of the practice. Bureaucracy and complacency can cripple a large regional player. In order to succeed against local centers with entrenched relationships, these companies need to find ways to be nimble and flexible. Conversely, local niche practices need to increase the professionalism of their marketing and customer-service operations in order to be seen as more than the local provider of baked goods and pens. The bottom line is that there are now nearly as many outpatient diagnostic imaging centers (6,414) as there are hospitals (6,973) in the United States, and at this growth rate, outpatient imaging centers will outnumber hospitals in two years. This dynamic sets up a market configuration that will continue to demand high-level focus on the fundamentals of business if one is to be counted among the successful. This will be the same strategic approach necessary whether one decides to remain lonely and independent or surrounded by sister organizations combining to form a large market footprint. In either case, the ability to compete effectively will be dependent on the same variables and the price for winning will be equal, thus creating a certain leveling of the playing field.