HBI Deals+Insights / Internationalisation

Opportunities in diagnostic imaging and teleradiology

The imaging sector presents a significant opportunity for private investors and operators, given its strong fundamentals and low levels of consolidation. Speakers on the ‘Opportunities in diagnostic imaging and teleradiology’ panel at HBI 2023 were particularly enthusiastic about the opportunity in Germany and France, and about building teleradiology platforms.

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Mariana Sampaio e Mello, assistant director at multinational investment bank and financial services company Rothschild & Co, set out the current state of play and opportunities in the European imaging market in her opening presentation. 

The last few years has seen the emergence of a handful of pan-European platforms – Affidea, Alliance Medical, Unilabs, Evidia and Ergea. This has been driven by investments from infrastructure funds such as EQT, Infravia, DWS and Icon Infrastructure, as well as family/foundation holdings, such as GBL, A.P. Moller and Telemos Capital. 

These long-term capital investors are driven to the sector by strong fundamentals: high barriers to entry (due to being heavily regulated and asset-heavy), low reputational risk, increasing share of volumes delivered by the private sector (coming both from increasing private pay and public outsourcing), low levels of consolidation, potential synergies with other parts of the patient pathway, and the potential of teleradiology and AI to improve efficiency and quality. Large scale platforms also have some benefits of scale, particularly in procurements.

Germany and France present the biggest opportunities, given both markets are less than 15% consolidated. France has seen “lightening speed consolidation” over the past 12 months, with private equity investors entering the market and the creation of radiologist-led networks. But there is a consolidation opportunity across the whole of Europe.

Steven Bird, CEO of UK operator Medical Imaging Partnership, commented that he increasingly hears people saying that the private sector has a role to play, and there is therefore an opportunity to move into the sector more aggressively. Currently the vast majority of imaging services in the UK are provided by the NHS.

Jan Hörnström, CEO at Evidia Nordics (the Nordic branch of German operator Evidia), stated that the only way to deal with the worsening demand-supply imbalance is with private pay, given the unsustainability of public health systems.

Teleradiology presents another big opportunity, but is “still in its infancy, or adolescence” according to Rob Anderson, Global CEO at Everlight Radiology, a UK teleradiology provider. 

Anderson explained that Everlight uses a ‘follow the sun’ model, under which the company uses radiologists from all around the world to provide a 24-hour service, shifting to wherever it is day time throughout the 24-hour period. However, the regulatory restrictions on the ability of teleradiology companies to use radiologists in other countries are still too stringent. “The regulation is so out of pace. We as an industry can help with this, but ultimately it is the responsibility of the government.”

We would welcome your thoughts on this story. Email your views to Martin De Benito Gellner or call 0207 183 3779.