HBI 2021

New Vistas, New Opportunities

September 20-22, Westminster Park Plaza, London

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Imaging Services (Outpatient) Market Report

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EMEA Overview: Imaging Services (Outpatient)

For-profit imaging services growth

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For-profit imaging services by country

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Top companies marketshare (2020)

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COVID-19 update (June 8, 2021) 

Overall, we are forecasting a 7% fall for the imaging sector in EMEA in 2020 due to Covid, with a 10% bounce back in 2021. 

COVID-19 update (June 12, 2020) 

National lockdowns in response to the COVID-19 epidemic hit the private imaging sector hard as volumes dropped sharply from fewer hospital, GP or self-referrals. 

Private sector imaging volumes dropped 80-90% across the European sector during the peak of the epidemic in March and April. Hospitals rarely outsource emergency CT and X-ray departments, so imaging operators provide almost exclusively elective imaging services. 

Operators, for the most part, have not had the warm blanket of cost-covering block-purchases of capacity that some hospital operators have enjoyed, and revenue protection for lost activity has tended to be lower or non-existent. Moody’s downgraded pan-European imaging, outpatient and radiotherapy provider Affidea from ‘stable’ to ‘negative’ on June 2 in light of the COVID-19 impact. 

Outsourcing markets in the UK and Nordics have fared better thanks to revenue floors while in Poland volume agreements with the statutory insurance fund have had some element of revenue protection too. But cash markets are down substantially in all countries. 

In general it seems that imaging operators in some countries can expect a quicker bounce back to routine activity than for hospitals. Patients seem more willing to visit outpatient units where they know there are no infected patients. And unlike hospital surgeons, radiologists in private practice are not waiting for their anaesthesiologists to return from COVID wards to resume normal activity, nor is their capacity of strategic importance in the eventuality of a large second wave of infections. 

However, imaging operators were far less willing or able to give full-year estimates when we asked, compared to hospital and teleradiology operators. So we think there is a lot of uncertainty around the full-year picture.

Fall by market

HBI is forecasting steeper 2020 revenue falls in CEE of 20-40% where operators are either more reliant on cash (Poland, Romania, Hungary) or do not seem to enjoy any level of revenue protection from the public payor (Slovakia/Czechia). 

The fall is lower at 5-10% in countries where the majority of activity is funded by statutory insurance and the epidemic was less extreme (DACH) or some revenue protection will buffer against the sharp volume drops (France). 

We are expecting even lower drops in Nordic NHS countries. Norway, Finland and Denmark kept infections low and returned to normal activity quicker while operators in Sweden continued running outsourced services and enjoyed some level of revenue protection from County Councils. The same is partially true of the UK where we estimate that half of the market is outsourcing. NHS England paid Alliance Medical average revenues for its big PET-CT contract during March/April. 

Reduced throughput

An Irish hospital source reckoned outpatient and diagnostic departments’ efficiency would be severely reduced because of infection control measures. A pan-European adds that things like washing scanners between patients reduced throughput by 20%. 

A Swiss operator disagrees, saying that imaging clinics there will not see a fall in efficiency, though throughput tends to be lower in high-tariff Switzerland anyway (especially outside the big cities). They argue that since outpatient imaging is all elective, by-appointment only, planning is much easier than in other outpatient departments (primary care, dentistry etc) and hygiene measures are less onerous. Many clinics in Switzerland have different waiting rooms for different modalities.  

However, we think that this might be true only in DACH or countries where the epidemic was less extreme. The UK and Latin countries are imposing more stringent hygiene measures which are likely to affect throughput to a greater extent. 

New financing models 

Our Swiss source reckoned the national lockdowns and drops in activity would mean an increase in usage of pay-per-use leasing models for imaging modalities in future. However, a Nordic source reckoned that suppliers would price that risk in making an already bad model of leasing (in his view) worse for the operator. A Greek operator said that the pay-per-use model was unfeasible in that market even before COVID-19. The model is common for imaging in the Middle East. 

Introduction (pre-COVID)
 
Radiologists are the doctors who save lives with the lights off. But demand for their services is growing 5-10% globally and the radiologist workforce is increasing by barely a fifth of that so something has to give. Three big trends are evident.
 
One is the remote reading of images, teleradiology, which has been around since the 90s but is now growing 20-30% annually in Europe’s biggest markets as the scarcity starts to bite.  
 
Second, Artificial intelligence (AI) algorithms have the potential to triage and, in the long term, interpret images instead of humans. The technology is now demonstrably as good as or better than radiologists at specific tasks like detecting small legions, but all existing algorithms collectively can still only do a fraction of what a jack-of-all-trades radiologist can do. See our recent feature here.
 
Thirdly, tariff and regulatory pressure and an ageing radiology profession are forcing a slow but evident consolidation of the for-profit outpatient radiology sector, in the countries where it exists. Even the most developed outpatient markets of Switzerland, Germany and France are respectively less than 20%, 10% and 5% consolidated by the largest 4-5 players. 
 
Across the 21 countries for which we have reliable market size figures, the for-profit imaging sector grew 7% to reach €21.2bn in 2019. But 75% of that market size figure is made up of Germany, Switzerland and France.
 
Volume increases and a changing mix of modalities towards newer, higher reimbursed scans are driving growth. Tariff cuts, limited imaging budget increases and regulatory barriers, especially in the big three, are mitigating growth.
 
Acknowledgements
 
This report was written with the kind help of the following imaging sector specialists (along with their region of operation/expertise):
 
Giuseppe Recchi, CEO, Affidea (pan-European)
Martin Hardens, CEO, Rad-x (DACH and France)
Dr Ralph Hefti, CEO, MedEuropa & former Switzerland CEO for Affidea (DACH)
Nicolas Weber, co-founder, Medneo (UK, Germany and Switzerland)
Tomas Zednicek, senior managing partner, Pro Partners (CEE)
Andrzej Różycki, senior managing partner, Tar Heel Capital (Poland)
Mustafa Qadada, Regional Sales Manager, Siemens Middle East (Saudi Arabia)
Sokratis Gourlis, board member, Iatropolis (Greece)
Dr Antonio Luna, Chief Medical Officer, Health Time (Spain)
Barry Downes, country manager for Affidea Ireland (Ireland)
 
...alongside several other expert sources who preferred to remain anonymous.
 
Methodology
 
This report covers all imaging services with a focus on the more advanced modalities, namely MRI, CT, PET and SPECT. We will generally point out if our figures are narrower and completely exclude more basic modalities like X-rays and ultrasound, but note that these have a lower reimbursement value so will usually be a minority of the market.
 
Note that PET and SPECT come under nuclear medicine, which is differentiated from radiology by the injection of a radioactive tracer. However, in common parlance, radiology is sometimes broadened to include these modalities so this report may sometimes use radiology and imaging interchangeably.
 
Nuclear medicine is also more likely to be kept within public hospitals in more mature, well-funded markets, while in less mature or underfunded ones the private sector is much more present because of the lack of funds and long-term planning in the public sector. A Greek operator claims to do half of the country’s PET scans, for example.
 
Overall growth and utilisation from country to country
 
OECD data shows that, by volumes, demand for positron emission tomography (PET) is growing by an average of 9.2%, computed tomography (CT) by 5.3% and MRIs around 5% each year, from 2014-2017 across 14 of the countries covered in this report. We are told it may underreport private sector activity and that the figures for MRIs and CTs are probably growing faster, especially for MRIs. PET is the newest modality of the three and so is growing the fastest.
 
The growth figures in our report are estimates based on the balance of volume growth, price adjustments and changing modality mix. MRIs are gradually replacing CTs for some indications while CTs may be replacing X-rays in some areas.
 
There is little similarity between different countries approach to imaging or between the size and usage levels of imaging parcs (a nation’s total inventory of imaging stock). When looking at the OECD data on scans per person in Europe, some patterns emerge. While the data might not include all private sector activity, it does confirm much anecdotal evidence around usage.  
 
The top half of countries ranked by MRI exams-per-person from 2013 to 2017 are all Western European, plus Turkey, and the bottom half all in East Europe. The highest is Germany (143 per 1000 people, 2016 – no 2017 data) and the lowest is Poland (36.3 per 1000 people, 2017).
 
Non-OECD figures say Turkey is even higher, at 190/1000 in 2016, while Norway and Switzerland are also very high according to local sources.  
 
For PET scans, a similar East-West pattern emerges, although Germany finds itself fifth from bottom and the Czech Republic is in the top third, while CT is a little jumbled further with Slovakia fourth-highest.
 
We can also look at usage per machine. A Swiss clinic might process 10 patients a day, although this is likely to have changed since 2014 as tariff cuts make it a volumes game. In Hungary or Turkey the figure would be more like 50-80.
 
This shows that there is huge under utilisation of the imaging parc in most countries.

OECD data shows the leaders in examinations-per-scanner are France, Israel, Hungary and Turkey (where the data is available), across CT, MRI and PET modalities. Slovakia and Czechia also score well but slightly lower than the above three. Those languishing at the bottom, with usage as low as 5-10% of the leaders, are Finland and Italy. Other countries lie somewhere in the middle. The data doesn't cover the UK but consultant Hugh Risebow reckons it is near the top. 
 
But note that in Hungary, the number of machines and therefore scans-per-person is at the lower end, and the country has one of the worst survival rates for cancer in Europe. So usage-per-scanner is not the best measure of overall allocation of resources according to need.
 
Market dynamics
 
In some countries, primary care doctors can commission scans routinely. In others, like the UK, only specialists can. In Germany, some forms of cancer do not qualify for CT diagnostics. In the UAE, physicians receive commissions from lab and imaging providers for referring them for tests, incentivising activity.
 
These issues are becoming political with claims being made that the UK's poor cancer survival rates are partly a reflection of poor diagnostics.
 
Within NHS models funded out of general taxation (Nordics, UK, Spain and some of Eastern Europe) diagnostic imaging typically happens within a public-sector hospital setting with little outpatient presence. Here, the for-profit market is in hospital outsourcing.
 
In Bismarckian insurance-based systems, (France, Portugal, Switzerland, Germany and Italy) much more happens in outpatient settings, which are often historically owned by doctors.
 
Rules in France, the Netherlands, Belgium and South Africa make it difficult for external or institutional investors to consolidate outpatient centres, though it is starting to happen in France and South Africa by acquiring the physical assets of the practice and leasing them to the radiologists. 
 
Imaging also happens, of course, in for-profit hospitals. But typically hospitals under a certain size may not be able to justify the capital expenditure in high-end PET/CT and MRI machines and so will outsource this to local outpatient radiology centres. Larger hospitals, over 100 beds, are more likely to do their own as are hospitals in statutory insurance markets where being a recognised provider with the statutory payors requires you to have imaging facilities on-site (sometimes even if they aren't really needed).  
 
Radiology is 3% of EMEA hospital group Mediclinic’s 2018 sales, although this will mostly be from Switzerland and the UAE, while a 2014 competition report found that 1.5% of the UK private hospital sector’s revenue was from clinical radiology. Figures indicate it is much higher in the Middle East, around 5-10% of listed Saudi hospital groups like Dallah and Al Hammadi based on the available data. Modalities may have been introduced more recently meaning higher reimbursement for scans. It is even higher in the USA where imaging represents nearly 10% of all healthcare expenditure.
 
A big West European operator reckons that typically private hospitals commission about half the rate of images as public sector counterparts, albeit at a higher price.
 
Private sector plays  
 
The private sector plays in three main ways.
 
Outpatient consolidator and polyclinics
 
In the Nordics, Russia, Italy, Portugal, Spain, Switzerland, Germany, Romania and other East European countries, outpatient radiology centres can be easily bought and sold. But the consolidation process in all except Switzerland is still in its infancy.
 
In Germany issues around the economic viability of the consolidation model remain although several large private equity firms have acquired consolidator platforms and several groups have reached €100m in annual sales. In Italy, where centres have been bought and sold for many years the market leader Alliance Medical probably controls centres which together do no more than 1-2% of all imaging (inpatient and outpatient) that takes place across the public and for-profit sector.
 
Consolidation is more advanced in Switzerland and Portugal but consolidation levels (market share by top 4-5 players) are still respectively below 50% and 20%. Private equity is frothing at the mouth in anticipation of the opportunity in France where there are few multi-clinic groups and the ten largest hold under 10% of the €3.5-3.6bn outpatient market, but whoever jumps first will face a whirlwind of opposition from the medical profession, like Labco did in the laboratory sector.
 
Consolidation of the sector is much less advanced than in clinical laboratories. Only Affidea, Alliance Medical and lab operator Unilabs have pan-European footprints, with Alliance mainly in the UK and Italy. Unilabs gets 20% of its sales from imaging, mainly in Spain, Portugal and the Nordics. In general, mid-sized operators do not seem particularly interested in selling, seeing more opportunity in consolidating their home market.

Like in the broader outpatient sector, many consolidation attempts and single-centre acquisitions fail because the new owners cannot keep the leading specialists on board. A practice with five radiologists may get 80% of its referrals through one of them with the other four doing the image reporting. If that radiologist leaves, the practice is finished. Higher start-up capital costs make this less of an issue than in, say, ophthalmology or dentistry, but it is still a problem. 
 
Groups offering broader outpatient services often tend to be major players in the imaging sector. It is an integral part of the business model in big, for-profit occupational healthcare players such as Terveystalo and Mehilainen in Finland, in Bupa/Luxmed in Poland, Regina Maria and Medlife in Romania and across Eastern Europe for Medicover. Affidea is increasingly moving into broader outpatient services in countries like Ireland, Lithuania and Italy. Alliance has many centres in Italy which offer a mix of labs, imaging and primary care.
 
Imaging groups moving into broader outpatient can demonstrate that growth is lacking in diagnostics (Ireland, for example) but it’s also an easy feeder for your heavy imaging machines.
 
Outsourcing partner
 
In many countries imaging, whether inpatient or outpatient, has been outsourced to for-profit providers. This is very much the model pursued in the UK by Alliance Medical, Affidea in Eastern Europe, and Aleris and Unilabs in the Nordics. Deals can be struck at the hospital level, regionally or nationally.
 
There have been huge tenders in the UK and substantial ones in Sweden and Norway. The process has been more piecemeal in Germany with individual hospitals making the decision.
 
There is a great deal of political resistance to outsourcing in southern/Latin Europe. As far as we are aware no one has done deals in France. That compares with nearly 20% of all images in the UK, according to Alliance Medical. Outsourcing has come to a halt in some Spanish regions with Valencia and Catalonia both insourcing.
 
The role the private sector plays varies. But, in general, it provides the equipment, the technicians and the IT systems to handle waiting lists and referrals. Radiographers may or may not be employed by the private operator.  Radiologists almost always continue to be employed by the public sector. Often the private operator builds the centre which it then runs under contracts with the local hospital network. Mobile units can also be deployed to mop up waiting lists. For-profit operators may also be allowed to do some private business from the facilities.
 
Teleradiology
 
Here we briefly go through teleradiology - for a more detailed overview with country-specific analysis see our Teleradiology sub-sector report. 

The remote interpretation of images has been going on since the advent of the internet, typically with radiologists working overtime or freelancing from home, sometimes on a very informal, piecemeal basis.  The benefit of it is much higher through-put per radiologist. Basically, all big hospitals use teleradiology to some extent, mostly for night time emergency readings.  It is also used for remote hospitals who struggle to recruit radiologists locally in areas like Northern Sweden.
 
Recent and growing shortages of radiologists have led to big growth in teleradiology for-profit operators which essentially operate as agencies connecting supply and demand. This formal, for-profit sector is growing at around 30% a year in many European countries. Medica, the largest player in the UK, has even IPOed on the back of strong sales growth.
 
Teleradiology is of course also deployed internally within private outpatient networks and as part of big outsourcing contracts. But Affidea, the largest provider of mainly imaging services in Europe, says it is a single-digit-€m provider of teleradiology, indicating that it is just 2-3% of its business at most. It uses teleradiology internally in all its markets, especially in Ireland where all its radiologists sit in one centre, but does not typically offer this service externally.
 
Unilabs bought what is one of Europe’s largest teleradiology operators by revenue, The Telemedicine Clinic based in Spain. But as a percentage of its sales – possibly even its imaging sales – teleradiology is still likely to be low single-digits.
 
The remote reading of images requires the transfer of huge amounts of patient data and the EU’s General Data Protection Regulation (GDPR), implemented in 2018, has scared the industry from diving headfirst into teleradiology. Penalties for mishandling patient data can be 2-4% of annual turnover, which could all but wipe out profits in some cases.
 
Countries where the public sector has embraced teleradiology more than most include the UK, Nordics, France and Poland, but we suspect it is being used ubiquitously. Often the medical profession seeks to outlaw foreign interpretation of images, most commonly by making it illegal to have an image reported on by a radiologist who has not trained or practiced in the country from which the image is taken. TMC was founded by a group of Swedes who moved to Barcelona. 

Artificial Intelligence (AI)

AI will revolutionise the imaging sector: read our recent feature here. AI-based image interpretation solutions can spot things radiologists cannot and can also provide automated quantitative information on features of an image. 

But the latter capability can be a double-edged sword for productivity. If it is doing what radiologists currently do manually it saves previous time. In other cases, it quantifies features radiologists have historically not looked at, and so radiologists have to learn about and decide what to do with that new information. This can create more work, though clearly has the potential to greatly improve diagnosis and patient care. 

There are also problems with implementing solutions into workflow. There are hundreds of startups (over 50 with $1-100m of VC funding) developing AI-based solutions, mostly cloud-based, and each of these has its own integration needs. If a radiologist has to get its results in a cloud separate to their own information systems, they will usually say it is not worth their time. OEMs do offer marketplaces with curated solutions - alongside their in-house solutions - but these often still require specific integration. 

But nonetheless, solutions are starting to be adopted by imaging operators on long-term commercial deals. Suppliers of these solutions seem to be getting the most traction from the hospital sector, which is larger, has more specialised facilities, and has access to research capital. 

When it comes to the for-profit sector, outpatient imaging and teleradiology operators have been the most vocal in announcing pilots and partnerships in AI but how it fits into their business model is less clear than for hospitals.

Outpatient imaging clinics see the plethora of patients which reduces the use case of single-feature solutions, and outsourcing operators like Alliance Medical do not usually employ radiologists, so they are not the ones doing the reading of images.

Teleradiology, meanwhile, is reimbursed per report whether it uses AI or not. And the proliferation of AI solutions in hospitals spells trouble for the amount of work outsourced to these groups in the long-term. 

AI solutions are only used as decision support tools meaning the radiologist always signs off on the report and bears liability. This is unlikely to change for a long, long time, and also means it is hard to measure AI’s penetration, as it makes it harder to know how many reports have been done with the help of AI or not. 

It is possible that big imaging groups are reluctant to admit that AI may replace much of what radiologists do, as the radiologists in many cases are their most important customers. Only one of the four pilots that Affidea (the largest for-profit operator in Europe) announced in 2019 have become long-term rollouts as of early 2021. It and other major operators declined or did not respond to requests to be interviewed for our recent feature on the topic, viewable in Deals+Insights. 

We don’t believe that radiologists will be entirely replaced by AI. But, it will replace many of the mundane and manual tasks they do today, and force them to prove their value in other areas: spending time with patients, explaining results of AI reads of their scans to patients and other clinicians, and spending more time on disease trajectory (AI does little or none of the latter today). This may also reduce their future earnings, compared with a situation where no AI solutions were brought to market. 

See a table of companies developing AI-based image interpretation solutions with at least €1m in VC funding below. 

Company Based Main focus Money raised (as of Jan 2021, €m) Founded
Viz.ai USA Stroke/brain CT 125 2016
NovaSignal USA Brain ultrasound 75 2013
Aisono China Breast ultrasound 60.2 2017
Infervision China Chest/lung imaging 60 2015
VoxelCloud USA Multi-speciality 56 2016
Caption Health USA Echocardiograms 50 2013
Imagen Technologies USA MSK 50 2015
Aidoc Israel Multi-speciality 50 2016
Enlitic USA Multi-speciality 47 2014
Zebra Medical Israel Multi-speciality 42.8 2014
Deepwise China Multi-speciality 42 2017
Lunit Korea Multi-speciality 37 2013
Arterys USA Multi-speciality 35 2007
Ultromics UK Echocardiograms 26 2017
Kheiron Medical Technologies UK Mammograms 19 2016
icometrix Belgium Neurological disorders 17 2011
VIDA Diagnostics USA Chest/lung imaging 14 2004
Qure.ai India Multi-speciality 13.7 2016
Circle Cardiovascular Imaging Canada Chest/lung imaging 13.5 2007
Volpara Solutions New Zealand Mammograms 13 2009
Vuno Korea Multi-speciality 12.5 2014
Riverain Technologies USA Multi-speciality 12.5 2004
Quantib Netherlands Neurological disorders 12 2012
QUIBIM Spain Multi-speciality 12 2012
Aidence Netherlands Chest/lung imaging 11.5 2015
Subtle Medical USA Image reconstruction 11 2017
Brainomix UK Stroke/brain CT 11 2010
Elucid Bio USA Chest/lung imaging 10 2013
Dia Imaging Analysis Israel Echocardiograms 10 2009
MaxQ AI Israel Stroke/brain CT 7.5 2013
Koios Medical USA Breast ultrasound 6.6 2011
QView Medical USA Breast ultrasound 6.2 2006
Niramai India Mammograms 6 2016
Therapixel France Mammograms 5 2013
Neurophet Korea Neurological disorders 5 2016
Qmenta Spain Neurological disorders 4.6 2013
Imbio USA Chest/lung imaging 3.4 2005
Rad.Ai USA Workflow/collaboration 3 2018
RADLogics USA Multi-speciality 2.5 2010
Behold.ai UK Chest/lung imaging 1.8 2015
Mindshare medical USA Chest/lung imaging 1.6 2014
Densitas USA Mammography 1 2011

 

Emerging models

Perhaps the most interesting is pay-per-use, which is being put in place by medneo in Germany. medneo sets up diagnostic imaging centres with the latest equipment, own developed IT-platform to optimize workflow, convenience and service for customers and patients, as well as with non-medical staff delivering clinical images according to customers’ needs. medneo then offers outpatient physicians, hospitals and research institutes a pay-per-use pricing model. It can also offer to have the images read by radiologists anywhere on its network, which is currently mainly in Germany and Switzerland. It says this may be a pull for PMI work in the UK although the potential of marketing this to the B2C market remains unclear.
 
Like other “shareconomy business models” the model is based on maximising throughput and claims that medneo machines are doing three times as many images per day as the average machine in Germany or any OECD country without compromising the quality. The model is vendor neutral.
 
Combining labs and imaging
 
From an operational and cost point of view, there are few synergies between labs and imaging. Having said that, they are both capital-intensive so there is some knowledge transfer potential in a business which provides both. 
 
In some markets, public healthcare sector outsourcing requires providers to offer the whole integrated diagnostic pathway covering clinical laboratories and diagnostic imaging in order to win contracts. And in more B2C-focused markets where patients pay cash for diagnostic tests to avoiding public waiting lists, it also makes sense to offer both from one location; the so-called 'one-stop-shop' for diagnostics.

We see the combination of both in most emerging markets, East Europe/Russia, as well as more developed Portugal and Italy. 

Of the big two European lab groups, Unilabs and Synlab, Unilabs is much more focused on imaging from which it accrues around 20% of its sales.
 
What are the competitive advantages of for-profit operators?
 
Most public sector systems are inefficient with expensive equipment often used only within a 5-6 hour working day. Patient flow may be poorly managed with many absentees. Referral systems may be leaky. In other words, many doctors may not be referring the patients they should for the right treatment modality. In many countries, public sector hospital systems do not have the capital to build new centres and may be unwilling to incur annual deficits to do so.
 
For-profit operators then can position themselves like budget airlines who are expert at sweating assets. Their advantages are then:
 
- Efficient capex allocation and management of capital equipment
- Excellent patient flow systems
- Access to capital, which is effectively providing off-balance sheet finance to the public sector
- Robust IT and management systems
 
They would also argue that they are well-placed as their networks grow to best deploy new innovations such as the artificial intelligence interpretation of images. International groups like Affidea and Alliance Medical would also say they can export international best business practice to their activities. And. by building out into outpatient networks and the provision of occupational healthcare to grow their customer base.
 
For-profit opportunities
 
Meeting explosive demand
 
Particularly in laggard countries, there is an opportunity to meet public sector demand. This is particularly true in the UK where Alliance Medical reckons that CT/MRI scans are growing in value at 8-10% a year, while by volumes we are also told there is double-digit growth in countries like Poland, Hungary and Spain. But even in more mature systems, demand is likely to grow at anywhere from 5-10% and from a higher base. 
 
Much depends on identifying those technologies where help is needed. Alliance Medical, for instance, has moved into cyclotrons and the supply of radiopharmeuticals in Italy and the UK and in 2017 bought Eckert & Ziegler’s cyclotron division in Germany and Austria with revenue of €18m. Voxel, the third-largest imaging group in Poland, is the largest supplier of radiopharmaceuticals in the country.
 
The secret is to identify willing partners, whether they are at the national, regional or hospital level. One source said: "The argument that we can help a public hospital meet demand in a low risk and highly effective way is obvious. The secret is to find the management teams and policymakers who are receptive to working with the private sector."
 
Consolidation
 
Particularly in France, Switzerland and Germany there is a big opportunity to buy practices as radiologists retire.  Many doctors are now in their fifties and sixties so there is a huge generational change. Often older doctors are simply running down their firms, waiting for their imaging equipment to reach its end-of-life. But it is not entirely clear to us that practices can be bought in way which is viable for the acquirer, given the high capital costs. If such a model really did work then the consolidation would be far more advanced today!
 
Creating major outpatient networks
 
For-profit operators can put together a regional or even a national network of outpatient centres and then hope that marketing and purchasing decisions and cross-referrals within the network can create big operating efficiencies. Teleradiology will allow you to have all your radiologists in one place, serving the whole network. Affidea does this in Ireland and other markets.
 
Building private patient volumes 
 
Where co-pays are high imaging groups can often persuade patients to go private. This is particularly true for Italy and Eastern Europe. Substantial markets have grown off peoples’ willingness to spend easily 10-20% of a month’s salary on a private MRI scan to skip waiting lists.
 
Building a wider outpatient service offering
 
Imaging groups can widen their appeal by adding extra services. Affidea is experimenting with this in Ireland where it has launched a primary care drop-in centre. Alliance is adding minor A&E centres to its outpatient network in Italy. Busy public hospitals can refer patients with minor accidents such as simple broken bone cases to Alliance units.
 
Affidea’s CEO says that health screening packages are a strong growth area although these obviously cannot be repeated regularly because of radiation risks. They are a big selling point in emerging markets or ones with weak public provision.
 
Moving into wider outpatient services can also provide a referral stream for your scanners. Physiotherapy clinics could be located next door to an imaging unit. Why not have a scan for your back pain, just to be safe?
 
Threats to imaging service players
 
Political change
 
Political change in Valencia led to the massive scaling back contracts with for-profit players having a major impact on Eresa and other operators. A far-left Labour government in the UK could severely impact Alliance Medical. In Poland, the Pis government has had a negative impact on for-profit players. Affidea lost a big contract in Hungary in 2020 for the same reason. 
 
But long-term contracts provide some protection as does the fact that imaging contracts are likely to be below the radar in many healthcare systems. In the UK, PFI projects or patient choice of for-profit hospitals would be higher on Labour's policy agenda.
 
Tariff drops/budget ceilings
 
Across Europe we are seeing budget ceilings (Poland, Slovakia, France, Germany) as well as tariff pressure (France, Switzerland, Poland, Slovakia, Czech Republic).
 
Despite what some operators say, we are absolutely seeing public payor tariff cuts in imaging across Europe. Cuts of between 3-10% have been seen since 2014 in South Africa, Sweden, Switzerland, Portugal, Turkey and France and virtually all countries have seen some price fall or another.   
 
Germany and Switzerland have joined France in introducing severe limits on the introduction of new imaging scanners to the market, either by limiting public reimbursement or by not allowing their introduction at all except in special circumstances. There are also usually volume ceilings above which prices drop substantially. 
 
Instant death competitive tenders
 
Tenders are getting bigger and operators are running facilities which they admit face "instant death" if they lose contracts. This could lead to lower margins and the sudden loss of revenue. Inhealth lost major CT contracts in the UK when Alliance medical swept the stage on PET1 in 2017.
 
A big Norwegian tender won by Unilabs had a similar impact on Aleris. In Turkey and Slovakia, we have seen massive, long-term contracts at very low prices, which has priced out international operators.
 
In Spain, one operator laments that insurers are now demanding that groups work on a capitated payment-basis where they provide all imaging services to policyholders in one province.
 
High Capex costs and low usage
 
A few years ago, after the 2008 financial crash, investors were questioning the viability of imaging service groups given their high capital expenditure.
 
There are still question marks over whether the massive German outpatient market can really be consolidated profitably, although the entry of several major PE firms (including Triton and Five Arrows) indicates it may be turning a corner.
 
Changing relationship with equipment suppliers
 
As diagnostic imaging is one of the more capital-intensive types of healthcare delivery, operators’ relationship with suppliers is all-important. Siemens, Philips and GE dominate the imaging equipment supply market in Europe.
 
But this may be changing. Market sources are split but some expect manufacturers from China, Japan and Korea to increasingly gain market share in the next 5-10 years, at least on the software side (AI or workflow optimisation solutions built into the equipment, for example) but possibly in hardware too.
 
And we hear that already their position is being upset in certain geographies, mainly East Europe. An operator in Ukraine, for example, tells us that Toshiba’s medical imaging unit (which it sold to Canon) is competing well with GE in the CT scanner supply space there. Some say Samsung has already started to eat the breakfast of the Troika in some other parts of East Europe. 
 
Third-party maintenance (TPM) and the second-hand market has also started to emerge as TPM consolidators like Althea emerge. Historically, Europe has bought new far more than North America but the repurposed market is growing, especially in markets savaged by tariff cuts like Greece or those hit by currency depreciation like Turkey. 
 
Generally, the power in pricing negotiations remains with the sellers of equipment rather than the buyers, but this is changing as larger service groups emerge. You have Affidea, Alliance and Unilabs across Europe but large national groups have also emerged in Spain, Poland, Germany, Switzerland and Slovakia and are able to get better prices, thanks to scale.
 
As the demand for imaging grows and the private sector consolidates, usage per machine is increasing. This means machines need more servicing more often, forcing suppliers to offer more than just the tech, like training, maintenance and software-based solutions for delivering the service. Cynics would say this is little more than new ways to make money as the growth in their core business has come down from the days when the new modalities came to market, but it is now standard.
 
There is also some wholesale vertical integration into services by suppliers although this is really limited to Germany and Turkey. In Germany, Philips bought a stake in outpatient and imaging group Med360 in 2017 while Siemens invested in radiologist network Curagita a few years earlier. But we hear that both have received a lot of blowback from existing customers who are unhappy at their supplier becoming a competitor, and both have now gone very quiet on the investments. In Turkey Siemens and other vendors have gone direct to win hige, high-risk, low-cost tenders.
 
Cracking down on over-treatment
 
Compared to hospital surgeries, there is not that much hoo-ha about unnecessary imaging scans, even though everyone knows it happens. An excerpt from Radiologists at Work by Carolyn Jourdan, containing an anonymised interview with a US radiologist who epitomises the issue:
 
“Sometimes we are treating the doctor more than the patient. Some of these exotic tests are being ordered solely because the doctor is curious.
“I’ve done expensive tests on DNR patients, people who’ve signed documents ordering us Do Not Resuscitate them, and I ask ‘What the heck are we doing this for?’
“The attending physician will say, ‘We think she’s bleeding somewhere.’
“’Are you going to operate on her if she is?’
“No, an operation would kill her.”
 
Anecdotal evidence suggests overtreatment is rife in Turkey while clearly there are too many scans in Germany too. And there seems to be little correlation between scans-per-person and cancer survival rates when looking at the OECD numbers.
 
The Future
 
We think that imaging service groups have a bright future in helping public sectors to meet the demand for new modalities.
 
Much depends then on the willingness of healthcare systems to involve for-profit players in this process. On this basis, cash-strapped systems in the UK, South and Eastern Europe look like the best options in the short-term. Elsewhere, the sector may be shut out.
 
Much depends upon the vision and salesmanship of top management. One told us: "Going to a public-sector incumbent and saying I can take this over and do it better is not going to work. You have to offer a genuine partnership in which you can demonstrate precisely how you can help them to attain long-term goals."

Ratio Report: Imaging Services (Outpatient)

Contents:

  1. Typical revenue ratios for imaging equipment by country 

  2. EBITDA margins for imaging services 

  3. The data we use to estimate revenue for imaging service groups in EMEA 

Typical revenue ratios for MRI, CT and PET-CT machines in the for-profit sector, by country 

We are using 2019 or normalised ‘post-covid’ figures for this report, so they exclude the impact of COVID-19 and will be higher than the averages for calendar year 2020. Our figures are for the for-profit imaging sector, so whether they include in-hospital imaging or are outpatient centre-only depends on the market. 

There is substantial variation in average revenues per imaging modality both across West Europe but also within countries. The range between low-end and high-end figures is characterised differently from country to country. 

The end-result is massive differences in revenue per machine. Within the UK, private-facing machines can generate three times the revenue of NHS outsourced ones. High-price Switzerland shows figures twice that of other West European countries and around four times higher than Poland. 

See all the data in this scrollable table. Scroll down to the Germany section for a more detailed table showing tariffs and payor mix. For a simplified version of this whole table showing the mid-point figures we use to estimate other companies' revenues, scroll to the end of this Ratio Report. If this or any other table is missing, right-click in the blank space and click 'reload frame'. 

While we use Poland as a guide for the rest of CEE, it’s not a straight east-west split. Italy has price points much closer to West Europe, but low utilisation means that the low end of our range there is the same as Poland. 

Nor is it the case that Swiss scanners generate the highest revenues on every measure. The top end of the UK range for CTs, for example, is 60% higher than in Switzerland. This is because there is a big market in the UK for privately-funded CT scans - at tariffs 7-8x the NHS one - which is not the case in Switzerland (as private sector scans will be either done in-hospital and reimbursed as part of a DRG tariff, or in an outpatient clinic under statutory health tariffs-only where waiting lists are nowhere near as bad as the UK). 

UK and Scandinavia 

In the UK, scanners doing outsourced NHS volumes generate lower revenues than those focusing on self-pay and private medical insurance (PMI) patients because prices are 4-5x higher in the latter. The range is €1.25-€3.5m for MRIs, €1-3m for CTs and €2.2-3.7m for PET-CTs. 

We think the figures will be similar for Sweden, Denmark and Norway will have similar price points and the same dynamic of public sector outsourcing versus more lucrative private pay. 

A UK imaging operator tells us that a predominantly-NHS serving MRI machine could see up to 600 patients a month with an average tariff per patient of around £150 (a single-part MRI is £112). That equates to 7,200 a year which matches up with the ‘upper end’ of volumes in most other countries, meaning a nudge under £1.1m a year in revenue which we round down to £1m assuming that operators don’t get up to full utilisation. 

A private-facing MRI machine will have an average revenue per patient close to four times that, but volumes will be only 400-450 per month since it will see a much wider variety of patients. It equates to around £3m a year per MRI machine. 

A CT scanner will have 30% more throughput across groups, our operator says, but the average NHS tariff is half at around £85, while consultant Hugh Risebrow says the weighted average private fee for a CT scan is £654, slightly higher than for MRIs. This equates to revenue of £800k for an NHS-facing scanner and a whopping £4.3m per private-facing CT scanner. But CT machines are more likely to be found in private hospitals doing both NHS & private work than in a private clinic only doing self-pay/PMI. We make the guess that at best a CT will spend half its time doing private work and half NHS meaning we meet the two figures in the middle, at £2.5m. 

PET-CT is a high-price low-volume operation. We are told Alliance Medical averages 2,800 patient examinations annually at its NHS scanners, and that the tariff is £700 each - note this does not include the report fee as Alliance does not employ the NHS’ radiologists as part of its outsourcing agreement. In Euros, that means average revenue of €2.25m a year per scanner. Figures from parent company Life Healthcare’s 2020 report indicates around €2.5m of ‘PET-CT / Radiopharmacy’ revenue per scanner, but we think that extra 10% is explained by the sale of radiopharmaceuticals to other imaging operators (NHS & private), as it is the largest supplier in the UK. 

There are only a handful of PET-CT scanners in the UK market solely serving PMI & self-pay customers, but a second operator says that the average amounts to 1,600 per scanner annually.  Consultant Hugh Risebrow says the weighted average fee for a private PET-CT scan is €2,285 (£2,000) meaning revenue of €3.65m each. 

(GBP = 1.17 EURO) 

Germany, Austria, Benelux and Finland 

As Germany is a level playing field for private and public operators, the range between the low and high-end figures is not defined by the payor as the majority of providers have a 91:9 ratio between statutory health insured (SHI) and privately insured (PHI) patients. 

Instead, scanners run by imaging operators in hospitals as part of outsourcing agreements generate higher revenues than those in outpatient centres, as they have both inpatient and outpatient volumes and generally achieve better utilisation. Not only that, their SHI inpatient volumes will have a higher tariff than the standard SHI ones as part of the agreement with the hospital outsourcing the service.

The range is €1m (outpatient practices) to €2.4m (hospital outsourcing) for MRIs and €400,000-1.1m for CTs. See all the data for Germany below. If this or any other table is missing, right-click in the blank space and click 'reload frame'. 

The range for PET-CTs - €1.4-4.5m - is less defined by the hospital/outpatient factor and more by how well it is run and how new its PET-CT scanners are (new models which have come to market in the few years allow for much higher throughput). Because of strange rules around reimbursement, 25-30% of PET-CT scans are PHI patients versus 9% for MRI and CTs: this is reflected in our figures. 

We struggled to get a French operator to talk but based on public data around tariffs and utilisation claims by operators we have revenue/machine figures of €850,000-1.7m for MRIs, €720,000-1.44m for CTs and €1.2-2.4m for PET-CTs. The largest network of outpatient imaging centres, Groupe VIDI, told us the volumes we based these figures on are broadly accurate (see the table). 

There are multiple tariff ceilings, above which prices drop substantially, to prevent over-usage: 11,000/13,000 scans annually for CTs and PET-CTs and 8,000/11,000 for MRIs. 

We think Belgium, Netherlands, Austria and Finland will have similar figures to Germany and France. 

Switzerland 

According to our DACH operator, Switzerland has an even greater range between scanners and this is not determined by where it is as there is little-to-no hospital outsourcing of imaging, but more by management and the competitive landscape. Some cities have a huge surplus of MRI machines, for example, meaning volumes at each scanner are low. But as tariffs are high enough that these centres can survive and the potential revenues at the high-end are massive: €1-5m for MRIs, €1.2-1.9m for CTs and €2.3-7.6m for PET-CTs. 

Southern Europe (Italy/Spain/Portugal) 

Utilisation of imaging modalities is lower in Italy than other countries in this report although tariffs are relatively high. A local operator explains the low volumes: 

“In Italy, the local ASL (Azienda Sanitaria Locale) determines how many procedures they will fund at the beginning of a year within their region and will allocate budgets to a centre accordingly, with these volumes then spread over the 12 month period. There can be multiple providers in a region, usually through clinics and therefore the overall volumes are spread over more facilities meaning scanners can be less efficient.” 

Alliance Medical’s figures reflect this. PET-CT volumes per scanner are around 700 a year based on figures in parent company Life Healthcare’s reports. That is a quarter of the figure for its UK NHS PET-CT centres. It has a blended average of 3,700 scans/machine/year at its 43 MRI and 20 CT machines, which is low for either modality. Guglielmo Brayda, CEO of managed equipment service (MES) and imaging operator Medipass, says throughput is not massively different for the two though you are more likely to find MRIs in private centres than CTs. Prices diverge substantially though, with CT tariffs about 40% lower than MRIs. 

The NHS (SSN) tariffs are set nationally but are tweaked by local authorities (SSRs) and can vary dramatically. Lombardy’s average MRI tariff of €246 is 8% lower than Tuscany’s €266 but 30% higher than Campania’s €186 - this is what private operators get for SSR activity. Private operators can also charge private fees to attract patients paying out-of-pocket or through insurance, and this is lower than the public fee in order to attract patients, who are paying a co-pay at public facilities anyway. The exception is Lombardy where private fees are higher but the local SSR body covers some of the cost: the average private MRI fee is €300 versus €100-200 in other regions. 

In the private imaging sector across Italy, SSR referrals account for 70% of patients and 60% of revenues. 

Poland/CEE/SE Europe

Voxel, the biggest imaging player in Poland and the only listed one in Europe, provides revenue and number of machines for MRI, CT and PET-CT allowing us to calculate averages. The average figure for 2018-2020 is €750,000 for MRIs, €400,000 for CTs and €1m for PET-CTs. We’ve adjusted the figures to account for ramp-up of new modalities and the Covid impact in 2020. 

70% of Voxel’s imaging revenue comes from the national health fund (NHF), and its Investor Relations department tells HBI that prices are higher for private pay although “not significantly”. The blended average tariff, based on its own figures, is 275-290 PLN (€63) for CT exams, 500-520 (€112) for MRIs and 2,900-3,000 PLN (€650) for PET-CTs. 

We guesstimate that a scanner doing 100% private patients at full utilisation (still lower than NHF because private patients take longer) will have revenue 20% higher than these average figures - €900k for MRIs, €500k for CTs and €1.2m for PET-CTs. 

(PLN = 0.22 EUR) 

EBITDA margins for imaging services 

In general, we see EBITDA margins of 20-30% in the imaging sector in Europe with depreciation and amortisation (DA) reducing that by 10 percentage points. 

In France the figure will be lower, as average EBE margins - the standard measure of profitability in the sector and one which excludes more than EBITDA - is only 19% for the top 30 groups. 

See the data we could collect on margins in the table below. 
If this or any other table is missing, right-click in the blank space and click 'reload frame'. 

The data we use to estimate revenue for imaging service groups in EMEA 

Below is a simplified version of our earlier table showing the midpoint of the low- and high-end range figures for each modality, along with the countries which we roughly assume will have similar figures. For Spain/Portugal, we estimate the figures will be in between Central/West Europe and Italy. We assume that the other imaging services a clinic offers (X-ray, ultrasound, consultations etc) will add on 10-30% to the revenue figure. 

Revenue per machine (€m) If this or any other table is missing, right-click in the blank space and click 'reload frame'. 

Imaging Services: Albania

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
For-profit sector (€m) 8.29.19.910.79.4 (11.5)10.8 (12.7)11.8 (13.9)13.2 (15.3)
For-profit growth % 10%10%10%10%-15-20% (10%)15% (10%)10% (10%)10%
COVID-19 update (March 16, 2021) 

We provisionally estimate the private imaging market in Albania willfell in line with the wider private healthcare sector, by around 15-20% (as per earlier estimates from the largest player American Hospital of Albania, which has not responded since for an update). We have the market bouncing back 15% in 2021 and growing 10% thereafter. 

Overview

Audited 2017 accounts of American Hospital of Albania, the only hospital operator of scale, showed that 7.5% of its €43m sales were from radiology, totalling €3.2m. We extrapolate that across the whole €80m hospital market (see that sector entry) in 2018 which gives €7m, which, with the outpatient imaging sector, gives a guesstimate of a €10m private for-profit sector. 

Imaging Services: Croatia

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
For-profit sector (€m) 1516.518.22018 (22)22.5 (24.2)25 (26.6)27.2 (29.3)
For-profit growth % 10%10%10%10%-10% (10%)25% (10%)10% (10%)10% (10%)
Croatia: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Affidea International €2.6m €431m 14%
See all operators
€ million 

Overview 

Croatia’s national health fund (HZZO) is increasingly outsourcing to the private sector to manage waiting lists, and the private sector now does around a third of MRIs. 

Market size 

Data from a 2020 report on revizija.hr shows a total of 81,300 MRI scans were done in 2019 by private operators, growing 10% for the second year in a row (150,000 were done in the public sector). 

Some 44% of the 81,300 scans were HZZO outsourcing, at an average tariff of around 700 Kuna (€93), and the remainder were a mix of privately-funded and part-private-part-public funding (the report’s exact definition says they are exams in which ‘50% or more of the cost came from the patient, private insurance or another institution’). 

Private private tariffs for MRIs can go up to 1,600 Kuna (€210), so wherever you think the public-private mix falls, it means the total private sector-provided MRI market is around €10m. 

Outsourcing for CTs, PET-CTs and other modalities happen too but there are no reports with as much detail, so we provisionally estimate they add on another €10m to the market size, which we estimate is growing 10% a year. 

Biggest players 

The largest players by public MRI outsourcing are Affidea, Polklinika Medikol and Croatia Poliklinika (Zagreb). 

Imaging Services: Czech Republic

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
For-profit sector (€m) 909510010595 (110)110 (115)115 (121)121 (127)
For-profit growth % 5%5%5%5%-10% (5%)15% (5%)5% (5%)5% (5%)
Czech Republic: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Akeso Holding €31.5m €157m 33%
2 Affidea International €3m €431m 3.2%
See all operators
€ million 
COVID-19 update (March 16, 2021) 

Imaging revenues for Slovakia’s largest imaging group Pro Diagnostic Group (PDG), which recently entered the Czech market, were expected to fall 30-35% through the COVID-19 pandemic in both countries. That is according to Tomas Zednicek, partner at Pro Partners Holding which built up PDG before selling a majority stake to Ribera Salud in 2017/18. We therefore estimate a 10% drop in the market for 2020, with a 15% bounce-back in 2021. 

Overview

An investor tells us the Czech market is a difficult one to get into with very few cases of outsourcing to date and most MRIs and CTs located in the public sector hospitals. The imaging market is nonetheless substantial at around €90m in 2016 for the private sector, according to HBI sources.  
 
Groups like Affidea and local player Multiscan are in the country and trying to create a market for better, more advanced imaging though they’re pretty much restricted to Prague and maybe Brno for now. Imaging is also a big business for outpatient polyclinic chains like EUC and Program Health Plus, which play in the B2C cash market.
 
OECD data covering 2013-2017 shows average annual volume growth of 20-30% for PET Scans, c.5% for CTs and 5-6% for MRIs, so we apply growth of around 5% as the country catches up with its Western peers on scans-per-person.

Imaging Services: Denmark

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
For-profit sector (€m) 32.53334.13535 (36)37 (37)38 (38)39 (39)
For-profit growth % 2.5%2.5%2.5%2.5%0% (2.5%)5% (2.5%)2.5% (2.5%)2.5% (2.5%)

Overview 

For-profit operators in the Danish imaging market appear to have had a tough time in the last decade, with bankruptcies and market exits from major players. While there is a clear appetite to outsource to the private sector, and overall volumes (including public sector) are growing 5-7% annually, conditions have not been favourable.

“Public (imaging) tenders tended to be very short – often 12 months – which made it impossible to finance big imaging investments. Existing providers could sometimes win a short contract on a low price, just to survive, but long term this was not sustainable,” a market source comments. 

Aside from a few outpatient units, the vast majority of diagnostic imaging provided by for-profit operators is done in private hospital units, including those run by the big three pan-Nordic operators Aleris, Capio (part of Ramsay Sante) and GHP Specialty Care. 

Unlike its Swedish and Norwegian operations, Aleris has no imaging specific agreements and its radiology units primarily serve its hospitals’ internal imaging needs (like any hospital). Capio has in the recent past opted not to acquire attached outpatient imaging units when buying a hospital (Viborg Privathospital, 2017). And Europe’s third-largest imaging operator Unilabs pulled its imaging division out of Denmark several years ago. 

Market size 

Nonetheless, a decent chunk of public imaging exams are outsourced to the private sector in Denmark. According to this report, in 2014-2016 private hospitals did one third of six types of publicly-funded MRI exams and just under 8% of two types of CT scans in the Midtjylland and Capital regions (which account for more than half of the population). 

We provisionally estimate the Danish for-profit imaging sector is worth somewhere between €30-40m (2019) growing 2-3% a year, based on the relative sizes of the private hospital and public imaging markets in Denmark, and other Scandinavian markets. 

We think the total imaging sector is worth several hundred million euros, based on volumes and tariff data from The Danish Health and Medicines Authority (Sundhedsdatastyrelsen). Sundhedsdatastyrelsen’s data shows that total MRI and CT scanning volumes grew by an annual average of 5.5% and 6.6%, respectively, in 2013-2018. But we peg private sector growth at about half that because the outsourcing problems mentioned earlier mean not all of that will be feeding through to the private sector. 

Outpatient providers

The only radiology units that cover all modalities (MRI, CT, X-ray and others) appear to be located in private hospitals. There are single-modality clinics like MR Scanner Viborg (the one Capio did not buy) and Helkrops MR which do MRIs, while there are many that provides X-rays (Frederiksstadens Røntgen-og Ultralydsklinik is relatively large).

 

Imaging Services: Finland

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 500525550575546590616644
For-profit sector (€m) 230240250260247 (270)267 (280)279 (295)292 (308)
For-profit growth % 4-5%4-5%4-5%4-5%-5% (4-5%)8% (4-5%)4-5% (4-5%)4-5% (4-5%)
Public/non-profit sector (€m) 270285300315299323337352
Finland: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Synlab €9.1m €2.6bn 3.7%
2 Coronaria €5m €260m 2%
3 Suomen Radiologikeskus Oy €2.6m €3.6m 1.1%
4 Unilabs SA €1.3m €1.5bn 0.53%
5 Alliance Medical Limited €120k €375m 0.05%
See all operators
€ million 
COVID-19 update (6 January 2021) 

We estimate the imaging market will fall by roughly 5% in 2020 because of COVID-19, slightly worse than the broader private sector which we estimate was flat based on full-year results of the big three (Mehilainen, Pihlajalinna and Terveystalo). We have it bouncing back 8% in 2020 and apply the same futures to the total/public imaging market. 

Overview
 
The growing usage of MRIs in the private orthopaedic surgery market has helped demand for imaging. Between 2010-2016, the number of MRIs performed in Finland grew at 10% CAGR compared to just 3% across all modalities. However, it still lags some way behind other countries on a scans-per-person basis.
 
Market size and structure
 
The total diagnostic imaging market is now about €550m and almost half privately provided, around €250m, in 2018 according to figures from consultancy Nordic Healthcare Group. They peg private sector growth at 4-5% going forward.
 
Trends
 
In diagnostics, the public sector and private providers have cooperated for a long time. In areas like mammography and PAP screening, the public sector uses private capacity widely and the same goes to a lesser extent in imaging and labs. Around €130m (52%) of the privately-provided sector is funded publicly, although that figure has been stagnant since 2014 with increased spending by occupational schemes and private payors driving growth in the market.  
 
Terveystalo has a big imaging business and pan European lab giant Synlab bought the country’s largest specialist imaging player Cityterveys last year. The group has annual sales of around €15m, performs both labs and imaging diagnostics and does a lot of work for the public sector, which CEO Dr Martti Kiuru says is short on capacity.

Imaging Services: France

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 6,2006,5006,8007,1406,6707,1307,4407,785
For-profit sector (€m) 4,1004,3004,5004,7004,420 (4,940)4,730 (5,160)4,940 (5,400)5,165 (5,640)
For-profit growth % 5%0%5%5%-6% (5%)7% (4-5%)4-5% (4-5%)4-5% (4-5%)
Public/non-profit sector (€m) 2,1002,2002,3002,4002,2502,4002,5002,620
France: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Ramsay Health Care €66m €3.3bn 1.5%
2 Imagerie Medicale Plaine de France (IMPF) €33.2m €33.2m 0.75%
3 France Imagerie Territoires €25.8m €25.8m 0.58%
4 IMR Valence €18.7m €22m 0.42%
5 Groupe Clinique Du Mail €17.6m €17.6m 0.4%
6 Groupe Norimagerie €15.6m €15.6m 0.35%
7 LBVDA €15.6m €15.6m 0.35%
8 Imagerie et Radiologie Specialisees D'Aunis (IRSA) €15.1m €15.1m 0.34%
9 Groupe IRIS GRIM €14.4m €14.4m 0.33%
10 Unilabs SA €13.5m €1.5bn 0.31%
See all operators
€ million 

COVID-19 update (June 9, 2020)

We revise our earlier estimate of a 9.5% drop in revenues for the imaging sector to -6%, to reflect the portion of the imaging market which is in-hospital and will have revenues protected (see our hospital report). We have it bouncing back 7% in 2021. Our public market size figures reflect a drop in activity but most public imaging is done in financially-protected hospitals. 


COVID-19 update (June 9, 2020)

A survey of 800 outpatient radiologists by the FNMR (National Federation of Radiologists) in April found that 25% of practices have closed while 40% of multi-practice groups have closed some of their clinics. Some 95% have furloughed staff and 84% asked lenders for a temporary waiver of repayments. Overall, 70% of respondents say activity has fallen 80% or more year-on-year.

There has been uproar after statutory insurer Assurance Maladie only promised to pay the proportion of costs deemed to be ‘fixed, which it calculated is 49% for radiologists versus 68% for surgeons. The amount varies depending on how much activity dropped. The FNMR has demanded 100% of last year’s revenues be covered for each month in which there were lockdown measures (April and May) but this seems unlikely to be granted. 

We can therefore broadly assume 50% drops in revenue during the crisis months (one quarter) and a ramp-up to ‘normal’ activity by Q4 meaning an annual drop in revenue for the radiology sector of 9.5% year-on-year to c.€6.42bn. 

Overview

The French outpatient radiology market is, in theory, an attractive consolidation play with the top 10 providers holding under 5% of the €3.5/3.6bn outpatient radiologist centre market by revenue (2017), a figure from local sources. 

But no private equity firm has yet taken the plunge and bought an operator outright because of the huge backlash there would be from the medical profession, although some have acquired the machinery of operators as an entry into the market or taken minority shares. 
Tariff cuts in 2017 which have reduced EBITDA margins at the top 30 groups by a combined 2.5 percentage points may accelerate this process. 

Some regional consolidation has taken place, where which ten or twenty radiologists merge their firms into a single super practice. It is hardly surprising that none of the pan-European imaging three (Unilabs, Alliance and Affidea) have entered the sector. 

A big problem in French healthcare generally but especially in imaging is 'medical desertification' where there are no specialists in some regions. There are ten and twenty-fold differences in radiologist-per-head between some rural areas and big cities: teleradiology is a solution to this. 
 
Market size and structure
 
The diagnostic imaging market came to €6.5bn in 2017 according to research house Xerfi which publishes annual reports on the sector. It says €2.2bn is the public sector and €4.3bn of this is private; separately it has said the outpatient sector is around €3.5bn meaning around €800m done in private hospitals. 
 
Statutory insurance (Assurance Maladie) covers 70% of the DRG tariff for imaging examinations with co-pays for the rest, usually through top-up insurance (mutuelles) that the majority of the population has. There are two exceptions to this: ultrasounds in the third trimester are covered 100% while imaging examinations which are not the result of a physicians referral, i.e. the patient going straight to a radiologist, are only covered 30%. So in terms of funder structure, we give private pay a nudge more than 30%.
 
Growth
 
Tariffs for diagnostic imaging were cut drastically across all sectors by an average of about 10% in 2016/2017, we are told. OECD activity on data shows the effect: PET activity up 25% in 2016 then stagnant in 2017; CTs up 3% in 2016 then stagnant in 2017; and MRIs up 8% in 2016 then just 3% in 2017.
 
Utilisation per machine has also been falling from 2016 (for PET, CT and MRI) although why is less clear; presumably tariff cuts make it more of a volumes game but machines bought on more positive future financial projections may now be sitting idol.
 
Market research group Xerfi says that annual growth in the imaging market will be 5% from 2016-2020. That may be true of volumes but is unlikely to be true of the market by revenue when accounting for tariff cuts. We cautiously apply that growth figure to all years but 2017, which we have down as a stagnant year based on the activity fall and the tariff cut (negative growth is likely).
 
Consolidation
 
The opportunity is massive in the outpatient sector considering the level of fragmentation. But no institutional investor has taken the plunge yet because of the huge backlash they will receive by the medical profession.
 
An investor: “(Laboratory consolidator) Labco had to go to the European courts to beat the French regulators. It won, and investors know that they would win in the case of imaging too, but it’s just about being prepared to absorb 4-5 years of aggravation. Everyone is just waiting for the first mover.
 
“There is such a huge pent-up demand amongst radiologists to sell. Their issue is that they are all partnerships of 10-20 doctors each of whom has a veto so they end up arguing about the colour of the wallpaper, let alone selling the practice.”

We believe the three largest players are Ramsay Sante through its imaging network, Imagerie Medicale Plaine de France (IMPF) and France Imagerie Territoires.
 
Teleradiology
 
We were told that there are now 3-4 operators sharing a market worth €30m a year in 2017 and growing at 30% a year as French public hospitals are forced to outsource thanks to the shortages of radiologists in the public sector. We include this in our market size figures.

Imaging Services: Germany

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 8,9009,2509,6009,9509,88010,42010,78010,940
For-profit sector (€m) 5,2005,4005,6005,8005,580 (6,000)5,970 (6,210)6,180 (6,430)6,180 (6,655)
For-profit growth % 3-4%3-4%3-4%3-4%-3.5-4% (3-4%)7% (3-4%)3-4% (3-4%)3-4% (3-4%)
Public/non-profit sector (€m) 3,7003,8504,0004,1504,3004,4504,6004,760
Germany: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Blikk Die Radiologie €95m €95m 1.7%
2 Med 360 (Radiologische Netzwerk Rheinland Medizinische Versorgungszentren Gmbh) €86.5m €167m 1.6%
3 Radiologie Holding €82.4m €82.4m 1.5%
4 Curagita Ag €75.2m €75.2m 1.3%
5 Meine Radiologie Holding €72m €72m 1.3%
6 Radprax €69m €69m 1.2%
7 Radio Log €27.6m €37m 0.49%
8 Die Radiologie €15.9m €15.9m 0.29%
9 Medneo €14.1m €17.3m 0.25%
10 DIRANUK €9.3m €9.3m 0.17%
See all operators
€ million 
COVID-19 update (March 16, 2021) 

The outpatient imaging sector in Germany was not forced to close during the country’s national lockdown but saw its revenue fall c. 50% for the late March-April period. Referrals from hospitals for outsourcers fell due to fewer elective procedures and drops in A&E admission drops, which was particularly felt in musculoskeletal imaging, while GP referrals dropped too as patients opted to stay home (affecting non-hospital outpatient practices). 

An operator says that as of the last week of May, the outpatient imaging sector is back to 90% of pre-COVID levels of activity.

Our total market size for imaging is made up of outpatient radiology (€2.4bn), radiology in other outpatient practices (€2.4bn) and imaging done in hospitals (HBI estimates this is around €800m based on the size and structure of the German hospital market).

Six weeks at 50% revenues (mid-March through April) and another four at 70% (May, where the sector ramped up from 50% to 90%) equates to an 8% loss on an annualised basis. As the outpatient sector (radiology pure-plays and general outpatient) is growing 3-4% that equates to a 4-5% annual fall.

The c.€800m in-hospital imaging sector should be more stable considering the financial support provided to the hospital sector during COVID-19, which offsets the fall in the outpatient sector slightly to leave a market falling 3.5-4% in 2020 to a nudge under €5.6bn. We have it bouncing back 7% in 2021.

We leave the public market size figures as they are considering that public hospitals (where all public imaging takes place) were well-protected through COVID. 

Overview
 
Europe’s largest healthcare market unsurprisingly also has a very large imaging sector, sitting at just under €10bn in 2018 and on a par with France. The outpatient sector is about half of this and has seen several private equity firms enter the space in the last few years and undertake rapid M&A. 
 
Market size and structure
 
HBI estimate that the private for-profit diagnostic imaging sector reached €5.6bn in 2018 while the total imaging spend is around €9.6bn, growing around 4% annually. It is one of the faster-growing imaging markets because there is little tariff pressure (explained below).
 
An investor we spoke to pegs the outpatient imaging sector at €4.8bn, 2018, all private. But they add that only half of this is done in pure-play radiology practices with the rest done by dentists, orthopaedists and other outpatient specialists who have a bit of imaging kit. We still include the figures, as there is a very large oncologist and cardiologist outpatient sector for whom imaging is a central component of the service. 
 
The hospital imaging sector is roughly the same size as the outpatient one, so another €4.8bn, (making a total market of €9.6bn). But this includes public, private and non-profit facilities. Our investor says the numbers are harder to calculate as imaging reimbursement is included in DRGs, so HBI provisionally estimate the market segmentation within it will be similar to that of acute hospitals (17% for-profit, 83% public and non-profit), making the for-profit hospital imaging sector €800m (17% of €4.8bn).
 
Market funding structure
 
The outpatient imaging sector is two-thirds statutory insurance-funded with one third by the private insurers, which is explained by tariff differences, not volumes. The public tariff for outpatient imaging, set according to the EBM (Einheitlicher Bewertungsmaßstab) price list is a quarter of the private one under the GOA (Gebührenordnung für Ärzte).
 
Our investor: “Broadly speaking, the EBM covers your basic fixed costs and any profits a practice makes are through the GOA work. Tariffs aren’t really changing because you can’t cut the GOA without increasing the EBM and there is no agreement on how this would be done. There was a big discussion three years ago but that’s died down now.”
 
The funder split within hospitals is much harder to calculate.
 
Sector growth and trends
 
Demand for diagnostic imaging is growing around 3-5% each year in Germany, by volumes, slightly lower in PET than for CT, with MRI the highest as there is a move away from high-radiation scanning, although exact numbers varies greatly from year to year (OECD data).
 
There is a trend of hospitals, public and private, outsourcing their imaging operations to specialised providers, so we apply a slightly faster growth rate to the for-profit sector than the wider one. These are typically 10-15 year contracts between hospital and imaging providers, and this growing sector is 20-40% of the large imaging consolidators' revenues, we are told. The in-hospital outsourced radiology department will serve both the inpatient demand and the wider outpatient market. 
 
But there are regulatory barriers to growth in the outpatient sector too. One of the biggest is that if want to install a new piece of imaging equipment (not replace an existing one) you are not paid by the statutory funds for the first two years of activity. You first need to demonstrate that the equipment is getting the volumes that prove local demand justifies its existence. While this means two years of losses, the huge and growing demand means the risk of not making a return isn’t that great, our investor says.  
 
The use of teleradiology is growing fast, over 20% according to our sources, but it is starting from a very low base.
 
Inorganic opportunities and main consolidators

The sector is currently very fragmented, but there are several large consolidators which are providing exit models for retiring radiologist entrepreneurs. Patrick Schachtner of PwC says that “increasing specialisation and a fall in the number of radiologists drives spending as the consolidation in the German market picks up pace.”

The largest players are Med 360 (founder-owned but with investment from Sana and Philips), Blikk Holding (Deutsche Beteiligungs, Radiologie Holding (Five Arrows) and Meine Radiology Holding (Triton) which all have around €100m in run-rate radiology revenue as of early 2021. Much of these groups' presence is in North Rhine
-Westphalia and around a third of their sales are from hospital outsourcing, the fastest-growing segment in the market. Mid-sized players include Curagita and Rad-Prax and Gilde-backed Rad-X also recently entered the market. 

Platforms can build good synergies in heavy modality procurement, back-office functions and the roll-out of more sophisticated PACS and RIS solutions. They are also better placed to trial AI solutions and teleradiology, but both of these are at a nascent stage in Germany compared to other West European markets. 

 

Imaging Services: Greece

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
For-profit sector (€m) 188189190191172 (192)189 (193)190 (194)191 (195)
For-profit growth % 0.5%0.5%0.5%0.5%-10% (0.5%)10% (0.5%)0.5% (0.5%)0.5% (0.5%)
Greece: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Bioiatriki S.a. €46.8m €130m 27%
2 Iatropolis €39.3m €78.6m 22%
3 Affidea International €21.6m €431m 12%
4 Nea Diagnosis €5.2m €5.2m 3%
5 Diagnostic Centers Sakarellos €1m €2m 0.58%
6 Medical Prevention €900k €1.9m 0.52%
7 Modern Diagnostics €900k €1.9m 0.52%
See all operators
€ million 
COVID-19 update (March 16, 2021) 

We maintain our previous estimate of a 10% contraction in 2020; followed by a 10% bounce back in 2021. 

COVID-19 update (June 5, 2020) 

Sokratis Gourlis, board member of outpatient imaging group Iatropolis, says that revenues fell 70-80% in the six weeks of lockdown and have recovered to 80-90% of normal levels in the two weeks since lockdown which combined equate to a 9% fall on an annualised basis. 

He says it is very difficult to forecast full-year figures as it depends on whether the summer is as quiet as normal (when Greeks go on holiday) and whether there is a second wave in the fall. But he says a 5% fall would be “good” and that the sector will not see the 40% full-year contractions forecasted by the Greek private hospital association. We provisionally estimate at 10-15% drop in revenues for the sector which has been stagnant at 0.5% CAGR before COVID-19. 

One potential result of this may be a smaller clawback at the end of the year (this typically equates to 30% of revenues) by the state payor, Gourlis says. 

Overview

Like all healthcare services, the radiology sector in Greece has been subject to a myriad of financial constraints.
 
The state health insurance fund (EOPYY) budget for private operators has been stagnant for the last 4-5 years, sitting at around €150m for imaging services; the tariffs for examinations have been cut by as much as 45%; tariffs decrease gradually the higher the activity per month (rebate); and at the end of the year, if the AOP exceeds its budget, it has the right to demand the excess back from the service providers, a clawback which typically equates to 30% of annual revenue. But the sector is optimistic about the new liberal-conservative government, which was elected in May 2019.
 
For this section we talked to Sokratis Gourlis, board member at Iatropolis, one of the three largest private imaging operators with six diagnostics centres across Athens and c.€30m (€56 before the rebate and clawback) in 2018 sales.
 
Market size and structure
 
Gourlis says there is a small private pay market for imaging which may add 20-25% on to private operators revenues, making a total privately-provided imaging market of around €190m in 2018 (€150m + €35-45m). There was a much larger private pay market before the post-2008 financial crisis but this has shrunk as peoples’ spending power has fallen and the middle classes left the country.
 
He adds it is difficult to know what the public budget for publicly provided imaging is.
 
The bulk of private provision is in the outpatient sector, dominated by providers Iatropolis, Bioatriki and Affidea who we estimate have together around 30-35% of the total private market. The remainder of the outpatient market is made up of around 300-350 individual clinics. The outpatient centres serve the cash market and the EOPYY-funded market through referrals from primary care doctors and specialists.
 
The large private hospitals do the bulk of their own imaging although may contract with outpatient providers for advanced modalities like PET/CT. There have been no cases of whole imaging department outsourcing in Greece to date, either in public or private hospitals.
 
Gourlis says that while it is hard to estimate the top three providers’ market share of the private diagnostic imaging sector, he is more confident that Iatropolis has 30% of the whole country’s PET/CT market and 51% of the privately-provided PET/CT market.
 
Growth
 
The public budget has been unchanged for 4-5 years but Gourlis says there is a small but observable increase in the private medical insurance (PMI) market each year, so we apply nominal growth to the private radiology sector of 0.5% for the past and coming years.
 
Gourlis says there is a palpable feeling that the new government will improve the situation for private healthcare providers, whether it is increasing the budget or easing the rebate and clawback, although nothing official has been announced.
 
Procurement
 
Gourlis claims that despite all the budgetary pressures the group is making money and still buys top-shelf equipment from Siemens et al, conceding that they negotiate hard on price but that its scale helps, as does the 34-year relationship. He says that the smaller independent clinics typically buy second-hand refurbished imaging equipment.

 

Imaging Services: Hungary

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 149.9164.6181.4199.5181.4215.4237.2260.9
For-profit sector (€m) 41.345.250.25549.5 (60.6)59.4 (66.6)65.3 (73.3)71.9 (80.6)
For-profit growth % 10%10%10%10%-10% (10%)20% (10%)10% (10%)10% (10%)
Public/non-profit sector (€m) 108.6119.4131.2144.6131.9156.1171.9189.1
Hungary: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Affidea International €28.9m €431m 58%
2 Pozitron Diagnosztika €3.5m €4.8m 7%
See all operators
€ million 
COVID-19 update (March 16, 2021) 

Recent figures from the largest private healthcare providers showed that Leitner's earlier (below) estimate for the wider sector was on the more gloomy side. But the publicly-funded half of the for-profit imaging sector in which Affidea plays is likely to have been hit hard. We provisionally peg the imaging sector at down 10% in 2020 and up 20% in 2021, including the public. 

COVID-19 update (May 6, 2020) 

Gyorgy Leitner, head of the private healthcare association of Hungary (PRIMUS) and CEO of Affidea Hungary, the largest player in imaging, expects a 25% drop in the private health sector in Hungary this year because of COVID-19. We apply that figure to the imaging market. 

Overview
 
The Hungarian healthcare system is chronically underfunded and happens to have the worst survival rates for cancer in Europe (according to the OECD data as well as academic studies). The need for more diagnostic imaging is generally accepted and the government has been increasing its spend on MRI and CT scans by 15-20% annually and on PET by a similar or even higher figure.
 
Market size and structure
 
Along with dialysis, imaging is the only area in which there is substantial outsourcing by the public sector. And like all private healthcare in Hungary, the for-profit sector is a small but growing fast. We estimate the private imaging market reached €50-60m (18bn HUF) in 2018 and is half split between the private pay market and the public outsourcing market. The total market including the public sector hospitals will be around €200m.
 
Providers can work directly with the country’s national health insurance fund, NEAK, or with public hospitals which choose to outsource their imaging work. These are generally multi-year tenders with a volume cap and agreed price-per-scan.

Pan-European group Affidea dominates this sector, although it is under threat as the government insources contracts: in May 2020, its €5.8m/year contract to provide imaging services at the Szeged university hospital was nationalised. Its full-year revenue fell 25% to €22m. 
 
Some 15% of the government’s 29 billion HUF (€90m) spend on MRI and CT examinations in 2018 was outsourced, meaning a roughly €14m public pay market for those modalities (according to NEAK’s annual report).
 
PET is not separated out but this is in a fairly embryonic phase in Hungary. Figures indicate public spend on exams done by the only five PET machines in the country was around €8.5m in 2015. This will have grown since then and a mid-sized private player has emerged off the back of this, Pozitron-Diagnostics Health Services Ltd, which has a large outpatient centre in Budapest and €5m of 2018 sales.
 
Patients pay cash for imaging tests to avoid queues in public centres while a small portion of large companies will pay for basic private healthcare as part of corporate schemes. This comes to “no more than” 10bn (€30m) HUF in 2018, according to rough estimates by sources close to Affidea.
 
We therefore estimate that the total sector, including PET and basic imaging done in both the outpatient and small private hospital/acute sector, is roughly €50-60m. Add to that public sector and the whole imaging sector is probably not far off €200m although this latter one is a guesstimate.
 
Growth
 
We peg growth at 10% for the sector as a whole, with the private sector driven by increasing private pay and a little bit of extra outsourcing as the government is likely to have to use private capacity whether it likes it or not (the €90m public spend on MRI/CT figure we mentioned earlier was a 14% increase on 2017, and 2017 was a 20% increase on 2016). 
 
Affidea does teleradiology within its own network only while Iconomix is the leader in the third-party market (see our teleradiology report). As with everywhere, a massive supply gap in radiologists is the primary trigger factor.

 

Imaging Services: Ireland

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
For-profit sector (€m) 100105110115104 (120)119 (126)125 (132)131 (138)
For-profit growth % 5%5%5%5%-10% (5%)15% (5%)5% (5%)5% (5%)
Ireland: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Alliance Medical Limited €32.6m €375m 31%
2 Affidea International €25.9m €431m 24%
3 Medica Group €4.5m €57m 4.3%
See all operators
€ million 
COVID-19 update (June 5, 2020) 

We revise up our estimated market contraction in 2020 to -10%, in line with the general trend in Europe, and have the market bouncing back 15% in 2021. 

COVID-19 update (June 5, 2020) 

An imaging operator speaking anonymously says revenues dropped 90% in April and are expected to drop 10-25% in the second half of the year. As only 10-25% of the private imaging sector's activity is funded by the HSE (Ireland's NHS) with the majority private insurance and cash, we think there will be a very limited element of revenue protection. 

Using our source’s figures, the market is likely to shrink 20% in 2020 to around €90m from €115m in 2019. (A quarter of the market is in-hospital imaging and hospitals have had their revenues protected during the block-buying deal, but a hospital operator source separately estimated a similar order of fall in the private hospital sector this year regardless, due to lower demand after lockdown.) 

Overview
 
The public imaging sector in Ireland is massively under-funded. Barry Downes, Country Manager for Affidea Ireland, tells us the next MRI appointment for some public hospitals are as late as 2026. That is the longest we have heard of and we’d expect Ireland to rank among the bottom countries for imaging exams per person per year, although we could not find publicly available data.
 
Market size and structure
 
For 2018, we estimate the outpatient imaging and outsourcing market at €70-80m with the private hospital imaging sector at around €30-40m making a total privately-provided sector of €100-120m and growing 4-6% annually.
 
We are told that the more advanced modalities of nuclear imaging (PET/CT and SPECT) are kept within hospitals, be it public or private. The outpatient market sticks mostly to MRIs, CTs and ultrasound.
 
It has three main players: Alliance Medical, Affidea, and Global Diagnostics which was acquired from Centric Health by Medica in late 2020. The overall market is growing at 4-6%, we are told. 
 
Our rough €30-40m estimate for the private hospital imaging sector is based on the size of the total private hospital sector, €900m to €1bn, and typical proportions of radiology and imaging revenue seen elsewhere. The private hospital market has five big groups (Mater, Blackrock, Beacon, Galway and Hermitage) who have just over half of the market.
 
Public expenditure figures on imaging are scant. There is a €40m hospital expenditure figure for imaging in 2017 figure on the Central Statistics Office, but this is far too low. It would barely cover the cost of the 270 radiology consultants employed in the public health service that year.
 
Funding
 
Patients cannot go for state-reimbursed imaging diagnostics without a referral from a primary care practitioner and in public-sector hospitals and outpatient clinics, patients face increasingly long queues.
 
Imaging companies can take advantage of this growing dissatisfaction and high-levels of PMI (50%) to treat PMI and OOP funded patients in private clinics. 
 
Downes estimates the outpatient imaging market is 30% cash with a small amount, perhaps 10-15%, from outsourcing by hospitals or the country’s NHS (HSE), and the remaining majority funded by private insurers and other corporate customers.
 
Since 2015, Affidea has been providing ultrasound services on an outsourced contract in the West and South of Ireland through contracts with four out of the country’s nine Community Health Organisations (CHOs), while in 2018 it won a three-year contract to provide this across all but one of them. The 2015-2018 tender saw annual volumes of around 60,000.
 
Growth
 
Growth is being tempered by a shortage of radiographers and radiologists and the level of reimbursement rates. There is medical inflation of around 2-3% with 2-3% growth in volumes leading to overall growth for the private sector at 4-6%.
 
Affidea is now making a move into primary care and Downes tells us that in 2018 and 2019 it has opened four outpatient clinics and plans to open 4-5 more by 2021. “We see limited growth in diagnostics,” he says “but we can utilise our diagnostic capability to generate certain synergies in the primary care market.”  
 
Alliance works much more closely with HSE and the majority of its revenue derives from tenders or PPPs. It has larger operations, with 20 clinics across Ireland and Northern Ireland. 

Imaging Services: Italy

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 2,3002,3502,4002,4502,1202,4162,4651,500
For-profit sector (€m) 1,0001,0251,0501,075860 (1,100)1,030 (1,122)1,050 (1,144)1,070 (1,167)
For-profit growth % 2%2%2%2%-20% (2%)20% (2%)2% (2%)2% (2%)
Public/non-profit sector (€m) 1,3001,3252,3501,3751,2601,3861,4151,460
Italy: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Alliance Medical Limited €104m €375m 12%
2 Affidea International €69.8m €431m 8.1%
3 Gruppo CDC €35m €75m 4.1%
4 Villa Santa Teresa - San Gaetano €12m €15m 1.4%
5 Fora Care €11.7m €11.7m 1.4%
6 HCIR Gruppo Privato Sanita €11.6m €78m 1.3%
7 Gruppo Larc €6m €33m 0.7%
8 Casa Di Cura Igea €4.4m €34.8m 0.51%
9 Cedam €920k €6m 0.11%
10 Centro Medico Santagostino €300k €37.1m 0.03%
See all operators
€ million 

COVID-19 update (June 10, 2020) 

We maintain our figure of a 20% drop in the market for 2020 but have the sector bouncing back 20% in 2021. 

COVID-19 update (June 10, 2020) 

Life Healthcare-owned Alliance Medical says Italy saw the sharpest drop in volumes out of its three markets at 80% (versus 60% in the UK and 65% in Ireland) with a very slow recovery starting during April. We can generously apply that 80% fall to one quarter of the year and have the rest ‘normal’, meaning a 20% annualised fall in revenues for the sector. The Italian NHS is unlikely to provide the same level of revenue protection that Alliance got from NHS England for it’s big PET-CT contract.

Market size

In 2012, the largest player Alliance Medical put the private imaging services sector at €800m, four times the size of the UK market. We think that since then it has probably grown to €1bn in 2016.  Almost all of this is in outpatient diagnostic centres of which Alliance estimates there are 900-1,000 in Italy. These handle not only imaging, but also labs and may have a layer of primary care. These centres vary greatly in size.

In 2015 Alliance reckoned that private paid and private delivered was already 16% of all diagnostic imaging examinations, with a further 27% public paid for and privately-delivered. The remaining 57% was publicly funded and delivered, typically in public hospitals. This suggests that the total market was around €2.3bn in 2016.

Alliance and the second-largest player Affidea account for about one-sixth (16-17%) of the for-profit market including hospitals. 

Payor changes 


The Italian NHS (SSR) accounts for 70% of volumes and 60% of revenues in the for-profit imaging sector, with private pay accounting for the remaining 30%. Co-pay has been increasing significantly which has opened an opportunity for private pay to grow.

Patients have to pay co-pays at public facilities, which opens up the opportunity for private providers to convince patients to just pay the whole fee themselves and skip public queues. This means that in all regions except Lombardy, cash tariffs are actually lower than SSR tariffs: Lombardy is the exception because the local SSR authority will cover some of the cost of a private scan. 

Public sector hospital outsourcing is limited to Piedmont, which for historical reasons has outsourced. 

Growth 

Overall, CT and PET modalities are increasing by 5% while MRIs are actually falling (OECD data). Add to that a largely static national healthcare budget, increasing 0.5-2% each year (Istat, the country’s national statistics association), we think the imaging sector is growing at most, the upper end of that range.

Volumes per machine are very low in Italy compared to most of West Europe (see our ratio report at the top of this section). 

Imaging Services: Netherlands

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
For-profit sector (€m) 4244.5475045 (53)54 (56)57 (60)60 (64)
For-profit growth % 6%6%6%6%-10% (6%)20% (6%)6% (6%)6% (6%)
Netherlands: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 MRI Centrum €11m €11m 24%
2 DC Klinieken €9.5m €37.5m 21%
3 PreScan UK €5.7m €17m 12%
4 Alliance Medical Limited €2.1m €375m 4.7%
See all operators
€ million 

The Dutch outpatient imaging and lab sector is mostly made up of non-profit foundations due to historically being set up by foundation hospitals, though has started to consolidate and 10-25% of the market is now held by for-profits. 

However, the lab component is far, far larger so most of the action has happened there with Unilabs, Eurofins and Synlab entering the market. None of Europe’s big three imaging groups - Alliance, Affidea or Unilabs - have entered the Dutch imaging market, despite Affidea’s group company being domiciled there. Affidea has not responded to our request for a comment on this peculiarity. 

There are a few for-profit imaging chains but none with much more than €10m in sales. So we provisionally estimate the outpatient imaging sector run by for-profits is no more than €50m (2019) made up of 4-5 large players including MRI Centrum, Diagnostiek Voor U and Prescan. We peg CAGR at 6% in line with the wider increase in spending on diagnostic care in the Netherlands, according to Deloitte.

 

Imaging Services: Norway

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 828.9868.6913.3959972.91,022.51,072.11,127.7
For-profit sector (€m) 69.573.577.481.482.6 (85.4)86.7 (89.6)91 (94.3)95.6 (99.3)
For-profit growth % 5%5%5%5%1-2% (5%)5% (5%)5% (5%)5% (5%)
Public/non-profit sector (€m) 759.4795.2835.9877.6931.2935.8981.11,032.1
Norway: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Unilabs SA €60m €1.5bn 72%
2 Aleris AB €26.5m €716m 32%
3 Alliance Medical Limited €2.4m €375m 2.8%
See all operators
€ million 
COVID-19 update (March 16, 2021)

Norway has a similar market structure and growth rate in imaging to its neighbour Sweden, but has been comparatively less hit by the COVID-19 crisis. There was nonetheless a strict lockdown and drops in activity so we think growth will fall to 1-2% this year from 5% previously. 

Overview

We are told by a local imaging executive that Norway has a higher scans-per-person figures for advanced modalities (MRI/CT/PET) than most West European countries and has a market the same size as Sweden (just under €1bn, 2018) despite a significantly smaller overall economy and just over half the population. Like its Nordic neighbour, it is a tender market.
 
Market size, structure and growth
 
Our source says the imaging sector, public and private, is of similar size to Sweden: 10bn SEK or 9.2bn NOK (€935m) for 2018. However, private sector provision is slightly higher at around 8-9% so we estimate the privately provided market is around 760m NOK or €77m.
 
We are told that the private sector has a much higher share in MRIs, possibly up to 50%, but much lower in other modalities, meaning the overall private share of provision is still below 10%.  
 
Private pay is a little bit bigger in Norway than in Sweden because of slightly higher waiting times, which triggers a self-paying market. It could be just over 20% of the privately provided market’s funder base, considering that in Sweden it is 15-20%.
 
Our source estimates that it is growing at a similar rate to Sweden, by around 5% factoring in volumes, price inflation and adjustments, and a changing modality mix.
 
A tender market
 
The private operators compete on tenders that are dominated by Unilabs and Aleris, operating out of both stand-alone and in-hospital imaging units. They might occasionally compete with a few small independent groups set up by local radiologists but the big two generally dominate the sector. 
 
The country’s healthcare administration is split into four regions: the southeast/Oslo, covering 60% of the population, the West, the Central around Trondheim, and the North. Each launches its own tenders for imaging. Unlike Sweden, some nuclear medicine (PET/SPECT) are outsourced too.
 
Tenders have a maximum volume meaning providers need to schedule them across months to allocate capacity over the year, and the volumes come mainly from the outpatient or primary sector.
 
Teleradiology
 
We are told that penetration of teleradiology might be slightly lower than in Sweden, but is still used by most public hospitals, especially in the north region where hospitals struggle to recruit radiologists partly because of extreme daylight conditions (24 hour sun in summer followed by 24 hour night in winter). Direct Diagnostic Alliance may be slightly stronger in the sector than fellow Barcelona-based provider Telemedicine Clinic (TMC), owned by Unilabs.

Imaging Services: Poland

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 1,0871,147.91,213.11,282.61,154.41,347.91,434.81,528.3
For-profit sector (€m) 191.3204.4217.4231.5208.7 (246.7)243.5 (262.6)260.9 (277.4)278.3 (295.7)
For-profit growth % 6-7%6-7%6-7%6-7%-10% (6-7%)17% (6-7%)6-7% (6-7%)6-7% (6-7%)
Public/non-profit sector (€m) 895.7943.5995.71,051.1945.71,104.41,173.91,250
Poland: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Voxel S.a. €69.1m €71.3m 33%
2 Affidea International €46.1m €431m 22%
3 Radiologica €26.5m €26.5m 12%
4 Helimed Diagnostic Imaging €15.8m €17m 7.6%
5 Scanmed Multimedis €14m €87.6m 6.7%
6 Tomma Diagnostyka Obrazowa €11.7m €13m 5.6%
7 Med-sport €8m €8m 3.8%
8 Wizja V €4.5m €4.5m 2.1%
9 Starmedica Group €4.1m €4.1m 2%
10 EuroDiagnostic €2.6m €2.6m 1.2%
See all operators
€ million 
COVID-19 update (June 5, 2020)  

Our earlier estimate was a bit on the gloomy side so we revise it up to -10% for 2020. The largest imaging player, listed Voxel S.A. revealed that its core imaging business' sales fell 7% in 9M 2020. We have the market bouncing back 17% in 2021. 

COVID-19 update (June 5, 2020)  
 
Fee-for-service activity has fallen 70-80% in the Polish private healthcare market during April and May. An investor in the sector says that a fall in the range of 20-25% in the sector is not unlikely. 
 
Market size
 
We peg the total imaging sector at c.€1.3bn in 2018 of which the for-profit sector is 15-20%, around €230m, explained below.
 
Andrzej Różycki, managing partner at local PE firm Tar Heel Capital which built up and then sold top 5 player Tomma Diagnostic Imaging, says that the for-profit imaging sector is around 800m-1bn PLN (€180-230m) in 2018, based on the largest operators.  
 
Separately, market research agency PMR says that the total diagnostic imaging market, public and private, will grow by an average of 5.7% to reach 7bn PLN (€1.6bn) in 2023, implying a 2018 market of around 5.3bn PLN (€1.2bn) in 2018 and 5.6bn PLN (€1.3bn) in 2019. This implies the private sector has a 15-20% share of the total market.
 
Pan-European group Affidea earlier estimated that around 20% of public hospitals outsourced their imaging, although we think this was from before the Law and Justice party came to power. The statist government has discouraged the use of the private sector and has taken many private operators off its list of health fund (NFZ)-empanelled providers. It has also in some cases failed to honour agreements promising NFZ money for healthcare services upon the launch of greenfield projects, causing investors to lose money, notably in radiotherapy. 
 
Growth and trends
 
Różycki says the private imaging sector is growing in the high single-digits while another investor in the sector says it is 7-10%, but HBI notes it is starting from a low base.
 
Private pay
 
Poland has one of the lowest imaging exams-per-person rates of all OECD countries because a portion of the cost of diagnostic exams commissioned by public primary care doctors comes out of their per-patient capitated reimbursement. So doctors are less likely to commission tests, and when they do, we hear the waiting lists for imaging examinations in public hospitals can reach 8-9 months. So there is a large private pay market which private operators target with urban-location quick-access clinics.  Having said that, more than half of the private sector imaging activity is still NFZ-funded. The second-largest player Voxel gets 70% of its imaging revenue from the NFZ. 
 
Outsourcing
 
There is a trend of outsourcing by public hospitals, which are 3-10 year tenders done on a hospital-by-hospital basis and can be for whole imaging suites or just one modality. This, combined with growing private pay, means we give the private sector a growth rate of 7%, nudge higher than PMR’s 5.7% for the whole sector and in line with our two sources’ estimates.

Glimmer of hope for state payor climate
 
The country’s national health fund, the NFZ, has become increasingly associated with harsh tariff cuts and capricious de-listings of private healthcare providers. But one source says that the climate has actually improved in 2019, with the government in March lifting a cap on quotas for NFZ-reimbursed imaging activity at contracted providers in order to clear public waiting lists which boosted activity 20-25% the month after. 
 
Biggest groups and consolidation
 
The largest private imaging operators are pan-European Affidea, Bupa-owned Luxmed, listed Voxel, Radiologica, Helimed and Tomma Diagnosyka Obrazowa (TDO). Combined, these groups have nearly 500m PLN in sales in 2018/2019 or roughly half of the privately provided market, says Różycki. There are 3-4 more small regional players and the remainder is in the private hospital sector or fragmented private outpatient sector.

Imaging Services: Portugal

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
For-profit sector (€m) 216226238250225 (262)260 (275)272 (289)285 (304)
For-profit growth % 5%5%5%5%-10% (5%)15% (5%)5% (5%)5% (5%)
Portugal: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Unilabs SA €58m €1.5bn 25%
2 Affidea International €42.2m €431m 18%
3 CUF S.A. €16m €534m 7.1%
4 Sanfil €6.7m €34m 3%
5 Joao Carlos Costa - Diagnostico por Imagem €5.2m €5.2m 2.3%
See all operators
€ million 
Overview/Covid update (May 18, 2021) 

Portugal has a large diagnostics sector which has successfully positioned itself as an indispensable part of the public health system, with the government (SNS) spending around €500m on private sector labs and imaging in 2018. Around 25% of this is in imaging. Primary care doctors can refer patients for scans at private sector imaging units.

We estimate that the private-pay private-provider imaging sector is as large as the public-pay private-provider one, making the total private provider market €250m (2019) and growing 5% pre-Covid. We estimate it fell 10% in 2020 and will bounce back 15% in 2021. 
 

Imaging Services: Romania

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
For-profit sector (€m) 90100110120126 (130)139 (143)153 (158)169 (174)
For-profit growth % 10%10%10%10%5% (10%)10% (10%)10% (10%)10% (10%)
Romania: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Affidea International €26.3m €431m 20%
2 Regina Maria €13.1m €232m 10%
3 Gral Medical €5.2m €35m 4.1%
4 Modus Vivendi €2m €8m 1.6%
5 Med Imagistic Plus €1.3m €1.3m 1.1%
6 Pozitron Diagnosztika €1.3m €4.8m 1%
7 Medima Health €458k €458k 0.37%
See all operators
€ million 

COVID-19 update (June 9, 2020) 

We revise our figure for the for-profit imaging sector to +5% from -20/25% previously, returning to 10% growth in 2021, in light of recent trading figures from the largest operators (see hospital entry). 

Overview

Consultant Sergiu Negut estimates that the private imaging sector came to €90m in 2016, 60% funded by the public payor with the rest private. We estimate it is growing 10-12% in line with wider private healthcare spending meaning a market of around €110m in 2018.  
 
Imaging and diagnostic tests are typically covered by employers’ corporate healthcare schemes which has boosted the sector and means that the imaging sector will be more reliant on these schemes than on cash payments, compared to other sectors like dentistry and broader basic outpatient care.
 
There is also a healthy amount of public sector outsourcing. Listed group Medlife says that the majority of its €10m revenue from the public payor in 2018 was in
 diagnostic imaging services. Regina Maria may have even more as has several dedicated imaging units while Medlife’s capacity is found in its ‘hyperclinics’. Other major players are Affidea, the largest, while other large outpatient groups like Gral Medical also have relatively large imaging revenues. 
 
The fact that it is imaging, alongside dialysis, where there is substantial public-private sector partnership demonstrates the ability of the private sector to make the large capex and opex investments in high-end imaging equipment which the public sector may be unwilling or unable to.
 
Many large public hospitals do not have advanced diagnostic imaging facilities and opt to instead use the private sector, though in 2018 and 2019 county hospitals in Sibiu, Suceava and Constanta have installed MRI/CT equipment.

Local private equity firm Morphosis Capital entered the sector in 2020 with the acquisition of Medima Health which runs imaging clinics in Bucharest, Calarasi and Alba Lulia.

 

Imaging Services: Russia

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
For-profit sector (€m) 295.3324.8354.3389.8425.2 (519.7)510.2 (571.6)561.3 (628.8)617.4 (691.7)
For-profit growth % 10%10%10%10%-10% (10%)20% (10%)10% (10%)10% (10%)
Russia: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Dr Berezin Medical Institute "MBIS" €72.4m €79.1m 17%
2 MPT Expert €63.7m €63.7m 14%
3 Tomograd €44.6m €44.6m 10%
4 PET-Technology €18.4m €18.4m 4.3%
5 Tomographia €8.5m €8.5m 2%
6 Ars Medica €5.7m €14.5m 1.3%
7 Patero Clinic €4.8m €4.8m 1.1%
8 Medscan €4.2m €4.2m 1%
9 JGC Hokuto Rehabilitation and Diagnostic Center €450k €3.2m 0.11%
See all operators
€ million 
Demand for diagnostic imaging services is growing around 10% a year, by examinations both public and private, as the country looks to combat the growing cancer burden and poor survival rates. Analysts BusinessStat estimates that the diagnostic imaging market in 2017 reached around 25-30 billion Rubles (€350-420m) which fits with the size of the largest operators, so we use that figure. We have the market falling 10% in 2020 due to Covid but bouncing back 20% in 2021. 

Imaging Services: Saudi Arabia

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 1,652.71,755.51,858.21,969.62,089.52,214.52,346.42,483.4
For-profit sector (€m) 466.7496.7526.6556.6584 (601.1)637.1 (650.8)687.6 (702.2)743.3 (757.9)
For-profit growth % 6%6%6%6%5% (8%)9% (8%)8% (8%)8% (8%)
Public/non-profit sector (€m) 1,1861,258.81,331.61,4131,505.41,577.41,658.71,740.1
Saudi Arabia: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 MetaMed €4.2m €16.7m 0.71%
See all operators
€ million 

COVID-19 update (March 17, 2021) 

We revise 2020 growth to 5% in line with the for-profit hospital sector, where the majority of for-profit imaging is done. We revise up our forward growth figure (pre- and post-) for the sector to 8% from 6% previously, to reflect future outsourcing, but keep the total market including the public sector at 6% CAGR. 

Overview
 
For years, the Saudi Ministry of Health bought masses of imaging equipment with little in the way of planning for its utilisation. That has all changed with Vision 2030, the new crown prince’s dramatic reform project, we are told. With more focus on cost, the public sector is buying fewer machines, paying less for the ones it does, and using them more efficiently.
 
Around 60% of the public health sector (the Ministry of Health, military and all government department facilities) now share procurement through National Unified Procurement Company (NUPCO), which has slashed the price of equipment. Public sector usage of its scanning modalities has increased from 25-30% of maximum capacity to around 60% today, says an industry executive.
 
The private sector has historically been much more efficient and only bought equipment it needed, we are told, but is still clearly far behind Europe. This is evidenced by an agreement announced in 2019 between Dallah Healthcare and Siemens, for the latter to provide technical services alongside equipment at one of Dallah’s large private hospitals, for 112m SAR (€27m). We are told this is the first deal of its kind in the country, while it is fairly standard in Europe and the US.
 
Previous reports indicate that imaging is a big part of the large hospital groups’ business, up to 5-10% of revenues as opposed to 1-5% in Europe.
 
Market size and structure

Daniel Viñas, partner at Mediterrania Capital Partners which acquired Egypt-Jordan-Saudi imaging player MetaMed in May 2020, says that the total imaging market in Saudi Arabia is $2.3bn of which the private sector is 30% or $690m (which is close to a separate estimate by a medtech source which puts the private sector at 40% of the total). About 10% of Saudi Arabia's radiologists are employed in the private sector. 
 
Our medtech source says there is a “booming” outpatient radiology practice market led by radiologists setting up their own practices with financing from local institutions. Its main customers are the outpatient clinic market as well as small hospitals (under 100 beds) who cannot afford their own imaging equipment.

The big private hospital operators, Dr Sulaiman Al Habib, MEAHCO, Fakeeh etc, do their own imaging and there is no sign of this changing. For now, the majority of the imaging sector is in private hospitals.
 
Growth and PPP opportunities 
 
We peg growth in the imaging sector at 6%, in line with hospitals, for now although it may be higher. The average age in Saudi Arabia is only 30 so there is a big opportunity in prevention.

Radiology is one of four sub-sectors that has been prioritised for PPPs run by private, preferably international operators (the others are mental health, home healthcare and post-acute rehabilitation). There was a deadline for submissions for a tender in late 2019 but it's not clear where this got up to. 

Imaging Services: Serbia

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 4550556066738088
For-profit sector (€m) 22.52527.53027 (33)33 (36.3)36.3 (40)40 (44)
For-profit growth % 10%10%10%10%-10% (10%)22% (10%)10% (10%)10% (10%)
Public/non-profit sector (€m) 22.52527.530394043.748
Serbia: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Euromedik €2.6m €14m 9.6%
See all operators
€ million 

Overview

The for-profit imaging sector has grown due to long waiting lists in the public sector and now accounts for half of the total market in Serbia, says Predrag Bjeletic, founder and manager of one of the largest imaging clinics DC Zemun. 

Unlike other former Yugoslavia markets Slovenia and Croatia, there is no public outsourcing so it is still entirely reliant on private pay. The lack of public-private cooperation extends to workforce, too: radiologists work in either private or public facilities, not both. 

Market size, growth and structure 

We estimate that the Serbian for-profit imaging sector is around €30m based on the size of the for-profit lab market (see separate entry) and the proportions between the two sub-sectors in other CEE/SE Europe countries that have a big private pay element and for which we have data (Russia, Poland, Romania, Ukraine). 

We peg pre-Covid annual growth at 10% in line with the broader healthcare sector and Serbia’s imaging capacity according to Bjeletic. The private sector is around half of the total market and one-third for CTs scans. 

He adds that the private sector is made up of imaging-only clinics on the one hand, and private hospitals and polyclinics doing their own imaging on the other. He doesn’t estimate the split between them but says the largest imaging providers are the polyclinic and hospital groups. 

Payors 

85-90% of patients pay for examinations themselves with the remainder funded by either private health insurers or pharma companies doing clinical trials. Operators in the past have tried to get government reimbursement for imaging but have failed each time, Bjeletic says, and it is still non-existent or negligible. 

Largest players 

The largest private imaging provider is polyclinic operator Euromedik, says Bjeletic, though the other two large hospital-polyclinic operators Medigroup and Bel Medic are likely to be close behind. Some of the largest pure imaging clinic operators include DC Zemun and DCH Health Group. 

We are told by a local source that there was a larger group of 6-7 imaging clinics, which Euromedic came close to buying a few years before it was sold and re-branded Affidea in 2015, but that it was broken up after the deal fell through.

Covid impact 

Bjeletic doesn't give a figure but indicates the impact on volumes was significant, saying it massively swung the proportion between MRI and CT volumes from 2:1 prior to the pandemic to 1:1 during it. 

Imaging Services: Slovakia

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
For-profit sector (€m) 929610010494 (108)106 (112)110 (116)114 (120)
For-profit growth % 3-4%3-4%3-4%3-4%-10% (3-4%)13.5% (3-4%)3.5% (3.5%)3.5% (3.5%)
Slovakia: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Pro Diagnostic Group, A.s. €44.6m €44.6m 47%
See all operators
€ million 
COVID-19 update (March 2021, 2020) 

Imaging revenues for Slovakia’s largest imaging group Pro Diagnostic Group (PDG), which recently entered the Czech market, were expected to fall 30-35% through the COVID-19 pandemic in both countries. That is according to Tomas Zednicek, partner at Pro Partners Holding which built up PDG before selling a majority stake to Ribera Salud in 2017/18. PDG has a roughly 40% market share of the private imaging sector in Slovakia. We therefore estimate a 10% drop in the market for 2020, with a 13-14% bounce-back in 2021. 

Imaging Services: Slovenia

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 53586470728391100
For-profit sector (€m) 1516.518.22020.1 (22)23.1 (24.2)25.4 (26.6)28 (29.3)
For-profit growth % 10%10%10%10%3% (10%)15% (10%)10% (10%)10% (10%)
Public/non-profit sector (€m) 3841.545.85051.959.965.672

Overview 

The private for-profit imaging sector in Slovenia has boomed in the last 5-6 years thanks to outsourcing by Slovenia’s statutory health fund the ZZZS. Unlike other sub-sectors, ‘concessions’ from the ZZZS for imaging services had no upper limit meaning providers were paid for every scan they managed to do, a market source tells us. 

Market size 

By 2019, the private imaging sector reached around €20m just in MRI and CT exams done for the ZZZS, one-third of the total market for those two modalities of €60m according to our source. They say it had a 44% share of MRIs and 11% of CTs in 2018. 

These figures are corroborated by A
lfi PE, a private equity firm that entered the sector in 2020.  Partner and managing director Tone Pekolj tells HBI there were 160,000 MRI exams done in Slovenia in 2019, of which the private sector did 75,000 (47%); out of 140,000 CT exams, it did 15,000 (11%). 

He says the overall market is growing 10% a year as these examinations become more routine procedures in healthcare practice in Slovenia, and the private sector's share is 'stable'.  

Largest players and consolidation 


Alfi PE acquired the largest player Medilab in late 2020 and in mid-2021 bolted on the second-largest player MDT&T to create a c.€10m-revenue platform. The next-largest operator after Medilab/MDT&T is Digitalna Slikovna Diagnostika.

Covid impact 


The combined revenues of the above three grew only 3% in 2020 versus a combined c.20% in 2019. We reduce post-Covid growth for 2020 to 3% and peg 2021 growth at 15%. 

Imaging Services: South Africa

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
For-profit sector (€m) 485.1559.3644.9742742 (856.1)908.9 (981.7)1,045 (1,124.4)1,201.8 (1,293)
For-profit growth % 15%15%15%15%0% (15%)20-25% (15%)15% (15%)15% (15%)
South Africa: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Morton and Partners €8.1m €8.1m 1.1%
See all operators
€ million 
COVID-19 update (March 17, 2021)

We assume the radiology sector has been impacted by COVID similarly to the hospital one (see Hospital report), so revise down growth to 0% for 2020, bouncing back 20-25% in 2021. 

Overview
 
Like hospitals, imaging in South Africa is split between a well-funded, European-level quality private sector and an underfunded and comparatively opaque public sector which faces a chronic shortage of radiologists. There is a twelvefold difference in radiologist-per-head if you segment the population by those using the public system and those with PMI (medical schemes) using the private system. It is therefore not unsurprising that 100,000 images go unreported in the public system each year.

Private market size, growth and opportunity 

Radiology practices, like all healthcare services in South African (with a few exceptions), need to be owned by doctors.

However, there is an opportunity to buy the physical assets and employ the support staff (and possibly radiographers if the law changes), then charge the radiologists to use the machinery and space. Life Healthcare has earmarked up to 3bn Rand (€180m) to 'buy out' the radiologist facilities in its hospitals in this way, as of June 2021 (the South African imaging market has been completely untapped for the Big Three hospital groups until now).  
 
A local radiologist estimates that the privately provided radiology sector reached around 9.8bn Rand ($650m) in the year to March 2018. The funding structure breaks down as:
  • 80% Medical Schemes (standard private insurance), a publicly-available figure
  • 15% Private medical insurance (additional/alternative cover, often as a cheaper alternative as coverage is more customisable)
  • 4% Compensation for Occupational Injuries Act-associated funds
  • 1% Clinical studies
The Medical Schemes figure ($592m) has grown 22% and 13% in 2017 and 2018. Our source says that most of the growth comes from more hospitalisations requiring imaging tests as well as greater allocation for radiology by Medical Schemes. 
 
But tariffs for imaging examinations from medical schemes have been falling by around 2-3% in real terms over the last three years. Average tariff growth of 4% is being outpaced by inflation of 6-7% each year.  Tariff pressure is being seen in all areas of private healthcare in South Africa as a dire economy means a stagnant pool of policyholders forcing Medical Scheme administrators to push hard on price.
 
HBI pegs forward growth for the private imaging sector at around 15% based on the past few years’ growth.
 
There are around 700 radiologists in South Africa and 500 of them work in the private sector, which is comprised of around 85 private practices. These range from a single radiologist to partnerships of 30-40, and the average revenue per radiologist for 2019 is around 20m Rand (€1.1m/$1.4m). You can browse all the country's practices here. Most rent space in private sector hospitals and serve both the inpatient facilities as well as the wider outpatient market.

Some 'star' radiologists can charge more than what Medical Schemes pay with the patient making up the difference with a co-pay. 
 
The private sector has offered its services to the state to alleviate public sector radiologist resource shortages. This could be done most effectively through teleradiology but there are problems with tenders, funding and other structural issues. Teleradiology is starting to develop in specialities like neuroradiology and MSK with radiologists offering their services nationwide from a single location, but it’s limited for now.


Our source says that it is impossible to estimate the size of the public radiology sector. If it offered its services at the same price as the private sector, volumes indicate it would be around $3bn (43.8bn rand). But in reality it is obviously far lower.
 

Imaging Services: Spain

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 2,9803,0903,2003,3003,0703,4403,5403,650
For-profit sector (€m) 8358909501,015914 (1,080)1,060 (1,150)1,130 (1,225)1,200 (1,300)
For-profit growth % 6-7%6-7%6-7%6-7%-10% (6-7%)6-7% (6-7%)6-7% (6-7%)6-7% (6-7%)
Public/non-profit sector (€m) 2,1452,2002,2502,2852,1562,3802,4102,450
Spain: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 ASCIRES €118m €118m 12%
2 Affidea International €30.6m €431m 3.3%
3 HT Medica €26.5m €26.5m 2.9%
4 Centre Medic Alomar €13.8m €13.8m 1.5%
5 Analiza Sociedad de Analisis Clinicos €11.9m €42m 1.3%
6 Clinica Gaias €8.3m €10.5m 0.91%
7 Alliance Medical Limited €8.2m €375m 0.9%
8 Scanner Murcia €8m €8m 0.87%
9 Clinicas Ibermedic €3.4m €13m 0.37%
See all operators
€ million 

COVID-19 update (March 17, 2021) 

The CMO of Spain's third-largest imaging chain HT Medica told HBI he expected the company's revenue to be down 5-10% in 2020. We put the market at the lower end of that estimate (-10%) and have it bouncing back 16% in 2021 before normalising at 6-7% of pre-COVID growth. We apply this trend to the total/public market which has been growing slower at 3-4% pre-COVID. 

COVID-19 update (June 12, 2020) 

We assume that the private imaging sector, of which the vast majority is elective outpatient work, will shrink around 20% in 2020 after growing 6-7% in the past few years. This is based on similar falls in other privately-funded elective markets.

Market size
 
We are told that the imaging market in Spain for 2018 is €3.2bn; the private is 30% of this or €950m and the specialised outpatient imaging sector is 10% of this or €300m. We have growth down as 6-7% which is the midpoint of two separate estimates.
 
Dr Antonio Luna, chief medical officer (CMO) of Health Time which is the third-largest outpatient imaging group thinks that the private sector share is higher than the above figures, as much private sector activity is not counted in many surveys. He reckons privately provided radiology (so excluding SPECT/PET) is €500-600m.
 
He adds that the publicly provided imaging sector is hard to measure but the second estimate matches up with figures from the country’s private provider association, IDIS. It says in its 2018 report that the private sector does 45% of MRIs and 22-25% of CT, PET and SPECT exams. Some private operators do not provide data so the real figure for private provision of MRIs might be more like 75% and for CTs 50:50, Dr Luna adds.
 
Structure
 
Dr Luna says that the private market breaks down into three segments in descending order of significance. The majority is imaging done in outpatient specialised imaging clinics, and polyclinics for whom imaging is not the main revenue stream. Next biggest is the public outsourcing sector, which may be in decline as leftist governments insource in Valencia and other regions. Third, we have the private hospital sector, where the largest hospitals including those run by Quironsalud, HM Hospitales, Vithas and HLA Hospitales do their own imaging.
 
Some of the smaller private hospitals do outsource - Health Time runs six private hospital imaging departments - though it depends on the politics of the group, with some more willing than others.
 
Growth
 
Dr Luna says that there is general agreement that the private radiology market in Spain is growing around 10% annually. This seems quite high for Western Europe and is a nudge higher than the OECD figures on volume growth, which for 2014-2017 average 3-5% for CTs, 6% for MRIs and 10-16% for PETs (increasing exponentially). The first estimates peg growth at 3-4% only, so we meet the two estimates in the middle.
 
PET/SPECT are much newer modalities so the annual volumes, in Spain and in general, are only 5-10% of those of MRIs or CTs, although growing much faster.
 
Dr Luna says an increased take-up of private health insurance is driving growth in the private sector as basic check-ups and diagnostic tests are one of the main reasons people take PMI policies, and even the most basic policies cover imaging tests. Prices have also come down dramatically thanks to competition amongst providers and higher volumes, which has helped make imaging more accessible.
 
Funding structure and trends
 
The private imaging sector is majority-funded through private insurance (PMI), with 2-5% cash and the sizeable minority of public outsourcing, Dr Luna says. The cash segment is much smaller than in other countries because of high uptake of PMI.
 
Private insurers are increasingly contracting with imaging providers on province-based tender agreements (Spain has 50 provinces in total) with a capitated fee per patient covering all their diagnostic imaging exams. One provider would cover a province of, say, 100,000 people while 4-5 providers would cover Madrid, which has 6.5 million people. The volumes can be huge and lead to very competitive pricing (although public outsourcing has been insourced in Valencia because authorities said it was too expensive) amongst the outpatient providers, as the contracts are quite low-margin for hospitals which cannot guarantee themselves the volumes to make them attractive.
 
Biggest outpatient providers
 
Health Time expects 2019 sales of around €25m making it a number three behind family-owned ASCIRES, which we estimate has around €100m, while pan-European group Affidea had just over €30m. 

Imaging Services: Sweden

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 883.2932.3981.41,030.41,079.51,128.61,177.71,236.5
For-profit sector (€m) 58.963.868.773.670.7 (78.5)76.5 (82.4)80.5 (86.4)84.4 (90.8)
For-profit growth % 5%5%5%5%-4% (5%)8% (5%)5% (5%)5% (5%)
Public/non-profit sector (€m) 824.4868.5912.7956.81,008.91,0521,097.21,152.1
Sweden: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Unilabs SA €37m €1.5bn 52%
2 Aleris AB €33.4m €716m 47%
See all operators
€ million 

COVID-19 update (March 17, 2021)

We stick with our original estimate of a 4% fall in the market, followed by a 8% rebound. We leave the public/total figures unchanged. 

COVID-19 update (June 8, 2020) 

Sweden has yet to (discernibly) peak which makes forward forecasting considerably harder than other European countries, the majority of whom have seen falling daily death rates for at least a month. 

An imaging operator, speaking anonymously, says revenues are down 20-30% in the last few months of the pandemic and that a return to normality is expected by the middle of summer but emphasises it is hard to know. We tentatively assume a normal Q1 (c.5% growth), a Q2 down 20-30%, a flat Q3 and a normal Q4 (c.5%) growth. This equates to a 4% fall on an annualised basis. 

Volumes are likely to have dropped more than 20-30% but diagnostics in Sweden is a tender market and many county councils have offered a certain degree of revenue protection to operators, either by simple revenue floors or by offering the provision of alternative services to make up the shortfall in the tendered activity. Our source says that the COVID-19 experience could mean all future tenders have more formal arrangements for crises, including revenue protection for when activity drops. 

Overview
 
Like all health care in Sweden, its roughly €1bn imaging sector is well-funded and public outsourcing is the main point of access for private operators. Stockholm and Gothenburg have proven the most fertile ground in recent years, but the privately provided market is still relatively small. Pan-Nordic group Aleris’ imaging arm competes with pan-European lab and imaging group Unilabs for virtually all tenders.
 
Market size and funding structure
 
An industry executive agrees with previous estimates given to HBI that the total imaging sector in Sweden stands at around 10bn SEK (€935m) for 2018, with outsourcing covering 5-7% of this.
 
On top of the outsourcing, there is a small private insurance sector covering MRIs and X-Rays for those not willing to wait the 6-ish weeks for a publicly reimbursed scan. This equates to around 15% of the private market, meaning a total privately provided imaging market of around 700m SEK or €65m in 2018 (600m SEK + 15%). That 15% will include imaging provided within the networks of the country’s acute private hospital players, mainly Capio, GHP Speciality Care and Aleris. Virtually no one pays out-of-pocket for imaging exams in Sweden.
 
The public-private funder split in the privately provided market is probably closer to 80:20 if you factor small co-pays by patients.
 
A tender market
 
The country’s 24 county councils administer healthcare and private sector involvement depends on how private sector friendly the local elected assemblies are (there are 20 but Stockholm’s healthcare administration is split into five due to its size).
 
Tenders cover a single county council region and are generally for all modalities, except PET/SPECT, with an agreed price per scan but no guarantee of volumes with much of the work still done at public hospitals. Generally, the imaging exams commissioned from within the hospitals remains in the hospitals, while the outpatient and primary care referrals are sent to the private providers.
 
Growth
 
Our source says that the private imaging market is growing by an average of 5% annually; 3% some years, 7% others. Some tenders have prices indexed against consumer inflation to account for increase wages while some don’t, which is much to the chagrin of the private sector operators.
 
There is some small pricing pressure but a changing mix of imaging modalities towards the higher-reimbursment ones roughly cancels this out, our source says. X-rays for some indications are being replaced by CT scans, while some CT scans are being replaced by MRIs, the latter partly driven by efforts to use less ionising forms of radiation. CT scans do give off less radiation than in the past but still more than MRIs, which give none.
 
Teleradiology
 
Remote interpretation of images has penetrated further in Sweden than most other developed markets apart from the UK, evidenced by the growth of Telemedicine Clinic (TMC), based in Barcelona but serving the Swedish market. But our source says that far from solving the radiologist shortage problem, companies like TMC are exacerbating it by pinching radiologists from Sweden.

Imaging Services: Switzerland

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 2,536.12,582.32,628.42,683.72,421.82,702.12,748.32,808.2
For-profit sector (€m) 1,544.71,567.81,590.91,618.51,407.3 (1,650.8)1,613.9 (1,683.1)1,641.6 (1,715.4)1,678.5 (1,752.2)
For-profit growth % 2%2%2%2%-13% (2%)14-15% (2%)2% (2%)2% (2%)
Public/non-profit sector (€m) 991.41,014.51,037.51,065.21,014.51,088.21,106.71,129.7
Switzerland: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Affidea International €34.9m €431m 2.5%
2 Rimed €32.3m €32.3m 2.3%
3 Rodiag Diagnostic Centers €29.7m €29.7m 2.1%
4 Groupe 3R €29.3m €29.3m 2.1%
5 RAD-X €19m €38m 1.4%
6 Unilabs SA €12.6m €1.5bn 0.9%
7 Alliance Medical Limited €4.8m €375m 0.34%
8 X-Ray SA €3.7m €3.7m 0.26%
9 Imagerieet Developpement (Imagerive) €2.5m €2.5m 0.18%
10 Medneo €1.8m €17.3m 0.13%
See all operators
€ million 
COVID-19 update (March 17, 2021) 

Switzerland’s radiologists closed for business during the lockdown meaning the sector was at 10% of normal revenue for six weeks (remaining open for emergency imaging). By the end of May activity had returned to 60-70% of normal and a full return is expected by the end of June, a local operator tells us. These falls equate to a roughly 13% annual revenue drop. We have the sector bouncing back 14-15% in 2021, before resuming sluggish 2% growth thereafter. We apply these figures to the whole for-profit sector including the portion done within for-profit hospitals and have a smaller drop in the public imaging market. 

Overview
 
Switzerland has historically been a highly lucrative market for private imaging operators. But the sector has been hit by tariff and regulatory changes by federal and cantonal governments in 2015-2018, introduced in order to bring down the country’s healthcare expenditure, which is the highest as-a-percentage-of-GDP after the US (amongst major markets). It also has the most consolidated outpatient imaging market of all the countries in this report.
 
Market size

For 2017, the total market for diagnostic imaging is around SF2.8bn (€2.6bn), with the for-profit sector around 60% of this at SF1.7bn (€1.56bn) according to a knowledgeable local operator. Of the for-profit sector, just over a third (SF600m€540m) is the outpatient sector according to public data sources with the remainder done in, and by, hospitals. We peg growth across all three at around 2% going forward, explained below.
 
Consolidators
 
Overall, the sector is fragmented, with the four largest players holding under 15% of the private (1.7bn SF€1.56bn) market although they hold around 40% of the outpatient sector.

They are local outfits Rimed, Rodiag and Groupe 3R, who together with pan-European operator Affidea, have around 200m SF in combined revenue according to HBI contacts’ best estimates, although figures are not public. Rimed has minority investment from Luxempark while 3R was acquired by Naxicap Partners in mid-2021.
 
Mediclinic-owned Hirslanden also has 15 radiology centres, although most of these are in-hospital and based on parent company, group-level radiology segment revenue of 3%, it could easily be in the top five private radiology providers in Switzerland.
 
Gilde Healthcare-backed platform Rad-X has also entered the market with the acquisition of a chain of centres with now around €18m in annual sales (2019/20) while the pay-per-use group Medneo has one centre in Zurich.
 
Tariffs and growth trends
 
The sector has been hit by tariff cuts under the Tarmed reforms brought in 2014/2015, which aimed to bring down the country’s healthcare expenditure, the highest in the world as-a-percentage-of-GDP after the United States. An executive says that overall, tariffs for diagnostic imaging have fallen 15-20% since the changes. A particularly harsh cut of 6% was levied in 2018.
 
The Tarmed reforms not only affected tariffs, but made it much more difficult to obtain licences to install new high-cost imaging equipment in new or existing centres, limiting the growth in the market.
 
These two changes have clearly hit the sector, hard.
 
The Office Federal de la Statistique publishes annual reports on healthcare expenditure and reveals the size of the outpatient radiologist sector. Growth was 6-10% from 2012-2015, while in 2016 and 2017 it was just 2%. It is three-quarters funded by a mixture of statutory insurance and cantonal spend, while individuals pay the final quarter through private insurance and co-pays. We hear the bulk of the tariff cuts have happened and will be “incremental” going forward, so for now take 2% as our growth figure.
 
However, the effect on revenues has not been as bad as feared. A source:
 
“In practice, the turnover has not been hit that bad because people have found ways to get around it. As a radiologist you don’t charge a fixed sum, you have a number of ‘positions’ or ‘items’ on an invoice and there is a bit of freedom to slightly increase some of those positions to make up for losses in the overall tariff. These are things like the amount of time a doctor spends with the patient or whether an injection was given before the scan. And you could also just switch to a better-reimbursed modality, like doing an MRI scan instead of a CT.”
 
Our sources nonetheless expect consolidation in the outpatient sector to happen more going forward as radiologists seek to retire and tariff cuts bite.
 
A typical price in Switzerland for an MRI stands at a whopping 500-900 CHF (€450-820) depending on the type of scan and the canton in which it is performed. For a CT, we are told it is around 1000 CHF. 

Imaging Services: Turkey

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
For-profit sector (€m) 119.1140.2164.6193.7213.1 (227.6)255.7 (267.3)300.2 (314.2)352.9 (369)
For-profit growth % 17.5%17.5%17.5%17.5%10% (17.5%)20% (17.5%)17.5% (17.5%)17.5% (17.5%)
Turkey: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Affidea International €30.2m €431m 14%
2 Baytuna €6m €6m 2.8%
3 ATL Health Services & Imaging €2m €2m 0.94%
4 Burtom Health Group €1.6m €1.6m 0.75%
5 Kayi Medical €1.2m €1.2m 0.55%
6 Lokman Hekim €580k €30.7m 0.27%
See all operators
€ million 

Overview

Diagnostic imaging is a big moneymaker for the private healthcare sector in Turkey and overtreatment is rife, anecdotal evidence suggests. Doctors in both the private and public system are paid for activity on top of their basic salary, incentivising over-usage. The result is the highest rate of MRI exams per-head in the world and the second-highest (after the US) for CTs, according to the Turkish General Directorate of Health Services. The government has voiced its intention to tackle this problem but contacts say little has been done other than a small tariff cut in 2018 of around 5%.

The devaluation of the Lira over the 2010s has skyrocketed the cost of imaging machinery for local operators. The only way around this is to make up for the cost by charging high sums to private and international patients, or to extend the lifetime of the existing imaging parc through more maintenance and refurbishment.

Market structure and size 

We can split the sector into private hospitals, outpatient radiology practices and outsourcing contracts as part of the massive PPP hospitals. The private/for-profit sector has a roughly 15-20% share of diagnostic imaging activity done in hospitals according to official national data, although this may not include some PPP outsourcing. 

The first two sectors are a low-volume, high-price-point play while the outsourcing contracts are massive with some of the larger ones guaranteeing volumes of around two million scans annually. However, the price point is likely to be so low that only local operators are involved. The outpatient radiology sector is comparatively small - most imaging is done in hospitals. 

The SGK tariff to hospitals for an MRI is now around 80 Lira (€12), and the tender process for the PPPs is likely to reduce that further. That tariff is after a 5% cut in 2018, we are told, one of the ways the government hopes to reduce the number of scans.

The private sector can collect a total price 2-3x the SGK tariff by charging up to a 200% co-pay to the patient’s top-up insurance, while the pure private insurance market price can be 4-5x higher than the SGK tariff and price comparison websites show hard-currency prices, advertised to the international market, that are 20-30 times higher.

Based on the available data on volumes, private sector share and tariffs, we think the private imaging sector - private hospitals and PPP outsourcing - is around 2 billion Lira (€200m), while the public sector is twice as large at 4bn Lira (€400m), in 2019. The private hospital sector has a 15-20% of imaging but will have a higher average price point thanks to co-pays, privately-insured and international patients. 

CT and MRI exams have been growing by an average of 9-10% from 2015-2019 which we apply to market growth (the private sector has not increased its share markedly during the period), plus medical inflation which means the market is probably growing around 15-20%. 

Biggest players 

The biggest providers in the public hospital outsourced imaging sector are ATL, Baytuna, Kayı, Burtom, Affidea and Diyarmed while the large hospital groups MLP Care, Acibadem and Memorial are also major players in the private hospital-based imaging market.  

Imaging Services: Ukraine

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
For-profit sector (€m) 72.479.787.696.491.5 (106)114.3 (116.6)125.9 (128.2)138.4 (141.1)
For-profit growth % 10%10%10%10%-5% (10%)25% (10%)10% (10%)10% (10%)
Ukraine: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Acmd €6.4m €6.4m 7%
2 Dr Berezin Medical Institute "MBIS" €3.4m €79.1m 3.7%
See all operators
€ million 

Overview 

We are told that there is a large, private-pay and retail-based imaging market in Ukraine as a chronically under-funded and under-staffed public sector struggles to meet the rising demand for imaging services. Government outsourcing has started slowly in the last few years but for now it is mainly a cash market. 

This is made up of a myriad of small polyclinics and diagnostic centres while the largest player is a chain of 7-8 clinics owned by the distributor for Toshiba’s medical imaging unit (now owned by Canon), Inmed Ukraine. Russia’s biggest imaging player MBIS also has clinics in Kiev and Odessa, while the investment firm that built up Slovakia’s largest imaging chain PDG, Pro Partners Holding, has also entered the market with European Radiology Center. 

Market size 

We can get an idea of the size of the for-profit sector from the ‘Association of MRI and CT Centers of Ukraine’ which aims to catalog every machine in the country, public and private. 

Its data, which seems fairly comprehensive for the private sector as all the biggest private hospital and polyclinic groups appear, indicates there are 150-200 MRI machines and 150-200 CT machines in private healthcare facilities across the country (it’s hard to know whether a few are public or private hence the estimate). 

It also shows the tariffs charged at each facility, which varies between 1000-2000 UAH (€30-60) for MRIs and 1000-1500 UAH (€30-45) for CTs. Based on these tariffs and likely volumes based on other markets, the total for-profit imaging sector (for MRI and CT) could total somewhere between €60m (1.9bn UAH) at the low end to €130m (4.1bn UAH) at the high end - with €95m at the midpoint. This would make it similarly sized to the for-profit lab market and we peg growth at a similar rate (10%). 

Imaging Services: United Arab Emirates

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
For-profit sector (€m) 214.1214.1214.1235.5235.5 (256.9)256.9 (282.6)282.6 (313.4)313.4 (342.5)
For-profit growth % 0%0%0%10%0% (10%)10% (10%)0% (10%)10% (10%)

Overview and market size 

Anecdotal evidence suggests imaging is a big money-maker for private hospitals in the UAE while the outpatient imaging sector is likely to be quite small. 

We provisionally estimate the for-profit imaging sector is around $250-300m, largely included in our for-profit hospital market figures. 

We get to this figure by looking at the relative sizes of the UAE for-profit hospital market and the Saudi imaging market correlated with the available data on imaging volumes and tariffs in the private sector in Dubai.

Volumes hit hard by economic slowdown & Covid impact 

The Dubai Health Authority says the private sector carried out 410,000 general X-rays, 74,000 MRIs, 36,000 CTs and 246,000 obstetric and general ultrasounds there in 2017. These account for 90% of the total radiology & imaging procedures done. 

Volumes fell by an average of 20% that year after growing around 11% in 2016, most likely due to the economic slowdown following the 2014-16 oil price crash. The same trend was seen in the hospital sector which basically had a flat 2016-2018 before growth returned in 2019: we apply the same figures for the imaging market.

While the wider healthcare sector has faired well in 2020, this has in large part been thanks to huge lab testing volumes. We don't think imaging will have done as well, so have the market as flat in 2020 and returning to 10% growth in 2021. 

Outpatient imaging chains 

We are told there are no big specialised outpatient imaging chains in the UAE. Some smaller operators that most regularly appear on insurer provider network lists include International Radiology Centre, Al Durrah Radiology Center, Cure Medical Centers, Advanced Radiology Centre, Al Safwa Radiology Center and Global Hawk Imaging & Diagnostics; though it’s hard to assess their scale. 

 

Imaging Services: United Kingdom

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 3,019.33,3773,787.44,221.23,810.84,760.65,124.15,733.8
For-profit sector (€m) 616.8691.8773.9867.7780.9 (973.2)996.7 (1,090.5)1,113.9 (1,219.5)1,249.9 (1,360.2)
For-profit growth % 12%12%12%12%-10% (12%)27% (12%)12% (12%)12% (12%)
Public/non-profit sector (€m) 2,591.32,685.23,013.53,353.53,029.93,763.94,010.14,483.9
United Kingdom: For-profit Imaging Services market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Alliance Medical Limited €188m €375m 24%
2 Inhealth Group €145m €145m 18%
3 Medica Group €48.9m €57m 6.3%
4 Medical Imaging Partnership (MIP) €13.3m €13.3m 1.7%
5 Diagnostic Healthcare Ltd €12.2m €12.2m 1.6%
6 AXA Group €8.5m €225m 1.1%
7 Fortius Clinic €6.5m €24.2m 0.83%
8 UME Group €5.9m €5.9m 0.75%
9 Oryon Group €5.2m €5.2m 0.66%
10 Phoenix Hospital Group €4.8m €19.3m 0.62%
See all operators
€ million 

Market size & Covid update (April 6, 2021) 

We revise our pre- and post-Covid market size figures in light of new data. We're changing the total size of the market nominally from £3.0bn in 2018 to £3.23bn. More significantly, we are increasing our private sector figure substantially from £350m that year to £660m off new figures provided by a knowledgeable advisor.

We were in the right ball-park for our NHS outsourcing figure of £150-200m. But we vastly underestimated the size of the privately paid-for imaging market in private hospitals and outpatient clinics which we thought was a similar amount but is actually c.£480m according to our source. Half of that is MRIs. 

We aren't splitting out the private hospitals' imaging revenues to assess their share of the £480m figure. But, considering they are a c.£5bn market and that radiology could easily be 5% of a private hospitals' sales, assume that they are at least half of that figure (and well over a third of the total £660m private sector). 

The new, larger part of the market that is private hospitals and clinics means we are changing our Covid impact to -10% from -3%, revising up the bounce back in 2021 from 20% to 27%.

NHS outsourcing contracts have seen some level of revenue protection while private pay activity is likely to drop sharply in 2020, by 20-25% according to one advisor. With the market growing 11-13% previous years we think that this balances out to a 10% drop. 

Overview
 
The UK is well behind the rest of Europe when it comes to PET/CT, MRI and CT imaging. This has become a political issue as poor diagnosis means that UK cancer survival rates lag West Europe. But the NHS does not have the money to meet this demand so there is a big opportunity for for-profit operators to build and run new centres. Some 40% of NHS PET exams and 9.1% (and growing) of MRIs are outsourced to the private sector. 
 
Market size
 
Based on publicly available data, we estimate that the UK NHS spend on medical imaging is likely to be somewhere between £2.5-3bn in the year to March 2019 (all modalities included). Plus the privately paid for and provided sector, the total is likely to be around £3-3.5bnbn. The private sector is 15-20% of this at £660m (see market size update at the top). 
 
The outsourcing market
 
NHS England is very transparent on how it uses private sector capacity for diagnostic imaging exams. It has arrangements with a dozen major private providers, of which the largest (by share of outsourced activity) are Alliance Medical and InHealth, followed by hospital groups Ramsay UK, Spire Healthcare and BMI, and then smaller ones like Care UK, Nuffield and Circle. 
 
The extent of outsourcing varies by modality. Alliance Medical does 35-36% of NHS England’s PET exams after it won all four lots of a large national tender in 2015, while non-profit Cobalt Health does 2-3%. PET volumes are growing 10-15% a year, to 176,280 in the year to March 2019, of which Alliance did 65,000.
 
The private sector did 9.1% of NHS England’s 3.7 million MRIs in the year to March 2019, up from 8% the previous two periods. Alliance and competitor InHealth are the largest providers, both doing around 3% of the total, InHealth slightly more (for now: its figure fell 20-25% in the most recent period while Alliance’s quintupled).
 
The remaining modalities’ extent of outsourcing is much lower: 1-4% of ultrasounds, fluoroscopies and X-rays, and under 1% of CTs and a negligible amount of the remaining modalities (nuclear medicine, medical photography, SPECT). Aside from the small growth in MRIs, these proportions have not grown substantially from 2016 to 2019.
 
Care UK and Ramsay are the largest private providers of X-rays, both holding just under a quarter each of the privately provided market (totalling 280k scans out of NHS England’s 22.8 million in most recent period) and Ramsay does the most CTs (23% of the 36,810 outsourced scans).

(Note that our database of companies doesn't attempt to separate out the private hospital groups' imaging revenue, with the exception of HCA.)
 
We estimate that the figures above total around £150-200m of outsourcing to the private sector, mostly MRIs and PET/CT, based on average prices per scan in the NHS sector. The private pay market is likely to be about the same based on the higher price points but lower volumes. 
 
Growth and future
 
The outsourcing market in England should grow strongly off the back of more diagnostic exams, mainly MRI and PET.
 
The volume of MRIs outsourced to the private sector jumped 20% to 336k in the year to March 2019, while growing 10% in the previous period. PET volumes are growing 10-15% a year with private provision maintained at 36-38% of the total, mainly Alliance Medical. So we peg growth for the outsourcing sector at a minimum of 10-15% and the private pay market is likely to be seeing similar growth, perhaps at the lower end of that range. This balances to growth of 11-13% going forward.

NHS Hospital Trusts are expected to continue working with the private sector. Alliance is hoping to build big outpatient centres next to NHS hospitals and has recently invested £15m in Colchester on this basis. In general, the argument presented by Alliance is that NHS hospitals are so underfunded that they will not be able to meet the demand for new images as the UK races to improve poor five-year survival rates for cancer. 

Covid has also led to several high-profile reports arguing for the construction of up to 100 community-based (i.e. not attached to a specific hospital) outpatient imaging centres at a cost of £4-5m each. One private operator, speaking anonymously, reckons one-third of these will be run by the private sector. 
 
Teleradiology

The provision of teleradiology services, which we account for separately, is around £80m (€91m) in 2018 according to the Royal College of Radiologists (RCR) and growing 20-30% annually. Operators in the space HBI has spoken to agree with the figure. HBI estimates that the NHS uses teleradiology providers to report 3-5% of its diagnostic images.
 
Only 2% of NHS radiology departments meet their reporting requirements without using teleradiology, overtime work by their radiologists or ad-hoc locums. Expenditure on the latter two is roughly equal to expenditure on teleradiology in 2018 according to the RCR.  


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