Practice acquisition will create 1 of the largest teleradiology groups in the US
A recent practice acquisition will create one of the largest teleradiology outfits in the U.S., those involved announced Tuesday.
Phoenix-based OnRad Inc. is acquiring competitor Direct Radiology for an undisclosed sum, creating a combined team of roughly 240 radiologists. Imaging industry giant Royal Philips is the seller, having acquired Direct Rad, its teleradiology platform and business operations in 2019.
David M. Engert—OnRad’s president and CEO since 2017—said the merger will allow both companies to expand capacity, achieve operational efficiencies, and cut costs through economies of scale. The merger comes as some of the nation’s largest teleradiology groups struggle to recruit rads and service hospital contracts in an uber-competitive market.
“The acquisition of Direct Radiology marks a new milestone for the future of OnRad’s radiology services with an expanded national footprint," Engert said in a statement. "With a shared vision of excellence, our combined organization will address the challenges of finding and attracting top-notch radiologists.”
Founded in 1998, San Francisco-based private equity firm Housatonic Partners provided OnRad with a growth investment in February 2009. The 160-physician teleradiology group has grown since, adding both Radiology 24/7 in 2013 and Shafaie Enterprises in the same year. Today, the practice provides around-the-clock remote final reads to over 120 hospitals and health systems including outpatient clinics, imaging centers, and the U.S. government. OnRad’s services span traditional teleradiology, custom on-site solutions, and subspecialized interpretations across all modalities. It currently services about 550 facilities in almost every state, with OnRad physicians managing more than 1.4 million exams annually.
Meanwhile, Bothell, Washington-based Direct Radiology was founded in 2012, employing over 80 physicians serving 430-plus healthcare facilities nationwide. Philips acquired the organization’s teleradiology platform and business operations five years ago while the medical practice side continued to operate independently through managed service agreements. At the time, the Amsterdam-based imaging manufacturer said the deal allowed Philips to expand its radiology solutions portfolio with “innovative teleradiology services,” aiming to address the “increasing shortage of radiologists.”
Direct Radiology will operate as a wholly owned subsidiary of OnRad, continuing its “customer expansion while building its radiologist team and enhancing customer value,” according to the announcement. The two companies on Tuesday billed themselves as the “the largest independent teleradiology provider in the U.S.” following the deal. Other large names in this space include vRad and its 500 physicians (part of Radiology Partners) and StatRad and its 90-plus docs (reportedly acquired by Australia-based, private equity-backed I-Med last year).
"We are proud of what we have built at Direct Radiology and excited about our new partnership with OnRad," said Leandra Hutchinson, MBA, Philips’ former teleradiology business leader, who will continue as president of Direct Radiology following the acquisition.
OnRad in November also became the first customer to deploy RadNet subsidiary DeepHealth’s suite of artificial intelligence-powered solutions.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.