Radiology M&A expert shares 6 trends to watch in 2025
A radiology mergers and acquisitions expert is sharing six trends to watch in the specialty for 2025.
Andrew Colbert, senior managing director of Ziegler, spoke March 26 during the second day of the 2025 Radiology Business Management Association annual meeting in Nashville, Tennessee. His firm has advised over 30 radiology practices and management services organizations on partnerships across the U.S., representing $3.8 billion in transaction value.
Colbert highlighted some of the trends the Chicago-based financial services firm is seeing in recent deals.
“Obviously, the biggest issue is the scarcity of radiologists right now,” he told attendees. “The number of studies is increasing, call it, 5% per year, while the supply of radiologists is, at most, up 2%. Year-over-year labor costs just continue to go up.”
Here’s a quick look at some of the trends Colbert discussed during his hourlong session at RBMA Paradigm:
1. Workforce shortages continue in the face of booming scan volumes (leading to backlogs across the U.S.): Colbert highlighted 2020 research from the AAMC, estimating that the U.S. is expected to face a shortage of up to 42,000 radiologists and other physician specialists by 2033. Meanwhile, medical group wages climbed 4% last year while hospitals saw labor costs increase 4.4%.
It’s not just physicians, either. Radiology groups are facing shortages for scheduling staffers, clerical workers and revenue cycle managers. About 81% of health systems reported grappling with radiologic technologist shortages in 2021, and they continue to feel the effects four years later, Colbert said.
“The biggest trend that we’re seeing right now is health systems starting to recognize that they’ve got a real shortage of radiologists and mounting backlog of demand and it’s putting a lot of pressure on groups,” he told attendees.
Colbert said Ziegler has received requests from radiology practices asking for help on how to negotiate subsidies or convince health system partners to guarantee a higher per-RVU rate in contracts. Hospitals are increasingly expanding their outpatient radiology services and this is only “intensifying competition for independent imaging centers.” Partnership activity continues to pick up as major hospital groups consider new strategies post-pandemic, such as subsidies or offering stipends to radiology groups who aren’t turning a profit on contracts.
He cited previous estimates from sources such as the Advisory Board, showing that overall outpatient imaging volumes are expected to grow by 7.5% through 2028. PET is a particular bright spot with 14% projected growth followed by CT (12%) and mammography (9%). MRI, meanwhile, is at the bottom end at 3%, given more saturation in that market.
2. Investment in AI aplenty: Colbert highlighted continued interest in radiology artificial intelligence, with about $1.65 billion invested in the segment last year. He named six firms with ballooning war chests and company valuations (according to Pitchbook data):
- Rad AI has raised $140 million in total investments to date and has a valuation of roughly $525 million. The company leads the generative AI space for radiology with products such as Rad AI Reporting and Rad AI Impressions, the first such solutions with widespread adoption by thousands of U.S. rads.
- Rapid AI has raised roughly $100 million with a valuation of $600 million. The company offers a platform for creating high-quality neurological images from noncontrast scans. It offers viewing, processing and analysis of brain images, empowering providers to make accurate decisions.
- Aidoc has raised $250 million from investors with a company valuation of $686 million. It’s one of the leading AI healthcare solutions providers, offering a platform to manage the entire patient lifecycle while helping reduce turnaround times, shorten hospital stays and improve outcomes.
- Lunit has raised $135 million with a valuation of $1 billion. It offers AI powered medical image analytics, ensuring accurate diagnoses and optimal treatment for cancer patients.
- Viz.ai has raised $290 million with a valuation of $1.2 billion. The “unicorn” (given its value above $1B) offers algorithms for analyzing medical imaging data including CTs and echocardiograms, providing automated assessments to accelerate diagnosis and treatment.
- Neko has raised $330 million, also boasting a “unicorn” designation with a value north of $1.8 billion. The health-tech company is focused on preventive care and early disease detection, developing a new medical scanning technology to enable broad data collection.
Colbert highlighted marked growth in the number of FDA-cleared AI tools in radiology. A survey from the Advisory Board found that about 53% of hospitals are using at least one imaging AI product versus 33% in radiology practices. The average respondent who had invested in AI said they used about three AI tools. Mean investment over a three-year period was greater than $100,000 for 44% of respondents, the survey found. About 72% said they expect to spend more than $100,000 on AI products during the next three years.
“This is an area that’s going to have to evolve, given the current [labor and demand] dynamics in the market,” he said.
3. Mammography as a growth driver: Colbert cited mammography as a “big growth area” in 2025. The modality is expected to see 9% volume increases through 2028, placing it third, ahead of MRI, X-ray and ultrasound.
“We’ve seen a lot of health systems looking to come up with a breast imaging strategy,” Colbert told attendees. “A lot of radiology groups are really under-leveraging the women’s imaging growth opportunity.”
Some imaging center operators are moving toward a concierge, boutique-style care model, offering spa-like amenities and a focus on comfort and wellness.
“We see a big trend toward carving out women’s health and mammography into a separate capability set,” he said. “That’s something we’re definitely working with a lot of groups around.”
As one example, Madison Dearborn Partners-backed Solis Mammography continues to grow, inking joint ventures with health systems. The Addison, Texas-based, breast imaging-focused outfit now has over 130 outpatient centers spread across 13 states. It boasts a “boutique-style retail healthcare experience,” with a focus on patient comfort, convenience and compassion.
4. States continue to relax certificate-of-need laws: Several states have relaxed their certificate-of-need laws in recent
years amid provider shortages and heavy demand for imaging. New Hampshire repealed its CON law in 2016, while Florida followed suit in 2019 and Montana in 2021, with the latter two carving out exceptions for nursing homes. North Carolina raised the dollar threshold for CON regulations related to new diagnostic center equipment in 2023, and Tennessee removed requirements pertaining to new PET and MRI scanners last year.
CON, or certificate of need, laws are state regulatory mechanisms for approving major capital expenditures for certain healthcare facilities, according to the National Conference of State Legislatures. Such regulations are meant to control costs and avoid unnecessary or duplicative expansion in a defined geography. However, critics have accused providers of wielding CON laws inappropriately to limit competition. About 35 states and Washington operate certificate-of-need programs, according to the NCSL.
“CON laws are definitely something that we’re watching,” Colbert said. “Our view is they’re going to continue to get relaxed and particularly under the current administration,” he added, noting that Southeastern states are particularly ripe for reform.
5. Volumes are shifting toward outpatient (rather than hospital) sites of care: Colbert highlighted a trend with which most in the specialty are familiar—hospital-based imaging costs at least two to three times more than the outpatient setting. However, consumers and employers are waking up to this reality, given the lower out-of-pocket costs, convenient access with on-demand scheduling, advanced technology, and high-quality subspecialized physicians.
He highlighted previous research, which found that a nuclear medicine exam, for instance, can cost 300% more in a hospital, with similarly high differentials across numerous other modalities.
Payers continue to try and capitalize on these figures. Colbert estimated that about 60% of imaging occurs in hospitals today and 40% on the outpatient side. But he forecasted 16% growth in the latter, with a shift to about 54% occurring in hospitals and 46% in outpatient centers over the next three years. Health insurers are helping to drive this trend, enacting policies prioritizing cheaper outpatient imaging. For instance, Cigna in 2020 enacted restrictions requiring advanced scans such as CT and MRI to be performed in outpatient settings, unless patients meet medical necessity criteria. UnitedHealthcare previously did the same in 2018 as did Anthem the previous year. This can serve to strengthen the value proposition for imaging center operators in commercial payer negotiations, Colbert said.
He highlighted varying degrees of how far along states are in their shift toward outpatient radiology services. Some such as Washington, Oregon, Nevada, Arizona, New Mexico and Colorado are seeing over 25% of imaging delivered in freestanding centers, claims data show. Others including North Dakota and Wisconsin are at less than 5%, according to Advisory Board data.
About 41.5% of outpatient imaging is billed under hospital outpatient department rates versus 36% via physician offices, 19% in freestanding centers and 3.5% “other.”
“Site of care continues to be an area where we see a tremendous opportunity,” Colbert said, noting that he expects that 41.5% HOPD number to continue trending downward in the coming years. “Some legislation on site-neutrality is definitely on the come. Payers have kind of taken a little bit of a backseat over the last couple of years due to other initiatives, but this is definitely something that is on their radar, particularly if you look at the magnitude of imaging costs on the HOPD side versus IDTFs [independent diagnostic testing facilities]."
6. Explosive growth and interest in teleradiology: Colbert noted that private equity healthcare deals have trended downward after a peak of over 1,200 in 2021, with just 415 last year, according to Pitchbook. However, Ziegler has seen “explosive” growth on the deal side for teleradiology.
The company recently advised Philips on its sale of Direct Radiology to Housatonic Partners-backed OnRad. Other recent deals of note have included Australia’s I-Med Radiology Network (backed by Permira) acquiring San Diego-based StatRad, America’s second largest telerad provider, in July. Grovecourt Capital Partners-owned Premier Radiology also bought NationalRad in February 2024, Colbert added.
“There are definitely a lot of international dollars behind a number of these businesses and they’re all trying to get into the U.S.,” he said. “This is an area where you are going to see a lot of capital flowing into the market, both private equity dollars as well as rad groups that have excess capacity who are going to start building their own teleradiology platform.”
He highlighted some of the numbers fueling increased M&A interest in teleradiology. The market is currently worth about $4.4 billion this year and expected to hit $6.7 billion by 2027. It offers benefits to customers such as reduced staffing challenges, greater access to subspecialists and more consistent turnaround times. And to radiologists, the model means flexibility to work from home and a “straightforward pay structure attractive for high-performing providers.”
Colbert highlighted an estimate from a market research report, claiming that teleradiology groups potentially are 20% to 33% more productive than a traditional private practice. Legacy staffing models have been seen as inefficient, with a staffing-volume mismatch throughout parts of the day. For instance, higher-paid nights rads may have the lightest workloads in evenings. Meanwhile, teleradiology offers a fully variable cost structure (with pay for completed reads), enabling customers to augment on-site rads with telerad capabilities.
He offered a list of some of the key names in teleradiology, excluding larger diversified radiology practices such as Rad Partners, which operates its own remote-reading group (vRad, the nation’s largest with 500-plus rads, acquired via RP’s 2020 acquisition of Mednax Radiology).
International:
- Medica Group: Based in the United Kingdom, it operates a network of 1,000-plus specialist doctors with radiologists producing over 2.5 million reports and exams for 200 clients. Private equity firm IK Partners acquired the organization in 2023.
- Everlight Radiology: Based in Australia and backed by Livingbridge, the platform utilizes 800-plus consultant radiologists reading 2 million studies annually for 200 sites of care. It also last year inked a technology partnership with DataFirst.
- TMC (a Unilabs company): Headquartered in Barcelona, Spain, the group employs 350 radiologists covering for 150 customers in the U.K., Sweden, and Denmark.
- I-MED Network Radiology: Based in Australia and backed by Permira, the platform employs 300 radiologists covering 250 sites and producing 6 million annual studies. As of late 2024, the organization was in talks with several investment banks about a possible sale, carrying a valuation north of $3 billion.
Domestic:
- Vision Radiology: Based in Pittsburgh and backed by Acacia Partners, the company employs 80-plus radiologists, 98% of whom are subspecialty trained.
- Premier Radiology: Stationed in Miami and owned by Grovecourt Capital Partners, the company has about 100 radiologists interpreting 2 million images annually for patients in 48 states.
- RadSource: Based in Brentwood, Tennessee, and backed by HealthEdge Investment Partners since 2024, the practice employs over 30 rads with a focus on musculoskeletal and neurological MRI.
- OnRad: Based in Phoenix and backed by Housatonic Partners, the platform services 550-plus facilities with over 160 radiologists interpreting more than 7,000 studies daily.
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.