I’ve been mulling over the opportunities in medical imaging over the last few weeks. It can look like a very dangerous business.

Huge capital costs (MRI machines cost €2m upwards), high salaries (radiologists make up 25% plus of the costs in Western Europe) coupled to high political uncertainty hardly sounds like a recipe for success.

Nor is it always. In Denmark and Norway prices have dropped 20% plus over the last three years thanks to more competition for outsource tenders. In South Germany, the public authorities have chopped prices by nearly 30%, leaving many small clinics either facing bankruptcy or unable to replace their equipment. Go back a few years and, in the UK, the NHS suddenly decided to cancel some very large projects and do more inhouse.

So why have I changed my mind? Firstly there are the growth rates. Include new machines and big operators like Alliance Medical can see organic growth rates of 15%. Secondly it is worth remembering that this is a huge market and that prices and business models vary greatly. A Swiss operator may only produce 8 images a day on his MRI machine whilst a Norwegian or a Hungarian can do 40 or more in 24 hours. Much hangs on your business model. Small outpatient clinics are liable to face price drops and have little control over patient throughput. And outsourcing has low margins in Spain and the Nordic regions. But margins elsewhere remain good.

The place to be is clearly in outsourcing or contracting out hospital business. Here big operators like Alliance Medical and Euromedic can deploy skills which will lead to much higher utilisation of equipment and at the same time deliver big savings to the public sector. Couple that to growth and you have a real business opportunity. That is going to be particularly true over the next few years as the public sector in Fringe Europe (East, South and UK and Ireland) is forced to look hard at where it spends money. 

Our report Opportunities in Healthcare: Diagnostics - Laboratories and Imaging is now available. Contact Max Hotopf on 44 207 841 0045 or max@healthcareeuropa.com for more details.