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Thursday, Sep 29, 2022

Radiology Group in Roll-Up Mode

A doctors group in El Segundo has been making Wall Street-type moves lately, passing the $1 billion mark in fundraising and adding former General Electric Co. Chief Executive Jeffrey Immelt to its board.

Radiology Partners Inc. reached far and wide to meet the milestone on fundraising, with a $234 million round led by Menlo Park-based venture capital firm New Enterprise Associates and Future Fund, a sovereign wealth fund for Australia.

The latest round brought the total investment to more than $1.2 billion into what has become the nation’s largest physician-owned radiology practice.

“We’re very excited,” Rich Whitney, its chief executive and co-founder, told the Business Journal. “We have a large opportunity to fundamentally transform the way radiology is practiced in the U.S.”

Radiology Partners started six years ago, with early backers New Enterprise Associates and Whitney, a veteran executive credited with key roles in the turnaround of Davita Inc., a Denver-based provider of kidney dialysis.

Radiology Partners built a practice that now includes more than 1,500 employees, including some 900 physicians who serve more than 500 hospitals and health care facilities in 17 states.

The privately held enterprise declined to disclose financials.

Size matters

The number of doctors and points of service point to significant scale in the radiology segment of the healthcare industry, where the average practice – or doctors group – last year numbered nearly 57 physicians, according to a survey conducted by Radiology Business.

Radiology Partners got started in 2012 with $60 million in venture capital from New Enterprise Associates, Whitney and member physicians. It raised another $200 million in a Series B round last year, and then arranged nearly $700 million in financing from Golub Capital to purchase Southwest Diagnostic Imaging of Arizona on undisclosed terms, and refinance debt and fuel future growth.

The deal for Southwest added more than 120 radiologists affiliated with 15 hospitals and 35 outpatient offices, and continued a roll-up strategy that has included acquisitions of several other radiology practices, Whitney said.

The most recent round of funding came on March 9, with money backing growth plans and a dedicated research laboratory.

The company’s subsidiary Radiology Partners Research Institute, based in El Segundo, now conducts medical research in conjunction with Baylor College of Medicine, University of Chicago Medicine and Cincinnati Children’s Hospital Medical Center.

Last month also brought the announcement that GE’s Immelt had joined the board – the latest high-profile addition. Others Radiology Partners board members include Dr. William Brody, former president of John Hopkins University; Robert Sheehy, former chief executive of UnitedHealthcare; and Joseph Mello, chief operating officer for former DaVita subsidiary DaVita Medical Group.

Whitney said the size Radiology Partners has achieved brings economies of scale that allow it to invest in new technology, share best practices, and provide better and more efficient patient care.

“It’s exciting for investors. It’s exciting for clients. Payers are taking notice,” Whitney said. “Academics are beginning to recognize that what we’re doing is very unique.”


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