EverBank Commercial Finance released results from a survey of medical doctors conducted at this year’s Radiological Society of North America (RSNA) annual meeting in Chicago. Findings showed the top priorities for capital spending for the majority of M.D.’s in the New Year will be upgrading existing equipment or technology (60 percent) and expanding into a new building or facility (21 percent).
 
While practice improvements and expansion are on the agenda for many M.D.’s, there are concerns about reduced reimbursements. The majority (62 percent) identified reduced reimbursements as the greatest challenge their business will face in 2015. Economic conditions presented noticeably less of a concern (21 percent), as did competition (11 percent).
 
“Despite concerns about reimbursements, we’re witnessing an appetite for upgrading among physicians,” said Justin Tabone, General Manager for EverBank Commercial Finance’s Healthcare business. “While the Affordable Care Act has introduced an element of uncertainty for some M.D.’s, financing presents a strategic capital expenditure option for equipment acquisition challenges.”
 
Survey findings did show some trepidation among physicians when it came to the Affordable Care Act (ACA). Approximately one in three (31 percent) M.D.’s said the ACA had a negative impact on their business, while 35 percent reported that they were still unsure about the effect the ACA has had on their practice.
 
Deal volume within the medical space is likely to continue. The survey found practitioners expect a strong deal market in 2015, with two-thirds (67 percent) of respondents whose practices are privately owned saying they anticipate entertaining an acquisition opportunity with a hospital in the next 12 to 18 months.
 
“The medical office space, particularly in the middle market, continues to see steady consolidation as practitioners look to increase the efficiency of their operations,” said Doug Misner, Sales Leader for EverBank Commercial Real Estate. “Within our own business, we have seen an uptick in acquisition financing inquiries as well as facility and equipment upgrade interest. As we look to 2015, we expect to see those financing needs continue and are looking at the best financial structures to help our clients with their growth plans.”
 
Below are other key survey findings, anticipating developments for the radiology sector in 2015.
 
Regulatory

Thirty-four percent of respondents characterized the ACA as having either a positive impact or no impact on their businesses.
 
Capital Expenditures

In addition to the 60 percent of respondents who identified upgrading existing equipment or technology as their top capital expenditure priority in 2015, 21 percent prioritized expansion into new facilities and three percent indicated a focus on office improvements in the New Year. The remaining 16 percent said purchasing or leasing new equipment or technology was essential.
 
M.D.’s making equipment upgrades and acquisitions said they would rely heavily on financing.  A third plan to acquire equipment in 2015 through financing, while 30 percent plan to use cash, 25 percent will use a lease, and 12 percent will use grants.
 
Ownership

Sixty-eight percent of respondents indicated that they own medical office real estate. Of that group, 96 percent plan on holding onto their property in 2015.
 
Of the 32 percent of respondents who lease their medical space, 56 percent will not make any changes in 2015 to their current contract. Thirty-three percent will be reviewing or renewing their contract, and 11 percent are looking to buy property.

“With interest rates expected to finally increase in late 2015, we are seeing some practitioners look to take advantage of low rates today and move into ownership opportunities,” said Tabone. “Given our expertise across the medical office spectrum, we’re focused on supporting our clients as they grow their businesses at any stage in the lifecycle – whether it’s through their equipment upgrades, financing a new acquisition or purchasing new medical office space.”