How Much Does It Take To Start A Radiology Imaging Center?
Ever get a question from someone you know that goes something like this, “Why don’t you start up an imaging center?” Well, in the land of pixie dust and chocolate covered mountains that may work. However, in an expensive world with loads of student debt, only the rare physician can gather enough cash to begin a new radiology practice. Additionally, who is to say that you will have enough patients in your location to survive? In any case, that got me wondering how much does it take to create an imaging center startup? So guess what? That is my insane plan for today. We will calculate the annual capital expenses to start/run your practice. So, at least, you will have a response that you can give to those naive friends and relatives of yours!
First, let’s sort out what kind of imaging center about which we are talking. Well, I am thinking about the average Joe diagnostic center with one of each piece of equipment. However, let’s skip interventional and nuclear medicine for the sake of simplicity. Perhaps, this center will have an MRI, a CT scanner, an ultrasound unit, a mammogram tomography unit, and an x-ray apparatus. We will also assume that you locate your practice in an ordinary part of the country with average building costs. Let us say that we will amortize the sizeable capital-intensive equipment over ten years. Finally, we will amortize the building over a thirty-year period.
Most importantly, these calculations are made on “the back of the hand,” meaning that I would not rely on them to create your imaging center. Numbers can vary widely. Nevertheless, I am doing this so that you can get a sense of the costs involved.
What are the fixed capital costs for an imaging center?
So, we will begin with the fixed costs, What are the most considerable fixed costs of an imaging center? Of course, these include the building that houses the equipment and staff as well as the imaging machines that make up the imaging center. Concerning the structure, we will assume that it is around 5000 square feet. So, how much is it annually to pay for an average space measuring 5000 square feet? Well, it turns out I was able to find the average cost per square foot of retail as well as industrial space throughout the country. Based upon the chart on the realtors website, the average industrial area would measure 6.92 per square foot, and the average retail space would be 17.12 per square foot. The building we would need could be in an industrial space but would need to be accessible to customers, so let’s make our cost 10 dollars per square foot or 50,000 dollars per year.
Not only do we need to pay for the building, but we also need to renovate the building before beginning our center. Designing the building would involve spending on an architect to create the renovations. Figure on another 20% of the cost of the building or 100,000 dollars. Let’s amortize over ten years and say that it will cost around an additional 12,000 dollars per year.
Then, of course, we need to pay property taxes. So let’s figure that the number is around 2% of the price per year or 10,000 dollars. Also, we need to insure the building and the business. Let’s tack on another 10,000 for good measure.
Moreover, finally, the building and practice need to be certified and inspected. So, let’s add another 10,000 dollars.
Total= 82,000 dollars per year
How much is an MRI? Well, the answer to that is that it varies widely. However, we are talking about the average MRI, maybe even used. So, based upon this MRI price guide, let’s say that it costs around 200,000 dollars. That would amount to a monthly payment of about 2,000 dollars or 24,000 dollars per year. You will also need a service contract to maintain the system. That would run another 100,000 dollars.
Next, let’s take the price of an average CT scanner. Based on the lbnmedical website, it would cost around 100,000 euros or 116,000 dollars for a typical CT scanner. Again, amortized over ten years we are talking approximately 1,200 dollars per month or 14,000 dollars per year. However, that is not the only significant expense for the MRI and CT scanner. You need a service contract. That service contract goes for around another 100,000 dollars per year per machine based on the blockimaging website.
Next, let’s look into the price of an average mammography unit. That would cost somewhere in the realm of 250,000 dollars (or 30,000 dollars per year) if we use the data from tractmanager with a service contract costing around 50,000 dollars per year.
Also, we need an x-ray unit. That would be around 100,000 for a digital machine according to the blockimaging website(or 12,000 dollars per year). Finally, let’s say service would cost another 50,000 dollars per year.
Total= 380,000 dollars per year
Naturally, our center will need an information system able to handle all the studies that we are performing. That does not come for free! So, how much does that cost? For an average “smallish” imaging center like ours, the website purview.net states it costs around 1500 dollars a month or 18,000 dollars per year for a cloud-based solution including IT. Not so bad, right? Well, you also need an information system management package to schedule, manage dictations, and more. That would run you another 450 dollars per month per user according to this website. We will assume a couple of users. So let’s say that would cost around 900 dollars per month for 12 months or 11,000 dollars per year.
Total= 29,000 dollars per year
Furnishings can be a hard one to estimate. Moreover, it can be more costly than you might think for desks and chairs, as well as patient tables, and more. Unfortunately, I cannot perform an exact calculation. However, I will estimate for the facility that it would cost around a few hundred thousand dollars. If we were to amortize that over ten years, we would say that would cost about 24,000 dollars per year.
Total= 24,000 dollars per year
Sum Total For Capital Expenditures= 515,000 dollars per year
What are the annual recurrent costs for an imaging center?
Well, the annual recurrent costs include all the people and things that you need to run a practice. Let’s start with the workforce. Most importantly, we will begin with the behemoth expense in the room, the radiologist. What is the average annual package for a radiologist? According to salary.com that would be around 400,000 dollars, of course not including extras such as malpractice and more benefits. Let’s say for argument sake that would end up at approximately 500,000 dollars.
You also need technologists to run the show. We will assume that you have a moderately busy practice so that you need an ultrasound tech, an MRI tech, a mammogram tech, and a CT/x-ray tech. According to salary.com, this would run around 60,000 dollars per year per technologist. For this imaging center, that would total about 240,000 dollars.
We would also need a medical physicist to make sure our practice is compliant with all regulations. The mean medical physicist salary is around 183,000 dollars per year. However, we don’t need a full-time physicist. Let’s say we were able to share a physicist among several other practices. So, let’s say that would cost 183,000/4 or around 45,000 dollars per year.
Importantly, you need to hire secretaries to run the front desk. Let’s take a couple of secretaries for our practice at the cost of 40,000 each per year according to salary.com. That would total to 80,000 dollars per year.
Also, you may need a business/marketing manager for the site to run the show. That does not come cheap as well. The cost would run around 100,000 dollars per year according to salary.com.
And finally, you need someone to clean the facility. Perhaps, a janitor? Let’s say another 25,000 dollars per year.
Total= 990,000 dollars
Billing And Benefits Management
Nowadays, you also need an expert that helps with billing since it is complicated and takes much time to learn. Besides, it is critical for maximizing revenue for the practice as well as for avoiding Medicare fraud. Often, these same “experts” also help out with payroll, insurance, and more. Most work on a percentage of the gross revenue for the practice. We will say for the sake of argument around 5 percent. For an average facility, we will say total revenues are around 3,000,000 dollars. So, a billing/benefits management for this site would run approximately 150,000 dollars per year.
Total= 150,000 dollars
Of course, you also have to pay for heat, hot water, and electricity. These expenses do not come cheap, especially when you are running all this equipment. I will estimate for this a lump sum of around a couple of thousand per month or 24,000 dollars per year.
Moreover, you need miscellaneous recurrent expenses like toilet paper, contrast media, intravenous supplies, and more. Let’s figure on another 35,000.
Sum Total For Recurrent Costs= 1,199,000 dollars/year
Let’s Add It All Up- Don’t Shoot The Messenger!
So, there we have it. I have created an approximation of a majority of the expenses that you might have if you were to start your imaging center. Of course, if you decide to plop the imaging center in the middle of Manhattan or San Francisco, my estimated costs would be a lot lower than the real total costs. (You know what they say- location, location, location!) Alternatively, if you stationed the imaging center in the middle of nowhere or an undesirable area, the costs would likely be less. However, for a typical place in the United States, this may be somewhat closer to the actual expenses. So, drum roll, please… Here is the final summary total of our costs-
Building- 82,000 dollars per year
Machines/Service Contracts- 380,000 dollars per year
PACs System/RIS- 29,000 dollars per year
Furniture/Room Items- 24,000 dollars per year
Workforce- 990,000 dollars per year
Billing and Benefits Management- 150,000 dollars per year
Other Costs- 59,000 dollars per year
Final Total= 1,714,000 dollars/year
Think you can afford that, starting out? I bet for most of you out there, probably not. Of course, you may be able to obtain financing. However, for the majority of us without the experience, it is a tough nut to crack.
So, there you have it. You now have an answer for your naive family members when you get popped the question, “Why don’t you start an imaging center?” Until next time, signing off…