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St. Paul Radiology, a private medical practice of radiologists, is exiting the teleradiology business, said its president and CEO in an interview with the Star Tribune.
“We did not feel that after three years we were especially well suited to operate in that environment and that it distracted us from our core business,” said Dr. Michael T. Madison, St. Paul Radiology’s president and CEO.
St. Paul Radiology has been trying to exit out of a long-term agreement it had with Scottsdale, Ariz.-based NightHawk Radiology Services over the last few months. NightHawk specializes in teleradiology, the contracting of radiologists to hospitals and clinics to diagnose virtual images.
Three years ago, St. Paul Radiology sold its business services division Midwest Physician Services and its off hours emergency teleradiology division called Emergency Radiology Services to NightHawk for $62.5 million. As part of the deal, St. Paul Radiology signed a long-term agreement for business services with NightHawk. In addition, St. Paul Radiology received a warrant allowing it to purchase 300,000 shares of NightHawk stock.
But since September, NightHawk said the St. Paul practice has been trying to dissolve the arrangement, alleging the Scottsdale, Ariz.-based company is in breach of its agreement. NightHawk said the claims are without merit. Madison declined to go into detail regarding the cause of the separation.
Under a proposed agreement of separation, St. Paul Radiology will pay NightHawk $24 million and buy back Midwest Physician Services and Emergency Radiology Services for $2 million, according to NightHawk.
Madison said St. Paul Radiology plans to pull out of the teleradiology business in the next six to 12 months, by not renewing contracts under its Emergency Radiology Services division. Teleradiology represents about 10 to 15 percent of St. Paul Radiology’s business, Madison said. St. Paul Radiology plans to go back to focusing on its core business, which is local hospital contracts, he said.
The news of St. Paul Radiology exiting the teleradiology business, comes as another local company, Eden Prairie’s Virtual Radiologic Corp., agreed to be taken private by an investment firm in a $294 million deal.