Smart Choice MRI, the Chicago-based company that last year opened two free-standing MRI centers at shopping centers in the Twin Cities, says it is moving forward with expansion plans in Minnesota including a new Eden Prairie center scheduled to open next month.
The company announced Wednesday an additional investment of more than $7 million by UCHealth, a large hospital system based in Colorado.
In an interview to discuss the financing deal, chief executive Rich Anderson said the company is preparing the space in Eden Prairie, and hopes to begin construction next year of a center in Roseville.
Smart Choice MRI previously announced it would open the Eden Prairie and Roseville centers by the end of 2016, but Anderson said the company opted to expand first in Chicago.
"The capital allows us to continue to grow the company nationally, and also in-fill the markets we're already in," Anderson said.
In the Twin Cities, Smart Choice MRI competes against the St. Louis Park-based Center for Diagnostic Imaging, which operates 17 centers here and plans to add another location in 2018. Called CDI, for short, the locally-based company offers a variety of diagnostic imaging services including MRIs at a total of 113 imaging centers in 22 states.
This month, CDI acquired an Illinois company that operates 27 mobile diagnostic imaging units, bringing the CDI fleet of mobile scanners to about 150.
"We continue to expand," said Matt Malloy, a company spokesman.
Smart Choice MRI says it has raised $22 million thus far from hospital systems and investors, including $7 million from a system in suburban Chicago and $3 million from a system based in Appleton, Wis. UCHealth did not disclose the exact size of its investment, but it's the largest sum yet from a single investor, said Anderson, the company's chief executive.
With next month's planned openings in Eden Prairie and a suburb of Chicago, Smart Choice MRI expects to be operating 17 MRI centers across Illinois, Minnesota and Wisconsin within a matter of weeks. Within the next three to four years, the company has a plan for operating a total of 90 centers, Anderson said.
Smart Choice MRI offers the diagnostic exams at a price of no more than $600 per test, which is hundreds of dollars less than some average rates in the Twin Cities quoted by insurance companies.
The company is betting that patients will respond to the low and simple price message, since many people now have high deductibles as part of their health insurance.
Magnetic resonance imaging (MRI) is a widely used diagnostic procedure in which a large magnet and radio waves generate images of organs and structures inside the body. The MRI business is capital intensive, with operators saying the cost of an MRI machine and related equipment can cost about $1 million.
Health insurers in Minnesota have been watching the arrival of Smart Choice MRI, which has the potential to bring competition that might lower prices for MRI exams. At the same time, there's a long-standing concern in health care that adding capacity simply drives up costs by creating pressure on doctors to provide more services.