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by Keith Loria

Note: This report originally appeared in the August 2008 edition of DOTmed Business News. A list of registered users that provide sales & service can be found at the end.

Over the last three decades, the mobile medical imaging business has evolved into nearly a billion-dollar industry. Mobile MRIs, CTs and PETs and other units are being utilized by hospitals, clinics and diagnostic imaging centers around the U.S. Mobile units are often rented during upgrade or replacement periods, or to relieve patient overflow.

But for the first time since the mobile units hit the road in the early 1980s, the companies involved in the rental, transport and storage of this equipment are seeing a downturn in the marketplace, and that has some in the industry concerned.

"It's been down all year really," says David Crail, general manager of JDS Transportation, a leader in transporting mobile medical equipment. "I guess like anything else it's the downturn in the economy. Talking with customers, part of it is due to changing technologies. What was in last year isn't in this year, and the technology is changing so fast that a lot of companies don't know where to go with it next."

The DRA creates a speed bump

The cutback in reimbursements has also played a role in the decline, and that's something no one can do anything about at the moment.




"Business has gone down a little bit because basically it's been impacted by the DRA," says Terry Andrues, President of Mobile Interim Solutions, which deals in mobile MRI and CT imaging systems. "My perception of the segment of this market is that the cutback in reimbursements has stunted the industry - even the manufacturers have cut back," Andrues observed.

In fact, a look at the top OEMs in the field - whether it's GE, Siemens or Phillips - shows that all the manufacturers' sales are down, and some people are losing jobs because of it.

"The news coming out over the last month shows that GE is laying people off and so is Siemens," says John Vartanian, President of the Ann-Arbor, MI-based Medical Imaging Resources, which provides temporary solutions for hospitals and centers in the process of buying new equipment, constructing additional space for enhanced services or experiencing a temporary overflow of exams that cannot be handled with their existing equipment. "The market is down all over, but we are still moving through it. Our rentals are not as good as they were last year,
but they are still healthy."

The Deficit Reduction Act of 2005, which took effect January 1, 2007, mandated reductions in Medicare reimbursement for imaging at freestanding facilities. And a lot of the negative effects are just being realized.

"We have seen the marketplace adopt a wait and see attitude, because I think a lot of the industry doesn't know what way to go," says Vartanian. "The DRA cuts came in faster than they should have, instead of being phased in, so it made a lot of people stand in the middle of the road like a deer in the headlights, not knowing what direction to go and where to put their money."

"It would be hard to find any company in this business without a negative impact from the DRA," says Rich Greb, Director of Logistics for Sunrise Medical Technology, Inc., a total equipment management service company for healthcare facilities across the United States and internationally. "The other economic declines are also making it difficult for our customers to survive."

Although all mobile imaging is declining, the CT mobiles seem to have been hit a little harder than the others. "It's never been so slow in this business. Right now most of our fleet is sitting so it's a tough industry," says Carl Frank, President of DBRS Medical Systems, a 20-year-old service driven organization providing Mobile CT Scanners, parts and service. "A number of hospitals want to buy our equipment, but we really don't want to do that because we want to make
some money on it. You buy a trailer for $40,000 and put $100,000 into it and they want to buy it for $80,000, it doesn't make sense for us."

Frank has noticed a scary trend in the industry, which is hurting companies like his, and the hospitals and patients who utilize the mobile modalities.

"What I've seen in our industry, there's been a lot of competition in the last 10 years with people going into business for themselves. They look at the mobile business and they know where they can pick up a trailer cheap, throw a cheap scanner in it and put it out there. But you get what you pay for," he warns. "A company like ours that has employees and overhead and a building, we can't compete against that even though our equipment is much better. We do our own repairs and servicing and have all the equipment needed to do remodels."

Another company that specializes in the CT mobile units is MobileScan Imaging and they are also feeling the lull in the industry.

"Three years ago, it was very active with people asking 'how fast can I get it?' Now there is a lot more analysis, more competitiveness, difference in reimbursement structure, those are things you have to look at," says George Webb, President of MobileScan Imaging, which sources, assembles and integrates all components for a complete, self-contained, mobile CT facility. "You need to be more flexible, more targeted, more responsive to the customer with more customized solutions. If you are going to track specific applications, they need to be more targeted."

Fuel prices add to the pain

With diesel prices as high as they've ever been, fuel costs have also been a factor in the mobile imaging decline. The costs for the most part passed on to the customers, and that can make for some pricey fees. What can't be passed on, eats up the profits.




"We have to try and pass those costs on to our customers, who of course are reluctant to pay more, because they have their own increasing costs to deal with," Andrues says. "The fuel that we use has really gone up. These tractors get maybe six miles to the gallon. So it's about $1 a mile in fuel, and if you have to send a unit from New York to Omaha, it's $2,000-$3,000 in fuel alone, so yes, it does have an impact."

For companies who in the past had sent mobile units long distances, this is changing the way they do business.

"Prices are way up and transportation costs are double what they used to be," Frank says. "It's really hurt us for long distance stuff because you may want to rent a CT scanner for $5,000-$6,000 a week, but the cost to drive that unit up to Oregon or Washington and that has really curtailed our business, because no one wants to pay a couple of thousand dollars just for delivery," Frank added.

To counteract the prices of fuel, companies are putting more thought into when and where their units will travel.

"Of course it has affected us just like everyone else. We are trying to do things to offset that," Vartanian says. "We are trying to move our equipment a little bit smarter, giving more notice to the people who provide us transportation and integrate it in with other moves as well. We are putting more things in storage rather than bringing it back to corporate. Trying to find local storage units and trying to be smarter about how we spend the transportation dollar."

That means not bringing the units home to its base, but often times finding a storage area close by to the last place it was in use.

"We're seeing a lot of people who don't want to move their mobile, but want to store and service them where they are. So right now we are preparing to set up multiple locations across the country for mobile storage and service areas," says Thomas Freund, Director of MRI Services for Oxford Superconducting Technology, a division of Oxford Instruments.

Transportation changing with the times

For those specializing in transportation, the competition has gotten a bit more fierce and it's not always that simple to utilize all their drivers.

"There's a lot of sales work involved and getting customers confidence," says E. Lee Bernier, General Manager and CEO of Sage Point Transportation, LLC, a major transporter of mobile imaging equipment, with headquarters in Upland, CA, and terminals in Texas, New York, and Washington. "They call and ask us if we have a driver who is available to move from point A to point B. And we have also been
asked for a lot of quotes lately because of the increase in fuel costs."

Years ago a transportation company could drop off a trailer and then head back to its home base, even if they didn't have a trailer to take back. That's rarely the case anymore, because the companies realized there was too much money being lost in the moves.

"A lot of times the units are needed right away so we can't always find a return trip," Crail says. "We'll also haul general freight and that helps us keep the cost down for the customers because if we can find a leased trailer and a load of freight to get us out where the unit may be, the costs will go down."

Bernier calls the transportation industry a "portal to portal business" and explains how his company will do whatever it can to keep a tractor from returning empty, resulting in bobtail miles ("bobtail miles" occur when a tractor is traveling without a trailer).




"You might move a trailer from Granville, Texas to Oklahoma and you end up getting in Oklahoma City and you don't have a trailer or anything to haul back, so you have to bobtail back home and that's where bobtail miles come in, and that's where there's a huge cost to our customers," he says. "We understand it's a 911 business, but if we have a heads up of a couple of weeks, we can look at the dispatch board and put customers together. That's how we're trying to get them to be more proactive in helping them out."

Qualified drivers are a must - especially for moving MRIs

When a transportation company is hired to move a mobile unit, you're talking about some mighty expensive freight and the companies don't take that for granted.

A good driver, for whichever company, must be able to restart the chiller, make sure the air conditioning is reconnected, know how to restart the cold head or compressor if necessary, and know how to plug and unplug the unit into a Russelstoll 480-volt power source in exactly the right sequence, or else potentially catastrophic problems could arise.

"Transport drivers need to understand the sensitivity of the load in transit. Qualified transporters can disconnect and connect trailers to shore power plus, monitor equipment (functioning MRIs) for operation under power during movement," Greb says. "Since it is a trailer they must ensure that everything internal is secured. Driving skill to place the trailer in tight quarters also counts."

When you have a ten-ton superconducting MRI magnet with over 240,000 miles of coiled wire bathed in a thousand liters of liquid helium at -452.1 degrees Fahrenheit below zero (only a few degrees above absolute zero at -459.7 degrees F), drivers need to know the intricacies of this equipment inside and out when on the road. Moving these mobiles is not like moving any other type of imaging equipment. You've got an incredibly sensitive machine that requires very specialized care and a host of exacting procedures to get it from point A to point B safely and securely.

"Drivers have to make sure the gantry is locked in the correct position for transport, make sure it won't roll around, and double check that things have been done properly before hitting the road," Crail says. "You have to let all your suspension out so you can level it properly. When you get hooked up and ready to move it you have to set the suspension for transit, know what levers and buttons to hit so that they will inflate, otherwise it will shake the machinery right out of it. You can run into a huge expense if something is damaged in transit."

Drivers are also responsible for the chillers, trailer AC, cold heads, compressors, on board generators, non-functional landing gear and more. That's why, when transportation companies are hired to move an MRI, CT, or PET scanner from one site to another, most reputable companies have had their drivers undergo strict training classes and then team-up with an experienced driver to get some on-the-job experience.

"All of our drivers go down to Texas for a two-week training period and are trained on all machines (MRI, PET, CT) and the unique paperwork of each customer," says Bernier. "We have varied customers and each one wants us to do different things so we need to be up on that. We have training at our customers' facilities as well."

National Mobile Medical Concepts Inc. has spent close to 20 years specializing in mobile applications for the medical industry and have an in-house training program for its drivers. "Our training program is about 40 days," says Dan Feeley, President of the company, and also a driver. "Before we put someone out there, they get hands on experience and we do support group services with them. Our key is to make sure that the customer is satisfied and things are well."

There are other costs associated with the transportation of the units as well that will be factored into the overall fee. Insurance is a must (umbrella policies of $1 million or more) and special permits for trailers that are oversized or overweight need to be obtained.

"A lot of times we encounter these trailers have sat around for a long time and we have to make sure that they are roadworthy and safe, and that can get expensive," Crail says. "You have tires dry rotted while it was sitting, and brakes that don't work properly. Time takes its toll when a trailer sits for months. We have to make sure it can get across the country. Costs are passed on to the customer, but we have to make it road worthy and pass inspection."

A lot goes on when a mobile goes into storage - particularly with MRIs

When mobiles aren't in use at a hospital or imaging facility, they need to be professionally stored. What's needed for an MRI is different than what's needed for a CT, PET, or PET/ CT, although many systems require constant power and need specialized attention.

Most storage companies also offer a full, a la carte menu of maintenance and refurbishing services that a trailer can undergo while awaiting its next run.

"Once there, the mobiles can get trailer repair and reconditioning, PMs, deinstallations, reinstallations, cold head and compressor maintenance, helium and internal magnet pressure monitoring, and A/C service," says Paul Zahn, Director of Sales and Marketing at Mobile MedTech, which has storage and power available at facilities in Council Bluffs, IA and Cottage Grove, WI. "We have seven service engineers on premises who undergo yearly OEM training to make sure nothing about the care and service of an MRI is overlooked."

Feeley adds that storage is becoming more of an active part of the business. "They come in and stay for a while, get cleaned, PM'ed, and then move on to another site," he says. "We do the maintenance and clinically get a trailer ready to go to a customer's site, so when it arrives the staff can bring in their necessary supplies and start scanning patients immediately."

"Storage is not a moneymaker for us," says Bernier. "A lot of people who do storage do it to break even. We definitely do it as a convenience to our customers," Bernier adds. "They need to have a place to park their trailers and if we bring them into our storage facility, we break even when we wash and clean the unit, and do a PM. The positive side that unit is ready to be driven to their next customer, set up, and it can start doing its job at once."

Changing times are changing the mobile equipment roadmap

Aware that everyone is being hurt by fuel costs, transportation companies today are often happy to help out a rival business if they need a place to park a trailer.

"If another trucking company calls up and they need to store something for a week, of course we help," Bernier says. "We hope that they would give us that courtesy. Let's say we brought a trailer up to Chicago but the contract was cancelled, it would be smart for us to keep it there for a week rather than lay a guy over for a week."

Vartanian agrees and believes that more and more companies are warming up to their competitors.

"If somebody calls me from another company and asks if can I drop off my MRI trailer for a month or two, sure we would do that. We have a secure yard, we have 480v power, and we have someone who can go out and check the unit each day to make sure the cold heads are pumping so the magnet does not go warm."

Magnaserv, Inc., one of the largest independent service organizations focused on MRI service, CT service, and CT tube replacement, says that the cost of running the chiller on an MRI can be anywhere from $50-$125 a day.

"You're not going to get rich on it. But if we do a good job for it, maybe we will get some service, some PMs, or some shop work. If the system is broken when it comes in, that's where you are going to make some money," says Greg Pearson, President and COO of the company.

Freund says that it's necessary to keep an MRI - whether a mobile or fixed-site system - stored with the magnet kept cold, because the customer will save money in the long run.

"If someone has a magnet and puts it in warehouse without power and it goes warm after a few weeks, the cost to cool it down again with new helium would be more expensive than what it would cost to keep it cold," he says. "You would have to store it for over a year for it not to be worth it."

When dealing with the MRI mobile units, there are daily protocols and round-the-clock security. Helium levels need to be checked every morning. Magnet pressure needs to be kept track of constantly. Chillers need to be attended to and each unit has to be kept permanently plugged into a 480-volt Russellstoll outlet for the duration of its storage.

"We have our own storage facility right here in California, but not all our units are here because they are spread out across the country," Andreus says. "We ask the storage places to monitor the helium levels. The vendors we contract know what they are doing. They go out and check cryogen levels on MRI a couple of times a week and report to our service center."

Freund says Oxford has an in-house trainer who spends about three months with each technician in all aspects of magnet service and includes a great deal of on the job training in preparing them for the keep cold services.

"We charge by the day. We charge for electricity and the chilled water, and the biggest thing is, if you bring a magnet to us and bring it in at 70% helium level, we will give it back to you at the same level," Freund says. "We will maintain that level. We can also top it off to 100% if they want that."

Oxford operates what they call the Cryofarm, an MRI magnet storage facility in Carteret, NJ, where they keep magnets cold and currently have room for 40 fixed-site magnets and four mobiles there.

"We store units for a variety of reasons and for a variety of different people," Freund says. "Either a new magnet is waiting to be sent to a site or a magnet is being moved from one site to another. For a low fixed cost, we will store a unit here and put it on our compressors and keep it cold as long as necessary."

Helium demand is ballooning

Although most companies really don't expect this to be an issue anytime soon, there is some talk among the science community that helium supplies may be running out, and if it's true, that could create a crisis for the MRI business.

Helium is a gas that over time came into existence from the radiogenic decay of uranium and thorium in the earth's mantle. As these radioactive elements naturally decay, they release alpha particles. An alpha particle is just a helium atom with no electrons, i.e., it is just two protons. These alpha particles then capture two electrons and become stable helium. Over eons, large quantities of helium have been produced, which typically becomes trapped underground in natural gas pockets, and is collected on the surface as a by-product of natural gas.

"In the 1950s, the U.S. Government stockpiled large amounts of helium because they considered it a strategic resource. It was stored in underground chambers in the West, and a lot of the cryogen companies have been drawing off that supply for a number of years," Freund says, "but the amount stored was less than estimated." Today a lot of companies have opened new facilities where they are recovering helium. But those costs are high today, so helium prices continue to rise.

The expected ultimate extractable amount of helium is estimated at 40,000 million Sm3 as of 1 January 2007 by the United States Geological Survey. Of this amount, 93% is produced by six countries, the U.S., Algeria, Canada, China, Qatar and Russia. It is believed that Russia could be the world's major source of helium by the year 2040.

The worldwide consumption of helium has increased by between 5% and 10% a year in the past decade, with the biggest growth in its use as a coolant for the superconducting magnets in MRIs. Present helium consumption is estimated to be about 100 million cubic meters a year, and is predicted to continue rising by 4% to 5% a year.

Praxair Cryomag Services offers liquid cryogen fulfillment and a comprehensive range of maintenance and technical services to optimize MRI/NMR operations.

"Liquid helium is key to the function of most superconducting magnets, not just during transport and storage," says Merrill Loechner, Manager, Marketing & Communications North American Industrial Gases for Praxair, Inc. "The technology required to re-condense helium within the magnet chamber, and thereby avoid helium losses, is perpetually advancing. Most major MRI manufacturers now produce MRIs that, under controlled conditions, have near zero boil-off rates."

So why do people think we are running out?

The increase in the use of helium in the manufacture of microprocessors, electronics and fiber optics has increased the worldwide consumption of helium as well. The demand has seen the price of liquid helium double in the past two years, with a going rate of about $5 to $7 a liter, depending on where in the world the buyer is located.

"Helium supply interruptions from several natural gas producers (helium is a by-product of natural gas production) in 2007 were in large part responsible for the shortages some sectors may have experienced," Loechner says.

Several overseas helium plants that were expected to be up and running last year were delayed. Severe storms in places like New York, Kansas and Oklahoma that damaged power lines to two major refiners, and scheduled plant maintenance at other U.S. helium facilities, caused prices to rise.

"Obviously GE and some of the other companies have addressed that by going to the LCC magnets where you only have to fill them twice a year, as opposed to the old ones you had to fill monthly or bimonthly," Pearson says. "We heard from our distributor they could run out of helium by 2050, but by then, who knows what breakthroughs in superconductivity might have occurred - helium may be
replaced by some Star Trek-like device. Who knows what the future will bring?"

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DOTmed Registered Mobile Trailer Transport, Storage, MRI Cold Storage Companies
Names in boldface are Premium Listings.

Domestic
James Fower, Calscan Medical Enterprises, Inc., CA
DOTmed Certified/100
MRI Keep Cold, Mobile Storage
Carl Frank, DBRS Medical Systems, Inc., CA
DOTmed Certified
Reed Wigington, Advanced Systems Services, Inc., CA
Mobile Storage
E. Lee Bernier, Sage Point Transportation, LLC, CA
Mobile Storage, Transport
Jill Jackson, MobileMed Support Services, LLC, CT
Mobile Storage, Transport
Miguel Machuca, Diagnostic Medical Equipment Solutions Corp., FL
DOTmed 100
MRI Keep Cold
Greg Pearson, Magnaserv, Inc., FL
DOTmed Certified/100
MRI Keep Cold, Mobile Storage, Transport
Dave Johnson, Genesis Mobile Partners, IL
DOTmed 100
MRI Keep Cold, Mobile Storage
George Webb, MobileScan Imaging, IL
Bill King, KING Equipment Services, Inc., IL
MRI Keep Cold, Mobile Storage
Jeff Rogers, Medical Imaging Resources, Inc., MI
DOTmed 100
MRI Keep Cold, Mobile Storage
Clark Wilkins, JDI Solutions, Inc., NC
DOTmed Certified/100
MRI Keep Cold, Mobile Storage, Transport
Todd Palmer, SVSR, Inc., NC
Mobile Storage
Robert Manetta, Nationwide Imaging Services, Inc., NJ
DOTmed Certified/100
MRI Keep Cold, Mobile Storage
Thomas Freund, Oxford Instruments, NJ
DOTmed Certified/100
MRI Keep Cold, Mobile Storage
Marc Fessler, Independence Cryogenic Engineering, NJ
Michael Dobbins, Mobile Conversions, OH
David Crail, JDS Transportation, OH
Transport
Joseph Kilfoyle, J.F.K. Trucking, Inc., OH
Transport
Fran Ambrose, Ambrose Rigging, PA
Transport
John Kollegger, Bay Shore Medical, LLC, NY
DOTmed 100
Jennifer Culbertson, AIT Worldwide Logistics, TX
MRI Keep Cold, Mobile Storage, Transport
Rich Greb, Sunrise Medical Technology, Inc., TX
DOTmed Certified/100
MRI Keep Cold, Mobile Storage, Transport
Cliff Hess, Texas Medical Mobile Services, TX
DOTmed Certified
MRI Keep Cold, Mobile Storage, Transport
Paul Zahn, Mobile MedTech, WI
DOTmed Certified
MRI Keep Cold, Mobile Storage, Transport

International
Aydogan Polat, MEDSER Medical Services, Germany
DOTmed 100
Rami Marom, ElsMed Ltd. & Relaxation, Inc., Israel
DOTmed Certified/100

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