Waikato radiology services to merge

ANDREA FOX
Last updated 11:52 03/12/2012

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Most Hamilton and Waikato MRI radiology services will merge under a joint venture proposal from the region’s radiology companies being considered by competition watchdog the Commerce Commission.

The plan is for the acquisition of Hamilton-based radiology practice Medimaging Ltd, by a new joint venture called Medimaging Radiology.

Medimaging Ltd owner Dr Kevin Gilbert would have a 30 per cent interest in the new joint venture, which would include shareholders that operate the main radiology practices in Hamilton and the Waikato region, Hamilton Radiology Ltd and Midland MRI Ltd.

The three companies provide private radiology services in Hamilton, including Xrays, ultrasounds and MRI scans.

Many of the shareholders of Hamilton Radiology are shareholders in Midland MRI and are mainly practising radiologists.

The joint venture’s application said its proposal  was the result of Dr Gilbert’s inability to employ a suitably qualified and experienced radiologist to help him run Medimaging.

The commission will determine whether the deal would harm and lessen competition in the market.

The application said the acquisition would reduce the number of independent MRI private service providers in Hamilton from two to one, although Medimaging would continue to operate separately.

The level of constraint on the merged parties would remain essentially the same as pre-acquisition, the application said.

The reasons for this included the strong influence from Midland District Health Board, the main purchaser of the radiology services, ACC and health insurance companies; the low level of patients who paid for their MRIs could travel to Auckland, Tauranga and Rotorua; and while there is a shortage of radiologists, there are low barriers to entry to the sector.

In time large radiology groups from outside Hamilton could set up MRI services in Hamilton, the application said.

Medimaging’s MRI services would remain a stand-alone practice and Gilbert’s speciality in musculoskeletar radiology would remain available for patient referrals, it said.

Hamilton Radiology, which performs services for ACC, private referrals including health insurance and DHB-funded work, and some outpatient work from Waikato Hospital, has 10 shareholders who are practising radiologists, or their associated company or trust.

Hamilton Radiology has the Midland DHB contract for provision of PET-CT services (positron emission tomography - computed tomography).

It operates from five clinics in Hamilton, and one in Cambridge, Morrinsville and Te Awamutu.Midland MRI services the Waikato region.

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It owns two MRI scanners, a 3T scanner at Waikato Hospital which has been contracted for 14 years, and a scanner at the Anglesea Clinic. The application said Midland MRI is having difficulty meeting the demand for MRI scanner time.

Its Anglesea Clinic MRI is working overtime seven days a week, causing long waiting lists.

Having access to Medimaging’s scanners would help meet demand, the application said.Medimaging provides low-tech and MRI radiology services, operating from two Hamilton clinics, with ultrasound clinics in Cambridge and Huntly.

The application said if the purchase did not proceed Gilbert would continue to search for a suitable radiologist as a partner or employee though the prospects were low.

- BusinessDay.co.nz

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