Open-sided MRI systems now comprise about 20% of the installed base in the United States, well down from the late 1990s when they were selling in almost the same numbers as high field and represented approximately 30% of all units. In 1997, for instance, unit sales of systems less than 0.5T were almost the same as those for 1T and higher (47% versus 50%), driven largely by interest in open-sided technology. The advantages of “open” units were trumpeted as the solution for a vast untapped patient population unable to withstand the claustrophobia of tubular MRI. Now, recent sales of 3T systems are exceeding the entire open-sided segment, “high-field” opens included.

Why is this sector on the decline? One likely factor is the lower signal-to-noise ratio (SNR) that is inherent to low-field. SNR is the bellwether of image quality. It can be increased by a variety of methods but most require compromising other aspects of the examination (eg, decreasing resolution, lengthening patient examination time through multiple averages, reducing receive bandwidth). Increases in field strength enhance SNR and can be done without examination compromise but usually at higher equipment expense. Pro forma analysis can help to explore the relative trade-offs of throughput and system cost to determine how much SNR per time unit one can afford.

MRI is usually a high fixed asset investment. The majority of expenses must be incurred independent of examination volume. Thus, one has to place a significant bet on the table to play the MRI game. If you guess too high in projecting either examination volume or reimbursement per examination, you can lose a lot of money rather quickly. However, the upside of such investments is profit potential after breakeven. Once one achieves enough revenue to meet expenses (breakeven), a large fraction of any additional revenue is profit. Variable expenses are low so the amount they subtract from additional revenue is small. Therefore, throughput and efficiency are the shibboleths of MRI.

Consider typical MRI operating expenses (technical alone) for a freestanding facility that runs weekdays 8 hours per day.

Static Expenses . Costs for personnel, overhead, billing and collections, office supplies, transcription, and utilities are likely to be independent of field strength or equipment cost. Site costs (rental space and tenant improvements) may well be more expensive for open-sided MRI than for conventional tubular systems due to the increased weight, vibration sensitivity, temperature concerns, and larger fringe fields of the former (especially “high-field” opens). Similarly, medical supplies per examination are likely to be lower for high-field units due to reduced contrast usage. For the sake of these analyses, however, I will assume both categories are also the same.

Dynamic Expenses . Expense differences are expected in the categories of equipment price (lease rate or mortgage payment) and service costs.

Capacity . An equally important disparity between “open” and tubular systems is examination capacity. At present, all seem able to address examination volumes of up to approximately eight per day, but low-field requires more time per examination, as much as a factor of two in many cases. For these analyses, I have assumed 1 hour per examination for low-field, 40 minutes per examination for mid-field, and 30 minutes per examination for high-field. At 250 days/year and 8 hours/day, there are 2,000 hours available per year. Thus, above about 2,000 examinations per year, the low-field operation must increase scan hours or days to accommodate additional volume compared to mid-field open-sided or high-field tubular systems. These analyses assume these systems can achieve 3,000 examinations and 4,000 examinations, respectively, in 2,000 hours per year.

Table 1. Volume assumptions for pro forma analyses.

Quantification of expenses per examination and profit per examination can be estimated via spreadsheet analyses. I have chosen to highlight six special cases, low-, mid-, and high-field units at low volume and at maximum (top) volume. Assumptions for equipment pricing and service costs are detailed below. Estimated examination volumes by year are listed in Table 1 and reflect the prior discussion of capacity.

The analysis for the open-sided low-field system at low volume is shown below. Assumptions are also detailed. Note in this example the contributions for the dynamic expenses decrease more rapidly with increasing volume than the static, primarily due to their lack of inflation (contractually fixed). Also, this analysis is for technical revenues alone. Professional interpretation services are assumed in these analyses to be billed separately.

ASSUMPTIONS FOR YEAR 1

These are provided as general estimates and may vary significantly for individual cases. The reader is cautioned to discuss such issues with local experts and to rely upon their advice. All noncontractually established costs are inflated by 4% in succeeding years.

Personnel . One manager/technologist, one receptionist, and one aide plus benefits for a total of $145,000.

General and Administrative Costs . Legal, accounting, insurance, phone, postage, accreditation, etc for a total of $25,000.

Office Expenses . $10,000

Supplies . Medical at $30 per examination and nonmedical at $5 per examination.

Utilities . $20,000

Billing and Collections . 6.5% of collected revenue.

Space Costs and Tenant Improvements .

Marketing .

Miscellaneous . $10,000

Financing . Tenant improvements and equipment costs, including sales taxes, are amortized over 5 years at 7% per annum.

Tenant Improvements . $250,000

Equipment Costs . $650,000 for low-field open, $1,400,000 for high-field tubular or open-sided.

Revenue . A technical component of $600 per examination is assumed for all years.

Similar analyses for alterations in equipment mortgage payments, service costs, and examination capacity were conducted. Results are summarized below and illustrated in Figures 1 and 2.

Table 2. Pro forma analysis of open-sided low-field MRI at low volume.

Figure 1 shows that the low-field system offers better profit per examination at low volume than mid- or high-field (same line for both cases since they have equivalent costs), which is negative for 4 of the 5 years. At maximum volumes, however, profit per examination increases with field strength.

The most dramatic effects, however, are seen in Figure 2, Cumulative Cash Flow by Year. Not only do the high-field systems show the greatest profit per examination (Figure 1), but they also are performing the greatest number of examinations in the 2,000 hours available per year. The confluence of these factors produces over $4,000,000 greater cash flow for the high-field unit compared to low-field and about $2,400,000 over the mid-field open-sided system. One should also recognize that these analyses assume the full amortization of system expenses over the first 5 years. A high-field unit is likely to have a longer useful life cycle than low-field. This would provide greater residual value for the high-field unit, a benefit not included in these comparisons.

According to IMV International, the average MRI unit in the United States is currently conducting about 3,300 examinations per year. If one desires to maximize profitability without compromising image quality and one can reasonably anticipate examination volume in excess of about 2,000 annually, it appears the choice of high-field tubular MRI is straightforward. Not only does this option offer the greatest profit potential if large examination volumes are achieved but the risk of significant losses at lower volumes is relatively modest. Thus, the reward to risk ratio heavily favors high-field tubular designs.

Figure 1. Profit per examination by MRI type, including low-volume low field (LVLF); low-volume high field (LVHF); top-volume low field (TVLF); top volume high field (TVHF); and top volume mid field (TVMF).
Figure 2. Cumulative cash flow for each MRI type over time.

When examination volumes are limited, can a case be made for low-field? Although these analyses indicate profitability, one must also consider the purchase of a used high-field system as a viable option. Excellent preowned equipment is now available for as low as $200,000, and I have had clients attain profitability with such equipment at examination volumes as low as 600 per year. Thus, it appears that even at modest volumes, new low-field equipment may not be the most efficient or profitable option.

What about current mid-field open units? They are in the same price range as new short-bore 1.5T units but offer only about one half the SNR. If there truly is a large patient population not able to undergo tubular MRI examinations, mid-field open may have continuing potential. However, in light of faster examinations conducted at high-field and new ultrashort magnet designs, such a market is probably short-lived.

CONCLUSION

The advent of 3T and parallel imaging at 1.5T will place further demands on image quality from all MRI units. As more of these advanced systems are placed into community settings, referrers and payors will increasingly question the effectiveness of examinations on units below 1T. Open-sided technology could rise to this challenge, but, to date, the manufacturing costs of such units do not appear to allow sufficient profit margin for widespread promotion by the major vendors. Thus, caught between lower SNR and higher production costs, open-sided MRI may soon go the way of the steam-driven automobile.

Robert A. Bell, PhD, is president of RA Bell and Associates, an independent consulting firm specializing in the technical and operational aspects of advanced imaging modalities. He welcomes questions and comments and can be contacted at (858) 759-0150.