Reimbursement drives the imaging center industry, added Skulte, of GE Capital HFS. “We put a task force around this subject 18 months ago, and started looking through our portfolios to see who would have challenges. We proactively reached out to imaging center customers and talked with them about it.

“Up until recently, there was a lot of entrepreneurial development of stand-alone specialty practices, but now the trend is for more integration with hospitals,” he said. “That is because hospitals are expected to ultimately survive healthcare reform.”

Others also said they were monitoring the shift of services from hospitals to stand-alone facilities on their own campuses, Funders also are watching the rise in the number of physician-owned specialty hospitals and physician offices adding their own imaging capabilities.

Geert Kraak, CFO for De Lage Landen Global Healthcare, said the imaging market is flat in the United States, so his company is looking to expand in China, India and Central Europe. “China is too big to deny,” he said, noting it is where equipment providers are going. “We mainly grow organically, so we really need to follow the vendors to expand.”

Healthcare Legislation
Despite all of the sales talk, much of the focus at this conference was on the American market and the impact of the imminent healthcare reform bill.

Grahe, the hospital CFO, said an “economy providing jobs” is more critically needed than federal healthcare legislation. Even if more people are covered under a federal plan, reimbursements to hospitals will be lower, he said. His biggest concern at the time was Maryland’s state budget crisis. He said the state is assessing hospitals some $350 billion to pay for high-risk and uninsured patients.

Another hospital administrator, George Bayless, VP of Finance, GBMC HealthCare of Towson, MD, said, “Healthcare reform feels like it is just reforming for hospitals.” He said everyone, including his hospital, is simply trying to dig out of the recession and complained that suppliers are charging higher rates, as well.

Healthcare financing executives said they appreciated the Washington perspective on what was driving the healthcare legislation and on how hospital administrators viewed its likely impact. They also spoke about the challenges of dealing with differing state regulations and requirements.

GE’s Lynch said his organization is regionally structured because things differ considerably from one state to the next. A number of executives agreed that California, New York and Illinois offered particular challenges. Other state concerns include varying population densities, cultural differences and varying economic situations. Some states have certificate-of-need requirements to be considered, as well.

Outpatient Market
The outpatient market, in particular, was characterized as requiring a high level of expertise. One executive said investment grade credits are in demand and there are a lot of dollars chasing the very best deals, bringing down yields.

In this market, a speaker said market dynamics vary significantly depending on the scope of the outpatient services, from surgical centers to imaging centers. Niches within the niches may be attractive for some. It’s been reported that eye doctors will see an expected growth rate in business of 24%. Veterinarians are expected to enjoy growth of 33% between 2008 and 2018.

In the hospital space, executives said they expect 2010 to be better from a funding perspective for average hospitals, while capital funding for the smaller or poorer hospitals may take longer. Most of the financing executives were positive about tax-exempt financing returning to the market and felt that there will be new entrants — more banks and entrepreneurs. The opportunities are simply too huge to ignore. With Americans growing older, there will indeed be more patients and tests, thus, more imaging and ambulatory surgical services needed.

It is expected that risk levels will shift in this dynamic market. Thus, getting even closer to clients is more important than ever.

Randy Sklar, vice president of middle-market finance with Philips Medical Capital, summarized it well. He said healthcare financing executives will need risk management strategies that are very carefully tailored to this industry. “This is an art form, rather than a science.”