1.0 Executive Summary
The purpose of this document is to secure $10 million of capital for the ongoing development of a medical imaging business based in Montgomery County, Maryland. Deutsch Imaging Group LLC (“the Company”) was founded this year by Matthew Deutsch, a highly experienced healthcare executive. The business will provide a wide range of medical imaging services spanning MRIs, CAT scans, x-rays, and ultrasounds. Full scale revenue generating operations are expected to commence in the first quarter of next year once the facility has been developed.
Operations
The business will generate highly predictable streams of revenue from the ongoing medical imaging services that will be rendered onsite. As noted above, the facilities will feature MRI machines, CAT scan machines, X-ray machines, and ultrasound. The business will directly employ two radiologists that will provide reading of medical images. The business will also coordinate with third-party radiologists that will have their patients come to the facility for specific types of medical imaging.
In regards to revenue generation, the Company will produce its income primarily from insurance reimbursement. The business will also be appropriately licensed to receive fees from Medicare as well as Medicaid. To a more modest extent, the Company will receive payments directly from patients.
The third section of this medical imaging business plan will further discuss the operations of the business.
The Financing
In regards to the $10 million of capital sought, $2 million of this funding is expected to come from private investors. The remaining $8 million will be secured through a business loan.
Given that this is a healthcare focused enterprise, the business could easily secure a working capital line of credit or business expansion loan in the future. Ongoing financing may be acquired as the business ads new types of medical imaging equipment. The Company will all still use a significant portion of it after tax cash flow for ongoing expansion.
The Future
The Company will continue to conduct direct outreach with medical professionals throughout the entire entirety of Montgomery County as well as the Central Maryland area. As this will be a large-scale facility, the Company will be able to easily provide services for patients throughout this highly population dense market.
Market Overview
Revenue Forecasts
2.0 The Financing
2.1 Funds Required
The $10 million of aggregate capital sought in this document will be allocated towards the following:
2.2 Management and Investor Equity
It is expected that investors will receive a 50% ownership stake in Deutsch Imaging Group LLC.
2.3 Exit Strategies
As medical imaging business businesses are able to remain profitable in any economic climate, there would be an immense demand among third parties to acquire the business. Potential acquisition candidates would include hospital systems, private equity groups, and specialized medical firms that are seeking to make an entry into the field of medical imaging. Historically, these businesses typically have a price of earnings multiple of six times EBITDA the value of any owned real estate. The sale of this business is not expected to occur for significant period of time.
3.0 Operations
As noted in an executive summary, Deutsch Imaging Group will be an end-to-end medical imaging provider for its patients. The Company will directly be employe radiologists as well as several radiology technicians in order to render services.
The most lucrative segment of the Company’s operations will come from MRI scans as well as CAT scans. It is expected that each of these engagements will produce $1,000 to $3,000 of revenue depending on the scope of services required. The Company will also provide full body scans to the general public, which will be authorized by one of the business’ staff radiologists. This is expected to produce $500 to $750 per engagement.
To complement these primary operations, the business will maintain state of the art x-ray machines as well as ultrasound technologies. The business will directly employ an ultrasound technician to render services in accordance with a physician’s orders.
4.0 Overview of the Organization
4.1 Registered Name
Deutsch Imaging Group LLC. The company is registered as a limited liability company in the State of Maryland.
4.2 Commencement of Operations
The Company will establish its medical imaging operations in the first quarter of next year.
4.3 Mission Statement
To provide comprehensive medical imaging services on a cost-effective basis to residents of Montgomery County in the Central Maryland area.
4.4 Vision Statement
To become recognized as one of the preeminent medical imaging facilities within this market.
4.5 Organizational Objectives
• Acquire a state-of-the-art medical imaging equipment in order to reduce future maintenance and replacement costs.
• Established ongoing relationships with physicians and surgeons that frequently require medical imaging for their patients.
• Implement proper fiscal control of business can maintain its profitability while also engaging in expansion strategies.
• Adhere to all laws and regulations regarding the use of radiological equipment.
• Maintain a moderate scale marketing campaign that targets a general public for full body scans.
• Potentially develop additional medical imaging locations after the fifth year of operation.
5.0 Market and Industry Analysis
5.1 External Environmental Analysis
This section of the medical imaging business plan will focus on the current economic climate, the industry, the demographic profile, and the ongoing competition at the business will face.
Economic outlook within the United States at this time is moderate. As a result of changing trade policies, as well as adjustments to government budgeting, there has been a higher degree of inflation that has occurred than what was expected. Numerous federal agencies included in the United States Treasury and the United States Federal Reserve are taking appropriate measures to ensure that the inflation rate decreases well also ensuring ongoing economic growth and low unemployment rate.
It should be noted that the revenues of Deutsch Imaging Group are immune for negative changes in the economy. Medical imaging is an absolute necessity among patients that may have a very severe underlying issue. As noted earlier, the business will generate the bulk of its revenues from insurance reimbursement as well as publicly funded healthcare systems.
5.2 Industry Analysis
As of this year, there are 5,500 companies that are actively involved with providing medical imaging services to the general public. These businesses produced $30 billion of revenue while providing employment opportunities for 110,000 people.
This is a highly established industry that has been around for numerous decades. One of the major trends within this industry, from a business standpoint, is that medical imaging facilities have begun to maintain ongoing affiliations with teaching hospitals. During the next five years, the Company may establish a relationship with a medical school or university hospital in order to receive an ongoing influx orders when specialized medical imaging is required.
5.3 Customer Profile
As it relates to demographics, any individual of any age as a potential patient of Deutsch Imaging Group. As such, it is difficult to determine the exact demographics of people that will undergo medical imaging at facilities.
5.4 Competitive Analysis
The primary competition that the business will face will come from established hospitals that maintain their own in-house medical imaging division. However, this is a more muted competitive risk as a business intends to work with physicians that will typically have their patients use Deutsch Imaging Group for medical imaging services rather than go to a hospital.
6.0 Key Strategic Issues
6.1 Sustainable Operations
Deutsch Imaging Group will have sustainable operations as a result of the following:
• This substantial population density of Montgomery County will fully support the operations of his medical imaging business.
• A highly experienced CEO, Matthew Deutsch, that has years of direct management experience with healthcare enterprises.
• The Company will have ongoing access to capital as this is a healthcare focused business.
• The Company can easily scale to include other medical imaging facilities in the greater Central Maryland area.
6.2 Basis of Growth
The Company will expand via the following methods:
• Expansion of the whole-body scan services that are offered to the general public.
• Continued development of ongoing relationships with physicians that frequently required medical imaging for their patients.
• Development of additional locations.
• Integration of additional radiology services that can be rendered at the Company’s initial facility and potentially at subsequent facilities.
7.0 Marketing Plan
7.1 Marketing Objectives
• During the development period, conduct extensive direct outreach with physicians in the market.
• Integration of additional radiology services that can be rendered at the Company’s initial facility and potentially at subsequent facilities.
• Place advertisement in medical journals at circulate throughout the greater Philadelphia Matan area.
7.2 Revenue Forecasts
7.3 Revenue Assumptions
Year 1
• The business will launch operations in Montgomery County.
• Revenue will reach $5.4 million.
Year 2
• The business will increase its fees by 10%.
• Total income will reach $5.9 million.
Years 3-5
• By Year 5, income from medical imaging services will reach $7.9 million.
• The business may establish additional locations at this time.
7.4 Marketing Strategies
The ongoing marketing required by Deutsch Imaging Group will be relatively limited. As this is a healthcare focused business, the Company will receive the vast majority of its medical imaging orders from physicians that provide referrals.
To that end, the Company will conduct extensive direct outreach with Montgomery County based physicians so they become familiar with the MRIs, CAT scans, ultrasound, and x-ray imaging capabilities of the business. Brochures and visually stunning assets will be distributed through the mail to physicians in this market.
For the Company’s website, this will be both a consumer facing and physician facing platform. As it relates to the general public, the platform will showcase hours of operation, services offered, cost of full body scans, and related information about having medical imaging completed at the location. For doctors, a specialized portal will be available so that they can review medical imaging that has been completed. This website will undergo a modest and amount of certain engine optimization specific for the Central Maryland market area.
The Company will also conduct printed advertisements in medical journals at circulate throughout Central Maryland. From time to time, the company will take out full page advertisements that showcase the location and numerous types of medical imaging services that can be provided.
8.0 Organizational Plan
8.1 Organizational Hierarchy
8.2 Personnel Costs
9.0 Financial Plan
9.1 Underlying Assumptions
• The business will acquire $8 million of debt capital to establish its medical imaging operations.
• Investors will contribute $2 million towards venture.
• Deutsch Imaging Group will achieve a compounded annual growth rate of 10%.
9.2 Financial Highlights
• The average medical imaging engagement will produce $1,700 of revenue.
• Total payroll will not exceed 31% of revenue in any given year.
9.3 Sensitivity Analysis
As has been one of the themes of this document, medical imaging remains in incredible demand, even during severe economic recession. As this is a health focused enterprise, the demand for the services will remain in incredibly strong, although whole body scan demand may decline slightly during challenging business climates.
9.4 Source of Funds
9.5 Financial Proformas
A) Profit and Loss Statement
B) Common Size Income Statement
C) Cash Flow Analysis
D) Balance Sheet
9.6 Breakeven Analysis
9.7 Business Ratios
SWOT Analysis
Strengths
• The ability to render MRIs, CAT scans, ultrasounds, and x-rayed through one facility will provide a major differentiating factor.
• The business is operating a population dense market that has a number of medical schools and university hospitals that will provide referrals.
• The Company has a unique approach for establishing ongoing relationships with doctors that will send their patients to Deutsch Imaging Group.
Weaknesses
• General operational complexities that this is a healthcare focused enterprise.
• Moderately high cost related to equipment maintenance and facility expenses.
Opportunities
• Continued hiring of radiologists and radiology technicians that the business can accommodate a greater number of patients.
• Establishment of secondary campus locations within Maryland.
• Expansion of operations to include interventional radiology treatments.
Threats
• Changes in government policy can affect the revenue produce from public health funded healthcare systems.
• Inflation could cause the operating cost of the business to increase including the acquisition of state-of-the-art medical imaging equipment.
Risk Analysis
Development Risk – Low
The primary issue that needs to be addressed to securing the $10 million of aggregate funding discussed this document. Management has already sourced the manufacturers that will provide medical imaging equipment once to build out of the facility is complete.
Financing Risk – Low
Nearly all of the funding salt in this document will be secured by medical imaging equipment, real estate, as well as general, furniture, fixtures, and equipment. The risks release this financing are all set by the fact that the business will produce substantial revenues in an economic climate.
Marketing Risk – Low
Most importantly, the Company will conduct direct outreach with numerous physicians and group practices within Central Maryland in order to receive ongoing referrals. This will be complemented by the Company’s consumer facing operations that will be conducted online.
Management Risk – Low
Matthew Deutsch is a highly experienced and competent healthcare executive that has work extensively with medical imaging businesses. He will be able to guide the operations to profitability prior to launch.
Valuation Risk – Low
The valuation risk is offset by:
• The business will have highly valuable medical imaging assets, which are the primary use of funds.
• The Company will have ongoing access to capital to further expand its operations as needed.
• The Company can easily establish additional medical imaging campuses within the target market.
Exit Risk – Low
As noted earlier, there would be a significant demand for the operation of Deutsch Imaging Group given his economic stability. In the event that the business is be sold, the Company will coordinate these efforts with an investment bank that has extensive experience with the sales of healthcare focused enterprises.