Alliance Business Healthcare Sees Boon recession

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Copyright 2009 ProQuest Information and LearningAll Rights ReservedCopyright 2009 CBJ, L. P. Orange County Business Journal

March 23, 2009 - March 29, 2009

SECTION: Pg. 32 Vol. 32 No. 12 ISSN: 1051-7480

ACC-NO: 12879

LENGTH: 814 words

HEADLINE: Alliance Healthcare Sees Recession as Business Boon

BYLINE: Reed, Vita

ABSTRACT

Chief Executive Paul Viviano reiterated that theme during a recent conference call, saying that the growing expense of borrowing money helps Alliance when it comes to selling medical imaging services to hospitals and others. Medical Office Building Buys Grubb & ElUs Healthcare REIT, a unit of Santa Ana-based Grubb & Ellis Co., bought four Wisconsin medical office buildings with 185,000 square feet of space from Aurora Health Care Inc. Grubb & Ellis didn't disclose a total purchase price. FULL TEXT

NeoMatrix Raises $ 1 5M; Grubb & Ellis Healthcare Arm Buys Wisconsin Medical Buildings

HEALTHCARE

Alliance HealthCare Services Inc., a Newport Beach provider of diagnostic scan- ning and cancer treatment services, has said tough economic times could be a boon to its business as hospitals look to conserve cash.

The company, which provides medical scanning services, is gaining customers who can't afford their own equipment and opt to outsource tests instead.

Chief Executive Paul Viviano reiterated that theme during a recent conference call, saying that the growing expense of borrowing money helps Alliance when it comes to selling medical imaging services to hospitals and others.

Alliance had some 505 imaging systems in 46 states as of the end of December.

Viviano cited a recent American Hospital Association survey of executives that "noted nine out of 10 hospitals reported that it was difficult to access tax-exempt bond markets and other important sources of financing."

Hospitals also face a funding drought on the charitable giving side, according to the report.

Viviano also touched on government issues, including some proposed Medicare reim- bursement cuts in President Obama's 2010 budget plan, which could cut into Alliance's profits.

To control costs, Obama's budget calls for using radiology benefit management, which would evaluate the effectiveness and need for tests that Alliance and its competitors do.

Alliance plans to lobby in opposition to the Medicare radiology benefit management plan, Viviano said. But he also said that because of the "limited nature" of the forecasted savings, he doesn't expect efforts to limit radiology benefits would be a major near-term priority.

Radiology benefit managers have become popular with commercial health insurers that want to approve medical scans before paying for them.

Insurers have argued that using radiology benefit managers can improve care because they have up-to-date, well-researched information on when to perform medical scans. Critics, particularly some doctors, believe that the managers' reviews delay the timing in getting scans and in some cases, they reject medically necessary scans.

Viviano doesn't believe the proposed budget contains other provisions that would affect its imaging or cancer treatment businesses.

Device Maker Gets $15M

NeoMatrix Inc., an Irvine medical testing company, said it raised $15 million in the second phase of its third round of funding.

NeoMatrix makes the Halo system, which is a five-minute, non-invasive test designed to look for atypical ductal hyperplasia, a symptom that can be a precursor to breast cancer. The company is going to use the money to support further commercialization of Halo.

NeoMatrix did not disclose the investors in the funding round, similar to its practice in a 2007 round. But it did say that the $15 million figure was 50% higher than its initial target of $10 million.

The company also said that it was not finished raising money and that it has initiated another phase of funding to seek an additional $2 million to $3 million investment.

In a release, NeoMatrix said that its investors understood that the company has reduced some risks found in early stage companies, including clearing Food and Drug Administration regulatory hurdles and placing units in healthcare facilities.

Medical Office Building Buys

Grubb & ElUs Healthcare REIT, a unit of Santa Ana-based Grubb & Ellis Co., bought four Wisconsin medical office buildings with 185,000 square feet of space from Aurora Health Care Inc.

Grubb & Ellis didn't disclose a total purchase price. The Milwaukee Journal estimated the price for the four buildings at $34 million. The newspaper also quoted documents filed with Milwaukee County that showed one of the buildings sold for slightly more than $7 million.

The medical office buildings are in Milwaukee and three suburban areas: Menomonee Falls, Richfield and Mequon.

The buildings are being leased back to Aurora, a hospital operator that has clinics at those locations.

Aurora sold the buildings to free up cash, system spokesman Jeff Squire told the Milwaukee newspaper. Aurora is building a pair of hospitals in suburban Milwaukee and is trying to reduce its expenses. SIDEBAR

Alliance mobile screening facility: expects more business from cash-strapped hospitals SIDEBAR

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LOAD-DATE: April 21, 2009