WHAT IS A MAMMOGRAM?

A mammogram is a low-dose x-ray image used to screen for and diagnose breast cancer and other diseases and disorders of the breast. Mammography produces images of breast tissue to enable radiologists to search for abnormalities such as fibroids, cysts, tumors or microcalcifications. Mammograms are the primary screening method for detecting breast disease, as the images can often reveal irregularities in the breast tissue before any symptoms are noticeable. There are two types of mammograms: (i) screening, a preventative scan using a small number of images; and (ii) diagnostic, used to investigate known changes, symptomatic conditions or abnormal findings yielded via a screening mammogram.

 HISTORY OF MAMMOGRAPHY

In 1913, a German surgeon named Dr. Albert Salomon, who had used radiological technology to assess mastectomy specimens, was the first to publish his thoughts on the concept of using radiographic technology to differentiate benign and malignant findings through correlative radiological, macro and microscopic anatomical studies. In the 1960s, researchers in New York launched a large-scale randomized trial of mammography screening as a tool to reduce breast cancer mortality rates. In the course of the study, which lasted for nearly two decades, diagnostic x-ray breast screenings were conducted on more than 60,000 women. The long-term results of the trial, published in 1982 in the Journal of the National Cancer Institute, were shocking; participants saw a 30 percent reduction in deaths from breast cancer when compared to the control group.

In the 1990s, the National Institutes of Health (NIH) and the U.S. Food and Drug Administration (FDA) began establishing regulations and guidelines pertaining to digital mammography, with Congress passing the Mammography Quality Standards Act (MQSA) in 1992. The MQSA sought to establish minimum quality and safety standards to ensure universal access to quality mammography, as breast cancer posed the most commonly diagnosed and second most lethal oncological threat to women’s health in America. In 2000, the FDA approved the first digital mammography unit, the GE Senographe 2000D. Eleven years later, Hologic introduced the Selenia Dimensions, the world’s first three-dimensional (3D) digital breast tomosynthesis (DBT) machine. DBT is an advanced form of 3D imaging which uses twodimensional (2D) images from multiple angles to build a stacked 3D image. With a 40 percent higher detection rate, 3D tomography units quickly became the preferred option in women’s health clinics around the world.

 SPECIALIZED TECHNOLOGY

Approximately 50 percent of women over 40 years of age have dense breast tissue, which reduces accurate detection rates of breast cancer on mammograms. Dense breast tissue has also been shown to increase the risk of developing breast cancer. Given these challenges, unique variations of the traditional mammography system have been developed in hopes of more timely diagnosis and greater accuracy in cancer detection rates among women with dense breast tissue.

Molecular breast imaging (MBI) takes an alternative approach to imaging breasts in comparison to traditional 3D mammography. MBI uses a specialized gamma camera to examine high risk patients with dense breast tissue in cases where a mammogram may leave a tumor undetected. One disadvantage of MBI is the higher dose of radiation exposure for patients, so MBIs are generally only performed when a mammogram may prove ineffective.

Breast specific gamma imaging (BSGI) is a similar procedure to MBI, but with the added requirement of intravenous radioactive injections to develop the nuclear image. This technology involves even higher radiation exposure risks than MBI; therefore, BSGI is typically only used when mammography or magnetic resonance imaging (MRI) systems cannot confirm a diagnosis. Due to the heightened exposure risk, BSGI is not used for routine screenings and, when supplemental screenings are needed for dense breast tissue scans, MBI is preferred over BSGI.

 APPRAISAL CONSIDERATIONS

Normal Useful Life (NUL) – The NUL for a mammography system in a cost approach appraisal is estimated to be 7 to 10 years, with x-ray tube replacement expected by year 7. These estimates are largely based on usage volume and, more importantly, presuppose routine maintenance of the system.

Replacement Cost New (RCN) – The RCN for mammography systems can vary depending on the capabilities of the system. A 2D system, such as the GE Senographe Essential or Hologic Selenia, costs around $60,000 to $80,000. An intermediate 3D system, like the GE Pristina or Hologic Dimensions, doubles the cost at $140,000 to $180,000. The latest models, such as the Fuji Aspire Crystalle or Hologic 3Dimensions HD, start at around $250,000. If a clinic wishes to expand their breast screening services, they may acquire a stereotactic breast biopsy system, such as the Siemens Mammotest, which can start around $50,000. These prices typically include installation costs and a one-year service agreement.

Functional Obsolescence – Advancements in mammography and the overall diagnostic imaging industry have led to new milestones in patient care. Accordingly, older mammography systems gradually become less comparatively effective since they lack certain features found on their newer counterparts. One example of this is digital breast tomosynthesis (DBT), which is a superior system compared to its 2D alternative, given its advantage of higher detection rates and fewer false positives than in most 2D systems. To achieve optimal patient care, facilities must regularly assess the capabilities of their existing mammography equipment to determine if a system upgrade or replacement is warranted. Technological capabilities and comparative use case advantages are important to consider when valuating mammography systems.

Economic Obsolescence – Since 1992, the MQSA has been leveraged to ensure that facilities provide high-quality mammograms and communicate clear and accurate results to their patients. Under the MQSA, all mammography facilities are required to be accredited by an FDA-approved certifying agency and undergo annual MQSA inspections. If a facility fails accreditation, it must stop providing mammography services until the deficiency has been corrected and accreditation is awarded. If violations are found during an inspection, the facility is given notice and a specified amount of time to remedy the violation and pass a follow-up inspection. The value of a mammography system can be dependent on both current compliance considerations as well as the evolution of current and future regulatory guidelines.

 CONCLUSION

In recent decades, mammography systems have significantly reduced breast cancer related deaths in women around the world. Proficiency surrounding the technology, various features and capabilities of mammography equipment is necessary when appraising these diagnostic imaging machines. As the value of a mammography system can be significantly affected by the unique characteristics and conditions discussed above, it is of the utmost importance to hire a qualified healthcare valuation firm, such as HealthCare Appraisers, to competently and reliably appraise mammography systems.

 WHAT IS MAGNETIC RESONANCE IMAGING (“MRI”)?

Magnetic resonance imaging (i.e., MRI) is a non-invasive medical imaging technique used to produce comprehensive anatomical images utilizing a magnetic field and computer-generated radio waves. MRI scans can generate detailed images of nearly all internal anatomical structures, including bones, muscles, organs, soft tissues, and blood vessels. Today, MRIs are deployed by healthcare providers throughout the patient care cycle, beginning with disease detection and continuing with ongoing patient monitoring after treatment. Unlike x-ray technology, MRI machines do not produce radiation and, therefore, are often the preferred test of choice for patients requiring frequent imaging.

 HISTORY OF MRI MACHINES

Prior to the development of magnetic resonance imaging came nuclear magnetic resonance (“NMR”). NMR was developed in 1937 by Columbia University physics professor Isidor Rabi as a method of measuring the movement of atomic nuclei in the study of chemical substances. Building upon Rabi’s work, American physician Raymond Damadian concluded that cancerous cells contained more water than healthy cells. Dr. Damadian posited that cancer cells could be detected by scanners that immersed a part of the human body in radio waves and subsequently measured the emissions from hydrogen atoms. Based on his theory, Damadian went to work building a human-sized scanner to further test this approach.

As Dr. Damadian proceeded with his work, chemist Paul Lauterbur, who had found a way to use NMR technology to create images, applied knowledge from his own work to human anatomy. Lauterbur realized that a gradient magnetic field allowing observers to take two-dimensional images of an object could potentially be utilized to create three-dimensional images. Lauterbur went on to create the first magnetic resonance image – one of two water-filled test tubes – in 1971. Meanwhile, the work of physicist Peter Mansfield led to the first successful human anatomical scan utilizing a new “line scan imaging” technique using NMR.

In 1977, Damadian, credited as the first physician to leverage NMR technology, ultimately created the first whole-body human scanner, which was dubbed the Indomitable. Damadian founded an MRI manufacturing company called FONAR Corporation in 1978, and FONAR brought the first commercial MRI scanners to market in 1980. Damadian’s device was approved by The Food and Drug Administration (“FDA”) in 1984 and coverage of MRI scans under Medicare was approved in 1985. Peter Mansfield went on to develop the echo-planar imaging technique, a technique using a single nuclear spin excitation per image and still utilized today to reduce MRI scan times. With the scientific contributions of Damadian, Lauterbur, and Mansfield, MRI machines became widely available in the 1980’s and persist as one of the most prevalent diagnostic tools in medicine.

 CURRENT TECHNOLOGY AND LEADING MANUFACTURERS

MRI machines can come in various forms (e.g., open bore, upright, mobile), and are often differentiated by their magnetic field strength. A tesla – denoted as “T” – is the unit of measurement used to define the strength of a magnetic field such as that seen in MRI scanners. The healthcare industry currently utilizes MRI machines ranging from 0.55T up to 7.0T. While 1.0T, 1.5T, and 3.0T scanners are fairly common across the industry, lower tesla machines (i.e., 0.55T) are often used within the clinical workflows of specialties like pulmonology and medical cardiology, and higher tesla machines (i.e., 7.0T) are currently utilized in highly specialized work, including clinical and research-based neurology.

One of the lowest tesla MRI machines currently available on the market is the Siemens Healthineers 0.55T MAGNETOM Free.Max. The MAGNETOM Free.Max received approval from the FDA in July 2021 and positioned itself to break barriers as one of the smallest and most lightweight options with the largest bore (i.e., the circular patient opening) on the market. With its smaller size, quieter operation, and infrastructure lite nature, the MAGNETOM Free.Max has opened the doors to explore new clinical siting opportunities for MRI machines, and allows for the use of whole-body MRI scanning in outpatient centers, emergency rooms, and intensive care units.

The Philips Ingenia Ambition 1.5T is one of three of Philips Healthcare’s current 1.5T MRI offerings. While MRI machines have historically required liquid helium to cool their superconductive magnet coils, the Ingenia Ambition 1.5T recently emerged as the first helium-free MRI. The technological advances inherent within a helium-free system promise more predictable operations and greater efficiencies without the potential for helium related complications or concerns of reliance on a non-renewable resource.

With initial approval of the first 7.0T MRI in 2017, GE HealthCare’s SIGNA™ 7.0T is now one of many 7.0T MRI scanners available on the commercial market. These powerful MRI scanners are utilized by healthcare professionals in advanced clinical and research settings for highly technical neurological and musculoskeletal imaging. The advanced imaging produced by 7.0T scanners is commonly utilized by researchers in the study of neurodegenerative diseases, such as Parkinson’s disease, to visualize alterations in the neurological field of view.

 FUTURE TECHNOLOGY

Perhaps the greatest breakthrough in MRI technology in recent years was the introduction of the Magnetic Resonance Imaging Guided Linear Accelerator (the “MRI-LINAC”). As discussed in HealthCare Appraisers’ publication, a linear accelerator (“LINAC”) is a technically advanced medical system utilized in the delivery of radiation treatment for cancer patients. Combining the treatment capabilities of a LINAC with the imaging capabilities of an MRI machine allows for the delivery of highly personalized treatment plans which can be monitored and adjusted in real time. The MRI-LINAC enables healthcare professionals to ensure greater accuracy in the deployment of radiation treatment by detecting even the smallest shifts in internal anatomical positioning and adjusting accordingly. The increased accuracy afforded by the MRI-LINAC reduces radiation exposure to surrounding healthy tissues and organs and limits the risk of unanticipated and adverse outcomes related to treatment. ViewRay Technologies, Inc.’s MRIdian® received FDA approval in 2017 and became the world’s first MRI-LINAC. Today, ViewRay’s MRIdian®, equipped with a 0.35T MRI, finds itself in competition with the 1.5T Elekta Unity.

 APPRAISAL CONSIDERATIONS

Normal Useful Life (“NUL”) – The NUL considered for an MRI machine under a cost approach to value is estimated to be 10 years. Within a cost approach, an appraiser must consider the maintenance history of the subject machine and assign consideration to software and/or hardware overhauls and updates. While such updates can be costly, they can significantly extend the NUL of an MRI machine. Due to the frequency of the aforementioned upgrades, it is not uncommon to see MRIs in the field well beyond a NUL of 10 years.

Installation/Deinstallation Costs – The cost of installation associated with MRI machines, including appropriate site planning and build-outs to accommodate the requirements of the subject machine, is often factored into the purchase price of a new machine. Medical equipment appraisers must determine the applicability of installation and deinstallation costs in accordance with the appropriate standard of value utilized within the appraisal (e.g., Fair Market Value Installed, Fair Market Value Uninstalled).

Replacement Cost New – Magnetic field strength, as measured in teslas, is the most notable factor in determining replacement cost new (“RCN”) of an MRI machine. New 1.0T to 3.0T machines will require an investment from purchasers of anywhere between $1,000,000 to $3,000,000, while a 0.55T machine can cost as much as 50% less. Refurbished units offer buyers a more affordable option, with pricing as low as $250,000.

Functional Obsolescence – Factors impacting functional obsolescence,[1] as applied in the valuation of an MRI machine, include features inherent in the machine itself, such as magnet strength, current software, and machine maintenance history. While functional obsolescence often comes in the form of outdated technology, it is also important to consider the functional obsolescence that can occur in conjunction with excess capacity (e.g., using a 7.0T machine in an orthopedic outpatient center).

Economic Obsolescence – Abrupt changes in regulatory guidance can have a significant and immediate impact on the value of an MRI machine as applied through economic obsolescence.[2] In the United States, The Centers for Medicare & Medicaid Services (“CMS”) sets the standards for healthcare reimbursement with Medicare fee schedules. As discussed in HealthCare Appraisers’ publication, Section 135(a) of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) amended section 1834(e) of the Social Security Act.[3] The amendment sets stipulations for suppliers of the technical component of advanced diagnostic imaging services (to include MRIs) to have appropriate accreditation by a designated organization in order to receive Medicare reimbursement effective January 1, 2012. Appraisers must remain abreast of amendments and introductions of new regulatory requirements, such as the aforementioned, which could have an adverse impact on MRIs, and should consider such changes within the context of their appraisals of relevant equipment.

 CONCLUSION

MRI machines have transformed disease detection, diagnosis, treatment, and patient monitoring in the healthcare space. Comprehensive knowledge of MRI-specific features such as MRI magnet strength and software capabilities is required to appraise MRI machines. As the value of an MRI machine can be heavily dependent upon the special considerations discussed herein, it is necessary to engage a qualified and knowledgeable expert in medical equipment valuation. Healthcare Appraisers has provided valuations of MRI equipment nationwide, and has extensive experience in the valuation of MRI machines across the spectrum.

 WHAT IS COMPUTED TOMOGRAPHY?

A Computed Tomography (“CT”) scan is a series of x-ray images of the body, depicting cross-sectional views of organs, bones, blood vessels, and soft tissues. Components of a CT scanner include a gantry, high frequency x-ray generator, a cooling system, and a corresponding computer system. Together, these components produce x-ray images or ‘slices’ of data which are then combined and viewed as a cross-sectional three-dimensional (3-D) image for the purpose of diagnosing disease, injury, or other abnormalities inside the body. The slice count for a CT scanner reflects the number of x-ray images taken during each rotation of the gantry. The higher the slice count, the more slices of data are recorded within a given period of time, resulting in a more detailed image on the CT scan.

 HISTORY OF CT SCANNERS

Prior to CT scanners, radiographic images were limited to single-plane, two-dimensional (2-D) images (e.g., x-ray film images). The first commercial CT scanner became available in 1971 after physicians developed a way to capture a series of single-plane x-ray images and combine them to create a 3-D image. Initially used for scans of the head, early CTs helped detect skull fractures, brain tumors, and other head trauma. When compared to x-ray technology, CT scanners produced far more detailed images, particularly of blood vessels, which had proven difficult to capture with traditional radiographic systems.

 CURRENT TECHNOLOGY AND LEADING MANUFACTURERS

CT scanners started out as 4- and 8-slice systems but are now widely available with 64- and 128-slice technology. A 128-slice system, such as the Siemens SOMATOM® Definition or GE Revolution EVO, can provide significantly more detailed images in less time than some 16-slice alternatives, such as the SOMATOM® Emotion eco or GE Lightspeed 16. 16- and 32-slice systems can be strong, affordable options for urgent care centers and emergency departments, whereas 64- and 128-slice systems are now standard in most hospitals and diagnostic imaging centers.

The technology of CT is constantly evolving to produce better images while reducing the concerns and limitations historically associated with CT screening, such as patient exposure to radiation, the size and weight of equipment, and access to CT scans, including in the case of in-the-field imaging for traumatic injuries. Some 160-slice systems, like the Toshiba Aquilion Prime, incorporate low dose technology that can reduce patient exposure to radiation by up to fifty percent. A 256-slice CT scanner, such as the Philips Brilliance iCT, has the ability to provide a complete 3-D image of the heart within just two heartbeats, which is critical for advanced cardiovascular studies. The NeuroLogica BodyTom and OmniTom systems leverage portability to enable mobile CT scanning, including the performance of CT-based stroke assessments onboard ambulances.

The highest slice CT scanner currently available is the Toshiba Aquilion One with 640 slices. With dose-modulating technology, the scanner uses eighty percent less radiation than conventional CT systems, making it a superior choice for pediatric care. It has the ability to produce an image of a heart in a third of a second. This system makes it possible to diagnose coronary artery disease at earlier stages than ever before. It is also equipped with 4-D digital subtraction angiography, making it possible to scan the brain in mere seconds. This allows doctors to evaluate brain function within minutes or make real time assessments regarding stroke patients.

 EMERGING TECHNOLOGY

The most significant breakthrough for CT came in 2021 with Siemens’ introduction of photon-counting technology by way of the NAEOTOM Alpha, the world’s first photon-counting detector (“PCD”) CT scanner. Conventional CT scanners convert x-rays to images using a 2-step process involving visible light conversion to produce the final image. The process for PCD-CT removes the intermediate step of converting x-rays to visible light, where the risk of losing image clarity and contrast occurs, and instead uses a photon detector to convert the x-rays directly into digital signals that produce the final image. This technique allows the PCDCT to measure photon energies with no electronic noise, delivering high spatial resolution. PCD-CT images are so clear they can provide insight into the progression of the disease, rather than simply confirming the diagnosis. Other benefits to PCD-CT include decreased radiation exposure, a reduction in utilization of contrast agents, and enhanced quantitative imaging opportunities.

 APPRAISAL CONSIDERATIONS

Normal Useful Life (“NUL”) – The NUL for a CT scanner in a cost approach appraisal is estimated to be 10 years. The appraiser must consider software and hardware upgrades that have been performed on a CT Scanner, some of which can be costly but could extend the NUL well beyond 10 years. Costs associated with a software update can vary based on which feature(s) are being upgraded or added to the current system, as well as specific pricing structures and policies set by the various manufacturers. Hardware replacement/upgrade costs can vary too – the cost to replace an x-ray tube, for example, can range from $40,000 to $200,000.

Installation/Deinstallation Costs – Site planning, lead shielding, cryogen storage, and proper ventilation are all necessary to install a CT scanner. Installation costs start around $40,000, but rural facilities or difficult-to-access spaces within a clinic or hospital can further increase these costs. Pricing for new systems is often inclusive of installation. The cost to deinstall a CT can also cost upward of $20,000. Depending on the premise of value, all of these costs should be considered in the context of an appraisal. If a clinic or hospital is upgrading to a new system, the seller will often deinstall the old system and offer a trade-in credit toward the new unit.

Replacement Cost New – The slice count is the most important factor in determining the replacement cost new (“RCN”) of a CT scanner. A potential purchaser may also consider refurbished units as an affordable alternative to new systems:

• • • • 16-slice CT scanners cost approximately $300,000 new or $100,000 refurbished
      • 64-slice systems range from $500,000 to $700,000 new or $150,000 refurbished
      • 128-slice units cost as much as $1 million new or $300,000 refurbished
      • 256-slice machines can cost over $2 million new, with few refurbished units generally available for sal
      • The Aquilion One 640-slice CT ranges between $2.5 and $3 million

Functional Obsolescence – Slice count, radiation exposure, image conversion time, potential down time, maintenance and machine footprint are all important factors to consider when appraising a CT scanner. When appraising a CT scanner in place (i.e., Fair Market Value Installed), it is important to note the specialty of the clinic to ensure the capabilities of the CT scanner are in-line with the demands of the clinic. Considerations such as outdated technology or overcapacity could significantly affect the FMV Installed of a CT scanner.

Economic Obsolescence – Regulatory changes can significantly affect the value of a CT scanner, if that particular CT now fails to meet the qualifications needed for reimbursement of technical services. Effective January 2012, the Centers for Medicare and Medicaid Services (“CMS”) requires providers of the technical component of advanced diagnostic imaging (“ADI”) services to be accredited by one of three designated accrediting organizations – the American College of Radiology (ACR), the Intersocietal Accreditation Commission (IAC), or The Joint Commission (TJC) – in order to be eligible to receive reimbursement for the technical component of ADI services.[1] In 2014, Congress passed the Protecting Access to Medicare Act (“PAMA”), which added specific standards for radiographic accreditation requirements. The National Electrical Manufacturers Association (“NEMA”) XR-29 Standard specifies four criteria regarding dose optimization and management, structured dose reporting, and radiation exposure controls. Starting in 2017, CT scanners in outpatient facilities must be XR-29 compliant to receive full CMS reimbursement; noncompliant systems are subject to a 15 percent reduction per scan for technical component reimbursement.[2]

 CONCLUSION

CT scanners have revolutionized the way medical professionals detect and diagnose diseases and injuries and perform medical procedures. Knowledge of the different technological specifications and capabilities (slice count, radiation exposure, upgrades, etc.) is necessary to provide accurate valuation of these machines. Additionally, it is necessary that an appraiser have knowledge of what type of practice the CT scanner will be used in, the intended use applications and requirements for imaging, and the particularities of the clinical specialties and population that the scanner will be used for. In addition to the typical drivers of value, the fair market value of a CT scanner is heavily dependent upon the special considerations discussed above. HealthCare Appraisers’ specialized team of asset appraisers have obtained industry credentials for the valuation of medical equipment and have a breadth and depth of healthcare equipment and asset valuation that spans decades. Contact us today to learn more.

On April 29, 2021, the Office of Inspector General (the “OIG”) posted Advisory Opinion No. 21-02, which addressed a request from a health system and management company (the “Requestors”) for review of a proposed investment, along with certain physician surgeon owners, in an ambulatory surgery center (the “Proposed Arrangement”). While the OIG ultimately indicated that it would not impose administrative sanctions on the Requestors under the applicable sections of the Federal anti-kickback statute, its determination hinged on certain key facts and stipulations made by the Requestors. This article summarizes Advisory Opinion 21-02 and highlights certain key safeguards of the Proposed Arrangement that were noted by the OIG.

  SAFEGUARDS NOTED IN ADVISORY OPINION 21-02

In the Analysis section of Advisory Opinion 21-02, the OIG concludes that each of the investors may be (manager), or would be (physician investors and health system) in a position to (directly or indirectly) influence referrals of items or services reimbursable by a Federal health care program to the new ASC. The OIG ultimately indicated that it would not impose administrative sanctions on the Requestors under the applicable sections of the Federal anti-kickback statute. This determination hinged on certain key facts and stipulations made by the Requestors.

We have summarized certain of the reference “safeguards” from the opinion in the left hand column of the table, below. One way to gain additional perspective on the commentary provided by the OIG, in addition to identifying the key safeguards, is to consider the opposite of the fact patterns cited in the safeguard – as shown in the right hand column of the table below. We present the information in the right hand column of the table noting that the OIG generally warns that Advisory Opinions are specific to the facts presented and cannot be assumed to indicate position or action on a different set of facts.

  KEY TAKEAWAYS

As the ambulatory surgery center industry is not a frequent subject addressed by the OIG, Advisory Opinion 21-02 is worth particular attention. This Advisory Opinion highlights the litany of related transactions or activities surrounding a joint venture investment in an ASC that might impact overall physician investment outcomes, and therefore, have regulatory implications. Though the Requestors have prudently and proactively addressed these surrounding transactions with safeguards that mitigate potential regulatory risk that might arise in the Proposed Arrangement, industry participants should consider with care whether any of their own surrounding transactions (individually or collectively) serve to undermine the spirit of the regulatory framework under which physician investments in ASC’s are permitted.