Outsourcer of radiologists files for stock offering

Outsourcing American jobs and services abroad is relatively new to physicians, but Nighthawk Radiology Holdings Inc. is hoping its business of sending jobs overseas leads to a big jackpot.

The Coeur d'Alene, Idaho-based company is planning to raise up to $86.3 million through an initial public offering of common stock, according to an Oct. 5 filing with the Securities and Exchange Commission.

The company recruits board-certified radiologists who typically are American citizens and then locates them in Sydney, Australia, and Zurich, Switzerland, to provide after-hours interpretation services to American hospitals and radiology groups. Generally, those entities cannot find enough radiologists to provide 24-hour service locally.

As of June 30, Nighthawk had 30 affiliated radiologists providing services to 347 clients serving 693 hospitals in the United States, according to the company's SEC filing.

Nighthawk, founded by radiologist Paul Berger, MD, says it also has contracts with another dozen radiologists. Its radiologists, who are independent contractors as opposed to employees, are licensed in the states where the hospitals for which they provide readings are located. They also have admitting privileges at those facilities, according to Nighthawk's filings.

That appears to meet the guidelines that the American College of Radiology approved for international teleradiology in 2004.

As long as companies comply with its guidelines, ACR doesn't oppose outsourcing, said Arl Van Moore Jr., MD, a Charlotte, N.C., radiologist and ACR vice chair.

"I don't think anybody can say that we're going to be protectionists, and that we can't allow this to occur, because that would be antitrust," Dr. Moore said.

"But I think that you can define what would be acceptable conditions in terms of protecting our patients by setting standards. We do that all the time," Dr. Moore said.

The AMA does not have a policy on either outsourcing of physicians or offshore outsourcing of other physician services, such as transcriptions. However, at its House of Delegates Interim Meeting this month, the AMA is scheduled to consider adoption of a resolution stipulating that outsourcing of medical and financial information outside the country should comply with U.S. medical privacy laws.

Nighthawk's filing is one of the few health care deals to make its way into the IPO pipeline this year, which has been dominated by companies in the energy sector, said Ben W. Holmes, a principal of Protege Funds LLC, an investment firm in Boulder, Colo.

Analysts say the presence of an IPO for physician outsourcing doesn't necessarily mean such a trend will take hold among all specialties. "It's pretty hard to outsource things like stitches, setting broken bones or surgery," Holmes said. "There's talk about surgery being done remotely [by doctors controlling robots from afar] ... but that's sort of [way] out there."

Dr. Moore believes "any specialty where you could provide patient care using a teleradiology link to a certain extent" could be outsourced. These include dermatology and psychiatry, he said.

"I don't think medicine is immune to globalization," Dr. Moore said. "It's not a question of if but how that globalization will occur. At least for radiology we put down what we feel are acceptable circumstances in how something like that might occur."

Nighthawk executives did not comment for this story because their company is in what is known as a "quiet period," the time between the filing of an IPO and its launch. During that time, the SEC mandates that executives not make public comments beyond what is in the IPO filing.

Nighthawk did not reveal in its filings how many shares it plans to sell and at what price.

Those details are likely to be disclosed in later filings with the SEC. The company plans to trade on the Nasdaq under the ticker symbol NHWK.