The competitive climate in the diagnostic medical imaging business in San Diego County is changing. San Diego Diagnostic Radiology Medical Group (SDDR), the largest private radiology group in the county, is losing its competitive advantage in contracting to San Diego Physicians Services, a radiology Management Services Organization (MSO). The four groups in this organization are merging their medical practices and will soon be a mega-group with greater contracting power and geographic reach than SDDR. Managed care and the consolidation of the hospital and payor segments precipitated this affiliation and these changes required SDDR to assess its position. After reviewing the national and local markets, SDDR evaluated four options: remaining independent, joining a Physicians Practice Management company, merging with another group or groups, or forming its own MSO. The strategic choice is to form an MSO, which will commence operations on August 1, 1998, to compete in the San Diego area market. This MSO will be implemented in two phases, Phase 1 with North Coast Imaging and Phase 2 with X-Ray Medical Group in early 1999. This new business direction will keep SDDR competitive and flexible in the San Diego County medical imaging market.
