Affidea has increasingly been in the headlines in the European imaging sector in the last decade as it has gradually acquired the assets of private imaging facilities, with notable penetration in Italy and the U.K. However, its core base was founded on servicing the private health market in Eastern Europe and the Baltics -- relatively small markets in the grand scheme of European imaging services.
Future growth will depend on Affidea's ability to acquire more imaging centers and penetrate new geographic markets, says Steve Holloway.
Operating over 300 imaging centers and a handful of oncology centers, Affidea has built up a network of imaging service providers and imaging fleet to match that of a small national health provider network. This creates the opportunity to leverage scale for economy, both in terms of purchasing modalities for its centers (such as the well-publicized 90-million-euro deal with GE Healthcare in 2019) as well as providing a "full-feature" offering -- including subspecialty expertise -- when it comes to teleradiology reading services.
GBL cited that Affidea has demonstrated "resilience to economic cycles and long-term underlying growth trends" as its rationale for the deal. Clearly, the good growth trajectory over the last decade during some tumultuous economic periods, especially in parts of Eastern and Southern Europe, showcases the resilience aspect.
But what of future growth? Arguably GBL is being coy on the growth potential of Affidea in its public briefings, so now's a good time to examine these trends in more detail. There appear to be three main areas of opportunity:
Post-COVID pent-up demand. Following substantial lockdowns and restrictions in provision of care, many health providers across Europe are looking to address pent-up demand for care and imaging services. Most do not have in-house capacity or staffing to meet demand, leading to longer waiting lists and more pressure on health systems as more acutely sick and chronic patients present, especially as screening services have been disrupted.
Consequently, public health providers will be looking at multiple options for how to meet this demand, with outsourcing to private groups with spare capacity viewed more favorably short-term; moreover, radiologist reading services are also under severe pressure, making the Affidea teleradiology service offering a more attractive proposition. Teleradiology in Europe is still nascent -- around 2% of all diagnostic reading volumes last year -- but is forecasting substantial growth in the coming years (expected to double by 2025).
Geographic expansion. Pent-up demand and a need for more outsourcing will also open up opportunities in larger markets, with France, Germany, the U.K., Benelux, and the Nordics also possibilities. For example, the U.K. government's plan to open a number of outpatient diagnostic "hubs" by utilizing a host of different ownership and partnerships is one such opportunity where Affidea could play a role.
Affidea will need to walk a tightrope, however, in addressing these markets, with each having complex health service commissioning, data privacy, and evolving care frameworks, with a preponderance for public as opposed to private care. Affidea is also well-positioned to tap into the burgeoning Middle Eastern market which is far more bullish on private care services and more likely to "buy-in" to the firm's focus on technology.
Technology and innovation. One of Affidea's key differentiators is its focus on investment in technology across its network of centers. The firm has a harmonized blueprint for technology adoption with minimum standards criteria, ensuring that, for example, modalities in its fleet are replaced more regularly and key analytics and IT software are deployed across all sites. This "baseline" for all of its providers has reaped rewards, both in terms of its glowing patient safety record (including some innovative patient dose tracking initiatives) and providing a competitive edge in terms of winning a growing share of imaging service commissions.
Fundamentally, as public healthcare resources are increasingly stretched, standards will slip and investment in innovation and new technology deployment will slow. For Affidea, this creates an even greater point of difference between the public and private settings for imaging acquisitions. With a new fleet and more advanced digital capabilities (including potentially faster deployment of artificial intelligence [AI]-based diagnostic tools) than most public imaging settings, Affidea should, per scan, be more price competitive and efficient in terms of both access to imaging and reading services, creating a more compelling driver toward its centers.
Additionally, the firm is already looking to leverage its position in new channels, both as data broker for developing AI-based tools (with its in-house development focus and partnerships with other developers) and in providing data and patient access for clinical trials. While other healthcare providers can also tap into this substantial opportunity, Affidea's focus on technology and multiregion reach means it has potentially unique access to richer datasets versus a single or smaller regional network in a single country. Given that Affidea already has multiple partnerships in place with leading pharmaceutical and clinical research organizations, increasing the scale of its imaging center network will only drive more interest in access to its data.
Growth is not assured, however. It will be dependent on Affidea's ability to continue its trajectory of acquiring more imaging centers and penetrating new geographic markets, no mean feat as asset valuations remain high and COVID-19 has layered on a new degree of focus from public entities on health reform and managing spending.
Moreover, with cost-of-living spiraling across Europe due to the impact of the Russian invasion of Ukraine, Affidea will need to tread carefully to win a bigger share of imaging service commissions, while not impacting the business of its key modality technology partners such as GE, Philips, and Siemens Healthineers. This should be possible, but the changing dynamics of imaging service line provision will increasingly mean Affidea is indirectly competing with, not on behalf of, leading imaging modality vendors.
However, as GBL has understood, the base fundamentals of the market today clearly point to a growing role of outpatient imaging in the European setting long-term, especially as more health systems look to the growth of U.S. outpatient imaging centers and reading group giants such as Radnet. While the two regions have vastly different approaches and context in terms of healthcare provision, parallels will be drawn and influence borrowed, which will in time reshape imaging services in Europe. GBL and Affidea are banking on it.
Steve Holloway is principal analyst and company director at Signify Research, a health tech, market-intelligence firm based in Cranfield, U.K. Competing interests: None declared.
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