Smart Choice MRI plans expansion after $6.5M funding round

By Polo Rocha

Smart Choice MRI’s significantly cheaper MRIs will soon be available in Chicago thanks to a just-closed fundraising round of $6.5 million, all of which came from Wisconsin investors.

“That’s something we really wanted to focus on,” CEO Rick Anderson said. “We didn’t want to go to the West Coast or the East Coast, or Chicago for that matter.”

The Mequon company, which raised about $4 million more than its goal, has six clinics across Wisconsin that offer MRIs for less than $600. That’s much cheaper than the average Wisconsin MRI of almost $3,000 and quicker than going to a hospital, Anderson said.

Smart Choice can offer its MRIs at a much cheaper rate because it doesn’t have a “bloated staffing model,” with only two staffers working at any time: a receptionist and the person working the GE Healthcare MRI machine.

That cuts a lot of the overhead costs that hospitals need to pay for, and it allows Smart Choice to contract with the academic medical center Cleveland Clinic for actually analyzing those MRIs.

“All we do is MRIs, and that is it,” Anderson said.

Anderson said Smart Choice now has rates worked out with all major insurers, and that some self-funded employers and insurers such as WEA Trust incentivize people to choose Smart Choice’s lower price.

Customers, meanwhile, benefit from the transparency in Smart Choice’s pricing structure and its quick procedures, Anderson said.

“If you get an MRI at a hospital today, you might as well take half of your day off work,” Anderson said. “In our case, we’re open at 6:15 in the morning to 9:45 at night, and we can get you in and out in about 30 minutes.”

The fundraising round was led by Milwaukee’s F Street Capital, whose managing partner, Todd Gruen, said the company is “on the leading edge of a new era of healthcare — one that empowers patients.”

“The changes in our healthcare system have fueled consumers who demand to understand their options — quality at a fair price has never been more important,” Gruen said.

Anderson was previously the senior vice president at Sharecare, which was co-founded by surgeon and TV personality Dr. Mehmet Oz, and was also on the founding team of WebMD.

Smart Choice was founded in 2006 but started in earnest two years later, Anderson said. Since he joined Smart Choice as CEO almost two years ago, the company has added four clinics in Wisconsin, each of which made a profit in their first full month.

The fundraising round will lead to four new clinics in Chicago, the first of which will open in February, and then four more clinics in the Twin Cities, an expansion that Anderson said isn’t too rapid given the success their past clinic openings have seen.

“When you see markets that deserve a solution like Wisconsin has enjoyed since 2008, it’s time to go,” Anderson said.

See the release: