Smart Choice MRI gets $7 million investment from Illinois health system

Illinois health system Edward-Elmhurst Health is investing $7 million in Smart Choice MRI, a Mequon company that offers MRIs at $600 or less.

It’s the second such partnership for the company, with Appleton health system ThedaCare investing $3 million earlier this year and adding $1 million later on. Smart Choice CEO Rick Anderson said it’s another example of a health system “trying to do the right thing” for patients and finding cheaper ways to deliver care.

The investments from health systems, he added, give Smart Choice MRI a “stamp of approval,” but they’re also more useful than traditional venture capital funding.

“Those dollars are always so much better [because] you get a partner that totally understands our business,” Anderson said.

Following the ThedaCare investment, Edward-Elmhurst reached out to Smart Choice MRI, as the company was looking to open clinics in Illinois.

It’s currently running three Chicago-area clinics and is adding one in downtown Chicago this summer. The $7 million investment, announced yesterday, will lead to five more Chicago-area clinic openings and an expansion into Minneapolis, Anderson said.

Edward-Elmhurst CEO Pam Davis said health systems, including her own, are being forced to take a look at how they can reduce health care costs. Davis said she liked Smart Choice MRI’s approach, which boils down to cutting overhead staffing costs by only doing the MRIs and contracting with the Cleveland Clinic for MRI analysis.

“Many people can have great ideas, but executing on time within budget is exceedingly difficult,” she said. “They showed they would excel in all those areas.”

The person taking over Davis’ role in July, Bill Kottmann, will join the Smart Choice MRI board of directors. The health system, like ThedaCare, now also owns 10 percent of the company, which has raised a total of $14.5 million.

By the end of the year, Anderson said, Smart Choice MRI will likely have 19 clinics in three states and more than 120 employees. It’s also looking at expanding in several other markets in 2017 and will look for other “forward-thinking” health systems to partner with there.

“We hope that we’re going to replicate that model,” he said.

— By Polo Rocha,