Two for Three

Two for Three

HEALTH CARE by Mark Gordon | Managing Editor

A former ER doctor turned entrepreneur strives to be really great at two parts of his medical imaging business while still being decent at the third. The formula is working.

The best business advice Stephen Miley ever heard came from Rose Saginaw, a polio-stricken wheelchair user and entrepreneur-turned-business-consultant.

Miley got the advice more than 25 years ago, when Saginaw, who co-founded a national chain of brake repair shops with her husband, shared her rule of three with Miley: Good, fast and cheap. That is if Miley and his business - any business, really - could be exemplary in two of those concepts while being at least adequate in the third, then he and the business, will be on its way.

Miley, then an emergency room doctor leading an effort at his Melbourne-based community hospital to open an urgent care center, took the words to heart. Being in health care, he knew costs would be the toughest of the trio to control, so he focused on being really good and really fast.

Saginaw's advice was Miley's lynchpin. "We had no idea what we were doing," Miley says of those days in the mid-1980s opening and staffing urgent care centers on the east coast of Florida, "but it was instantly successful."

Miley was so successful, his bosses at Holmes Regional Medical Center asked him to open more urgent care centers in the area. And although he would later continue his medical career as an emergency room doctor at Venice Hospital, Miley now had a place in his heart for running a business.

That heart opened wide in 2002 when Miley founded Axcess Diagnostics in Venice. The idea was to create an outlet for doctors to refer patients in need of medical imaging not readily available at a standard office, such as brain scans or MRIs. Miley also wanted to create a top-rung facility, one combining the latest and greatest technology with an elite staff.

Just like he did with the urgent care centers, Miley used Saginaw's two-out-of-three philosophy to build the business, again choosing quality and speed of service as the aspects to excel in while striving for adequacy in cost.

And once again, the theory clicked: Five years after opening the first branch in Venice, Axcess Diagnostics has about 75 employees spread over three offices and had between $10 million and $13 million in 2006 revenues. Miley declined to release specific revenue figures for the privately held company.

On the third part of the equation, cost, Miley is nothing if not blunt. "There's nothing," he says, "we have that's cheap."

A brilliant expense

Take Axcess' new machine for coronary artery evaluations, a unit so rare and expensive there's only one other in the state, in Fort Lauderdale. Sold by electronics company Philips under its Brilliance product line, the machine has 64 channels, making it one of the most powerful on the market. And besides heart monitoring, it's designed to scan multiple organs and can also be used for children.

Technology like that is costly. Axcess paid $2.2 million last year for its Brilliance machine. It also comes with a whopping four-year, $12,000 monthly maintenance cost, which translates to a $550 a day.

Axcess has several other high-tech, high-cost machines. The list includes an Allegro PET scanner, used for cancer detection, in addition to heart and brain monitoring, as well as a Gemini PET/CT scanner, billed as the market's first open PET/CT scanner. Those machines provide 3D images, too, which Miley says is a big part of providing the best results quickly.

With such high equipment costs, it's no surprise Miley's taken on $16 million in debt through bank financing since he opened the first Axcess office. He says the company has been slightly profitable and has grown revenues every year.

Dr. Keith Johnson, a Venice-based internist and pediatrician, says the Axcess formula of high-costs, high quality works because it combines top-tier equipment with top-tier personnel analyzing the results the machines generate. What doctors are looking for when referring patients to an imaging center, says Johnson, "is not only the quality of the picture, but the quality of the eyes reading the picture."

Life-saving technology

Count local entrepreneur and investment banker Cliff Wildes has one Axcess patient thrilled over Miley's business plan. Wildes, chairman and past chief executive of Kesselring Holding Corp., a publicly traded Sarasota-based restoration and construction firm, first met with Miley a few months ago in a business capacity. Miley, seeking more financing methods to continue growing Axcess, looked up Wildes, who has helped several small businesses go public.

As part of that first business meeting, Miley suggested Wildes get a heart scan, to see how the firm's technology really works. It was a life-altering - and possibly life-saving - suggestion.

Turns out Wildes, a reasonably fit 57-year-old who works out a few times a week and plays the occasional game of tennis, had more than a 90% blockage in one of his heart arteries. "I had no idea I was having these issues," says Wildes, "and neither did my doctor."

Wildes immediately made an appointment with a cardiologist, which led to him having a stent put in, a process that helped him avoid bypass surgery. While not yet in the medical clear, Miley says he's much better off today as a result of the Axcess test.

And while Wildes had already agreed to do some background work for Miley on financing and possibly taking Axcess Diagnostics public, he's now doubly sold. "I am his biggest champion," says Wildes. "The center saved my life."

An experience like that is why Miley doesn't flinch at the high cost of doing business. Says Miley, channeling one of the leaders in upscale shopping known for quality, but not necessarily price: "We want to be the Nordstroms of the industry."

The 'right eyes'

After five years of running Axcess, Miley says the company's second biggest challenge - behind navigating the nation's Byzantine health care and payment reimbursement system - is daily execution of the philosophy to excel at quality and speed philosophy.

While that could be true for dozens of other businesses, it's especially important for Miley, as Axcess essentially has two sets of distinct and discerning customers. First, there are the referring doctors, who are looking for medical quality, including the type of machine and the choice of doctor, and then there's the patients themselves, who are seeking some of the more subtle facets of medicine, such as being greeted properly and avoiding long waiting times.

To the first part, Axcess has spent in excess of $4 million the past few years on technology and now, overall, the company offers more than a dozen diagnostic imaging procedures, from standard MRIs to virtual colonoscopies to recently becoming one of the first medical imaging centers in the region to utilize a digital mammography system for detecting breast cancer.

It has also hired several nationally trained radiologists Miley says allow the company to have the "right eyes" look at the results generated by the technology. For example, Dr. Jamie Montilla, the medical director of the Sarasota office, formerly ran the PET/CT imaging department at the Walter Reed Army Medical Center, while Dr. James Ball, Jr., medical director of the Venice office, was previously chief of neuroradiology at the Florida Hospital Medical Center in Orlando.

What's more, in 2003 Miley opened a second Axcess branch in Bradenton, followed in 2006 by a third office in Sarasota, in a 9,000-square-foot building the company owns that now doubles as a corporate headquarters. More patient centers - Miley's considering opening a fourth location in North Port - allow the staff to excel in the speed arena.

Miley has also tried to be diligent on the customer service side of things. The Sarasota office, for example, is decorated more like a living room then a waiting room. It includes a combination of carpet and hardwood floors, as well as flat screen TVs playing a variety of happy-place shows, such as old Johnny Carson montages.

REVIEW SUMMARY

Industry. Health care

Business. Axcess Diagnostics, Sarasota

Key. Company strives to excel in speed and quality, while being adequate in cost.