xecutive Summary

Scan Lab Medical Imaging is a start-up company offering a wide range of medical image
scanning tests for the New Bedford, Massachusetts community.
The Market
Scan Lab will target insurance carriers. Insurance carriers use a bid submittal process to set
up contracts with the various medical scan service providers. In todays medical environment
these contact are key because 99% of the scans done are billed through insurance. Insurance
companies therefore are the gate keepers to this process. Scan Lab recognizes the importance
of getting insurance carriers approval and will work hard to get approved by all popular
insurance plans.
Once Scan Lab has been approved by an insurance company, it will rely on referrals of
physicians to point their patients to Scan Lab. Doctors make referrals based on several factors
including geographic location/convenience who they know, accepted forms of insurance, type
of scan, etc. It will be important to have a strong marketing and sales campaign that alerts
referring doctors to Scan Labs services.
Services
Scan Lab offers a wide range of radiology-based medical scanning tests. Scan Lab has the
latest equipment and the expert medical training to interpret and provide valuable
consultations to the physicians who make the patient referrals to Scan Lab.
Management
Scan Lab will be lead by Dr. Carolyn Jones. Dr. Jones received her medical degree with a
specialization in radiology from the University of California San Diego, a nationally
recognized medical school for radiology. Dr. Jones performed her residency at John Hopkins,
also nationally recognized for their radiology program. Dr. Jones has practiced radiology for
13 years at a large clinic in Boston.

1.1 Mission
It is Scan Labs mission to be recognized as the leader in medical scanning technology in
New Bedford. This will be achieved by friendly service, flexible acceptance of insurance
plans, and accurate analysis.

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1.2 Objectives

To capture 40% of local physicians business within two years.

To reach profitability within two years.

To double sales by year three.

1.3 Keys to Success

Only purchase medical equipment that has demand within the community.

Provide fast, friendly service with accurate readings.

Employ strict financial controls to help manage the expensive capital costs associated
with medical imaging equipment.

Company Summary
Scan Lab has been formed as a Massachusetts corporation. It is solely owned by Carolyn
Jones.

2.1 Start-up Summary

Scan Lab will need to purchase the necessary equipment for the clinic.

Office furniture for four exam rooms. This equipment will be purchased used in good
condition. This will be done as a cost saving measure.

Receptionist office furniture and assorted waiting room furniture (this will also be
purchased in good, used condition).

Three computers, one with QuickBooks Pro, all with Microsoft Office, a central laser
printer and broadband Internet connection.

Medical scanning devices:

o X-ray machine
o Ultra sound unit
o CAT scan imaging machine
o MRI imaging machine

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Start-up
Requirements
Start-up Expenses
Legal
Stationery etc.
Brochures
Consultants
Insurance
Rent
Total Start-up Expenses
Start-up Assets
Cash Required
Other Current Assets
Long-term Assets
Total Assets
Total Requirements

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Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required
Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

Liabilities and Capital

Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)

Total Liabilities
Capital
Planned Investment
Dr. Jones
Investor
Additional Investment Requirement
Total Planned Investment
Loss at Start-up (Start-up Expenses)
Total Capital

Total Capital and Liabilities

Total Funding

2.2 Company Ownership

Carolyn Jones is the sole stockholder of the Scan Lab corporation.

Services
Scan Lab offers New Bedford physicians a wide range of diagnostic scanning tests. Due to
the high cost of scanning equipment for occasional use, most small clinics and practices use
an outside service provider for scanning needs. The following scans will be offered:
o X-Ray: An X-ray uses invisible electromagnetic energy beams to produce
images of internal tissues, bones, and organs on film. X-rays are used for
numerous reasons but work best to find tumors or bone injuries.
o Ultrasound: This technology sends sound waves into the body, recording the
reflection. Ultrasound is used for a detailed assessment of blood flow and for
views of soft tissue and anatomical body structure.
o CAT Scan: This is a diagnostic technology that uses a combination of x-rays
and computer technology to produce cross-sectional images (slices) in a
horizontal and vertical orientation. A CAT scan can show detailed images of
any part of the body including bones, muscles, fat, and organs. CAT scans are
more detailed than traditional x-rays and have lower releases of radiation. CAT
scans are often used to diagnose tumors, evaluate internal bleeding or
investigate internal injuries or damage.

MRI: This technology harnesses magnetic energy. The patient is placed in a tube or
on a bed where magnetic fields are applied to the body. The reaction by the body
when the magnetic fields are applied and relaxed are noted by a computer which has
been recording data throughout the process. MRIs are the premier scanning device for
extremities, especially joints, as well as for imaging the upper spine and lower back.

Diagnostic scanning requires proper analysis by a radiologist to analyze the scans.

Market Analysis Summary

Scan Lab has identified two customer segments that they will target: medical insurance
carriers and physicians. For many patients the insurance company mandates who can provide
scanning services. Therefore, the driving force to getting customers is attracting the large
insurance carriers. Scan Lab has been in negotiations with the three largest carriers in the
state and all have informally accepted Scan Labs bid proposal.
The second customer group is the physicians. While the insurance company will mandate
what labs are acceptable for their insurance plan, it is the doctors choice where they
recommend their patients goes.

4.1 Market Segmentation

Scan Lab will target the three largest medical insurance carriers: Aetna, Cigna, and
Prudential. Smaller ones will also be targeted later.
Scan Lab has been involved in negotiations with these three insurance carriers to develop an
arrangement for Scan Lab to be an approved facility. The next step is the submission of a bid,
which is primarily based on price. The lab must agree to rates that the insurance companies
have set forth. A secondary consideration is the ability of the lab to adhere to specific filing
and billing procedures.
The second target market segment is physicians. Physicians make referrals based on
numerous factors including:

Who they know.

Who the patients insurance company is.

What type of scan the patient is receiving.

Convenience of location relative to their office or to the patients home.

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Market Analysis
Potential Customers
Insurance companies
Physicians
Total

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4.2 Target Market Segment Strategy

The insurance companies decide what scanning facilities are acceptable relative to their
insurance plan. Once the facility has been approved, the approval is typically good for one to
two years at which point a new bid must be submitted.
Physicians direct the patient to where they must go for a scan. Because Scan Lab is located
within a professional building with many doctors, this level of convenience with often prompt
the doctor to immediately recommend Scan Lab.

4.3 Service Business Analysis

The medical imaging industry operates under two models: a large clinic or practice that
purchases the equipment for the use of their physicians, and outside service providers.
Only large clinics and practices can justify buying their own scanning equipment. For a small
clinic or practice, the high equipment cost with low use rate makes cost per use expensive.
Scan Labs direct competitors offer their services to all physicians and accept a wide range of
insurance plans. These competitors rarely offer services beyond medical imagine test and
radiologist analysis. The medical scanning industry can be profitable if there is not over
capacity of the scanning machines in the area. A profitable capacity is to have approximately
five MRIs for every 100,000 people. Currently, New Bedford, with a population of 300,000
has 12.

4.3.1 Competition and Buying Patterns

There are nine direct competitors in the area. The large ones are detailed below:
o Massachusetts Imaging Center: This company operates three centers of
imaging equipment. This company is large, while they offer competent
radiologist analysis, the setting is somewhat factory like where patients
become numbers who are shuffled through.
o Bedford Scanning: This is a small facility with one part time radiologist on
staff. They only have an MRI and CAT scan, they do not offer any other types
of imaging services.

Radiologist Imaging: This facility is similar to Scan Lab but is located on the far side
of town, a 25 minute drive away, therefore this facility seems to serve a more regional
customer base due to their non-centralized location.

Scan Lab also has indirect competition from clinics and large practices with their own
scanning equipment. This group does not serve outside physicians so it is only a threat if they
recruit doctors, that use Scan Lab, away from private practice.

Strategy and Implementation Summary

Scan Lab will leverage its competitive edge of having the most advanced equipment with a
seasoned, nationally recognized radiologist providing all of the analysis. Scan Lab will
employ a marketing strategy that will communicate the message that offers state of the art
technology and medical analysis, developing an awareness regarding Scan Labs strengths
and distinctiveness.
There is not a significant amount of work that needs to occur to market to the insurance
companies. This activity is handled by bid submission. Most activities directed at the
insurance companies will occur through the sales campaign. Scan Lab will also embark on a
sales strategy that has the goal of converting qualified doctors into referring doctors, Scan
Labs source of patients. The following three sections provides this analysis.

5.1 Competitive Edge

Scan Lab will a nationally recognized expert radiologist in charge of all analysis. Dr. Carolyn
Jones has been practicing radiology for 13 years, has published over 14 articles in renowned
medical journals and is often asked to be a speaker at national engagements. Recently, she
was the keynote speaker for the American Association of Radiologists Annual Conference
where she described a new technique of using contrast in medical imaging that yielded a 34%
increase in detail. A medical imaging scan is only as good as the analysis of the scan,
therefore it is of significant value to offer a service where you have a nationally recognized
expert offering the consultation to the referring doctor.
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5.2 Marketing Strategy

Scan Lab will use several methods to communicate that it offers the most advanced
technology and the best expert radiology analysis. This message will be communicate
through various methods:
o Yellow Pages: While the Yellow Pages are not as targeted as other methods of
communication, these advertisements will be necessary as many people turn to
the pages when they do not have a specific service provider in mind. The ads
are proven to be cost effective.
o Circulars: These will be pamphlets that are sent out to local physicians. The
pamphlet will serve to introduce Scan Lab and detail the different services that
it offers. It will also provide information on Dr. Carolyn Jones and will include
background into her professional accomplishments and activities.

Networking: Dr. Jones recognizes the importance of networking, getting to know the
physicians that work in New Bedford. A high percentage of referrals are made based
on personal and professional contacts so networking is a very effective method of
increasing the number of referrals. Dr. Jones will be active in the numerous
organizations and committees that are present within the medical community.

5.3 Sales Strategy

Scan Labs sales strategy will be to convert a qualified lead into a referring physician. This
will be done through the emphasis of Dr. Jones strength and expertise in the field of
radiology. The medical scanning laboratories service both patients and doctors.
For patients the scanning must be convenient, pleasant, and accept most insurance plans. For
physicians, it must be a high-quality radiologist analysis. The better the analysis, the more
accurate information that the radiologists can offer in the consultation to the referring
physician.

Scan Lab will be networking with various insurance carriers. The first step is to determine
who the key contact at the insurance company is. These contacts will be useful in providing
information on what is expected in the submitted bid.

5.3.1 Sales Forecast

The sales forecast adopts a conservative approach to projecting future sales. As a start-up
organization, Scan Lab recognizes that sales will be slow initially but by the seventh month
sales will be steady and grow as the marketing efforts are developed.
The sales forecast is broken down by the type of service provided and displayed in the
following table. The charts give a visual representation of monthly and yearly figures.

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Sales Forecast
Sales
X-ray
Ultrasound
CAT scan
MRI
Total Sales
Direct Cost of Sales
X-ray
Ultrasound
CAT scan
MRI
Subtotal Direct Cost of Sales

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5.4 Milestones
Scan Lab has chosen several quantifiable milestones that have been developed as goals for
the organization to achieve. The following table details the specific milestones, the time
frame that has been estimated for completion of the milestone, and the specific employee
responsible.

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Milestones
Milestone
Business plan completion
Secure lease
Equipment purchases
Facility open
Profitability
Totals

Web Plan Summary

Scan Lab will have a website which will provide information regarding the services offered
and Dr. Jones professional experience.

6.1 Website Marketing Strategy

Scan Lab will use two simple marketing techniques to alert prospective customers to the site.
The first is the prominent display of the Web address on all literature that Scan Lab has. The
second is submitting Scan Labs website URL to multiple search engines. This will ensure that
if a customer types New Bedford MRI into a search engine and they would be brought to
www.scanlab.com.

6.2 Development Requirements

The website will be designed and built by a local computer science student.

Management Summary
Scan Lab will be lead by Dr. Carolyn Jones. Dr. Jones received her medical degree from The
University of California San Diego, world renowned for their radiology. Dr. Jones moved to
the Northeast and practiced her residency at John Hopkins, after which she went to work for a
large clinic in Boston.
Dr. Jones has published 14 articles and is frequently asked to present her papers at
conferences.

7.1 Personnel Plan

Scan Lab will require the following positions/responsibilities:
o Dr. Jones: In addition to being the resident radiologist, she will also be
responsible for business development, and some marketing and sales.
o Technicians: Four people will be responsible for the operation of the
machines.

Administration: Two people will be responsible for the clerical duties and
bookkeeping.

Personnel Plan
Dr. Jones
Technicians
Other
Total People
Total Payroll

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Financial Plan
The following sections will outline the financial planning for Scan Lab.

8.1 Important Assumptions

The following table details important Financial Assumptions.
General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

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8.2 Break-even Analysis

The Break-even Analysis indicates what is needed in monthly revenue to reach the breakeven point.

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Break-even Analysis

Monthly Revenue Break-even

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

8.3 Projected Profit and Loss

The following table and charts will indicate Projected Profit and Loss.

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Pro Forma Profit and Loss
Sales
Direct Cost of Sales
Other Costs of Sales
Total Cost of Sales
Gross Margin
Gross Margin %

Expenses
Payroll
Sales and Marketing and Other Expenses
Depreciation
Rent
Utilities
Insurance
Payroll Taxes
Other

Total Operating Expenses

Profit Before Interest and Taxes
EBITDA
Interest Expense
Taxes Incurred
Net Profit
Net Profit/Sales

8.4 Projected Cash Flow

The following table and chart will indicate Projected Cash Flow.

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Pro Forma Cash Flow
Cash Received
Cash from Operations
Cash Sales
Cash from Receivables
Subtotal Cash from Operations

Additional Cash Received

Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance

8.5 Projected Balance Sheet

The following table will indicate the Projected Balance Sheet.
Pro Forma Balance Sheet
Assets
Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets

Liabilities and Capital

Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
Long-term Liabilities
Total Liabilities
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth

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8.6 Business Ratios

The following table details Business Ratios as they relate to Scan Lab, as well as the
Diagnostic Imaging Center industry, NAICS code 612512, that it participates in.
Ratio Analysis
Sales Growth
Percent of Total Assets
Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets
Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth
Percent of Sales
Sales

Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios
Net Profit Margin
Return on Equity
Activity Ratios
Accounts Receivable Turnover
Collection Days
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout

Appendix
SALES FORECAST

MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONT
3
4
5
7
9
1
2
6
8
10
11
Sales

X-ray

$8,56
5
$5,05
3
$9,42
2
$6,06
4
$29,1
04

$10,0
05
$5,90
3
$11,0
06
$7,08
4
$33,9
97

$12,4
54
$7,34
8
$13,6
99
$8,81
7
$
42,31
9

$13,1
21
$7,74
1
$14,4
33
$9,29
0
$44,5
85

$14,0
05
$8,26
3
$15,4
06
$9,91
6
$47,5
89

$14,9
89
$8,84
4
$16,4
88
$10,6
12
$50,9
33

$15,1
14
$8,91
7
$16,6
25
$10,7
01
$51,3
57

$15,
65
$9,0
6
$16,
92
$10,
08
$51,
70

Month Month Month Month

3
4
1
2
$1,26 $1,97
$0
$0
5
0
$1,16
$0
$0
$746
2
$1,39 $2,16
$0
$0
2
7
$1,39
$0
$0
$896
5
$0
$0
$4,29 $6,69
8
4

Month
5
$2,30
1
$1,35
8
$2,53
1
$1,62
9
$7,81
9

Month
6
$2,86
4
$1,69
0
$3,15
1
$2,02
8
$9,73
3

Month
7
$3,01
8
$1,78
1
$3,32
0
$2,13
7
$10,2
55

Month
8
$3,22
1
$1,90
0
$3,54
3
$2,28
1
$10,9
45

Month
9
$3,44
7
$2,03
4
$3,79
2
$2,44
1
$11,7
15

Month
10
$3,47
6
$2,05
1
$3,82
4
$2,46
1
$11,8
12

Mont
11
$3,5
1
$2,0
1
$3,8
2
$2,4
6
$11,
30

0% $0

$0

Ultrasou
0% $0
nd

$0

CAT scan 0% $0

$0

MRI

0% $0

$0

$0

so

TOTAL
SALES
Direct
Cost of
Sales
X-ray
Ultrasou
nd
CAT scan
MRI
Subtotal
Direct
Cost of
Sales

$5,50
0
$3,24
5
$6,05
0
$3,89
4
$18,6
89