Body scan industry dims as market becomes saturated.

The once booming industry for body and heart scans that flooded L.A.'s airwaves with promises of life-saving diagnoses is fading fast, with the region's biggest scanning company closing down and others scaling back operations and ambitious expansion plans.

CT Screening International LLC, a Newport Beach-based body scanner with 12 offices nationwide, quietly closed its doors late last year. The company, which had three Los Angeles County locations, is in the midst of restructuring, said founder Dr. Richard Penfil.

Smaller operators, such as Comprehensive Advanced Prevention Services, a heart-scanning operation with one Westside location, have seen business decline sharply.

"Everybody had big, big plans, but business has definitely dropped off," said Neil Rosen-field, co-owner of Comprehensive Advanced. 'Too many people got into the market."

Southern California radiologists and entrepreneurs opened dozens of heart and body scan centers starting in the 1990s, igniting a national trend to take advantage of improvements in imaging technology.

New equipment offered clearer pictures of the body's interior, and promised to find hidden heart disease, cancers and other problems. The ads touted clients who appeared well but had potentially fatal tumors discovered by scanning.

However, the industry has suffered from a classic boom-bust cycle after far too many screening centers entered the market. At the same time, the economy turned sour and clients became less willing to spend up to $800 or more for tests not reimbursable by insurance, operators said.

Moreover, after initial favorable "gee whiz" media coverage, questions arose about the safety of the tests, which expose patients to radiation. The American College of Radiology is against full body scans in the absence of specific symptoms, noting that it can often lead to benign findings requiring more testing.

"I would say (the failures) were predictable," said Dr. Dieter Enzmann, chairman of the radiology department at UCLA Medical Center and a critic of the screening centers. "I thought there was a limited life span to this business model."

Closing down

The financial stress has hit body scanning outfits harder than heart scanners. Both perform similar functions, but the electron beam CTs preferred for heart scans are more expensive than the spiral CT equipment used for full body scans. The expense has acted as a barrier to entry, giving electron beam CT operators a cushion against oversupply in the market.

Locally the highest profile failure so far has been the apparent closure of CT Screening, which opened its first office in Newport Beach in February 2001. It expanded locally to Beverly Hills, Encino and Pasadena, as well as to New York and New Jersey.

Calls placed to company centers in California and elsewhere were either answered by message machines, or the numbers were disconnected. Callers were also referred to a central toll free number that also has been disconnected. The answering machine to the Beverly Hills office indicated that the center was "temporarily closed."

Penfil, reached briefly for this story, said CT Screening was "restructuring."

The problems haven't just occurred in Southern California. Centers based elsewhere, including in the Midwest and on the East Coast, have closed.

Kenneth Johnson, a diagnostic imaging consultant based in Columbus, Ohio, said he believes operators are failing due to a lack of insurance coverage, and also because they made too many promises. "It might rebound to some extent but it was oversold," he said.

Bruce C. Friedman, president and co-owner of Heart Check America Inc., a Los Angeles-based heart center, said CT Screening had a business model resting on a popular but questionable industry practice of direct consumer advertising.

"They brought in a lot of money, and opened up a lot of centers very quickly," he said. "They thought just because they poured out the ad money everybody would come."

The centers attracted an initial wave of people highly concerned about their health, but then business faltered, Friedman said.

"We have picked all the low-hanging fruit. You are going to get the people that are easiest to reach, who only hear about it once or twice on the radio and they call and schedule an appointment. But once you get those it gets more difficult to get to the next level," he said.

KNX-AM Radio (1070) carried heavy advertising from the companies until it stopped about six months ago, said Jim Olerich, the radio station's sales manager. Many centers failed to pay their advertising bills.

"It was just a flash in the pan," said Olerich. "It was very similar to the dot-coin bust but wasn't quite as large."

Peter Buffa, vice president of marketing for HeartSavers, an Irvine-based company with three centers, said the company has struggled to get by and has cut back on advertising, but is still in operation.

"When the wolf comes to the door you cut back on advertising," he said. "We are grateful that if we are not the last person standing in this area then we are one of the last."

The industry shakeout has prompted many of the surviving centers to change their tactics--moving from direct consumer advertising to building relationships with doctors groups.

Although the tests are not reimbursable by insurance, some doctors may ask their patients to get screened, especially if they are smokers, overweight or have other risk factors.

Heart Check America has adopted this tactic for its Los Angeles area offices, and now gets more than 50 percent of its business from referrals.

Another strategy is to pair the center with traditional radiology services, in which doctors order specific tests for other conditions that are paid by commercial insurers and government programs such as Medicare.

Dr. Stephen Shapiro, a former attending chief of surgery at Cedars-Sinai Medical Center, has taken both tacks. After opening his first body screening center in Beverly Hills, he's had to adjust plans to expand into 25 markets over the next five years.

"My model was to open free-standing centers and to try include (referrals from) physicians in the community but to grow very rapidly before I got a good base of business from physicians," he said.

Now, he plans to first build relationships with physicians, though the business still advertises directly. Also, new centers will offer both traditional radiology services or be opened in conjunction with existing radiology centers.

Despite the downturn, Shapiro has just opened a new center in Riverside and is raising money to open eight more nationally. He said he deliberately pulled back on his more ambitious expansion plans after the Sept. 11, 2001.

"We slowed ourselves down," he said.