FONAR Corporation (FONAR) engages in the designing, manufacturing, selling and servicing magnetic resonance imaging scanners (MRI or MR scanners), which utilize MRI technology for the detection and diagnosis of human disease, abnormalities, other medical conditions and injuries.
FONAR is also the originator of the iron-core non-superconductive and permanent magnet MRI technology. FONAR’s iron frame technology made FONAR the originator of ‘open’ MRI scanners. The company has concentrated on furt...
FONAR Corporation (FONAR) engages in the designing, manufacturing, selling and servicing magnetic resonance imaging scanners (MRI or MR scanners), which utilize MRI technology for the detection and diagnosis of human disease, abnormalities, other medical conditions and injuries.
FONAR is also the originator of the iron-core non-superconductive and permanent magnet MRI technology. FONAR’s iron frame technology made FONAR the originator of ‘open’ MRI scanners. The company has concentrated on further application of its ‘open’ MRI, introducing the Upright Multi-Position MRI scanner (also referred to as the ‘Upright’ or ‘Stand-Up’ MRI scanner) and the FONAR 360 MRI scanner.
Segments
The company operates through medical equipment segment and physician management and diagnostic services segment.
The company’s medical equipment segment is conducted directly through FONAR. The company’s physician management and diagnostic services segment is conducted through its subsidiary Health Management Corporation of America (‘HMCA’). HMCA provides management services, administrative services, billing and collection services, credentialing services, contract negotiations, compliance consulting, purchasing, IT services, hiring, conducting interviews and managing personnel, storage of medical records, office space, equipment, repair, maintenance service, and clerical and other non-medical personnel to medical providers engage in diagnostic imaging. In addition to acting as a management company, HMCA owns and operates six diagnostic imaging facilities in Florida, where the corporate practice of medicine is permitted.
Medical Equipment Segment
Products
The Upright MRI scanner is the company’s primary product. The Upright MRI is a ‘whole-body’ MRI, meaning that it can be used to scan virtually any part of the body. The Upright MRI differs from conventional MRI scanners in that it is not limited to scanning patients in the recumbent posture. For example, patients can be scanned while sitting, standing, bending, or lying down.
The fact that the patient space is unobstructed permits scanning in a variety of postures that cannot be duplicated in conventional MRI scanners. Most conventional MRI scanners in use today employ solenoidal super-conducting magnets whose magnetic field orientation is along the axis of the patient’s body, which must be placed into the bore of the scanner in either a supine or prone posture. The company’s experience is that when presented with a choice between being scanned lying down in a tunnel-like enclosure or seated in an open MRI, most patients will choose the latter.
The Upright MRI is also, by design, a non-claustrophobic MRI scanner. The Upright MRI employs a dipole magnet whose magnetic field orientation is transverse to the axis of the patient’s body. The gap between the poles of the magnet is the space into which the patient is placed. Because the magnetic field direction is horizontal and transverse to the body, a patient who is scanned seated or standing has an unobstructed view out of the gap of the magnet. In typical installations, patients watch television while being scanned, without the aid of special glasses with mirrors.
The Upright MRI facilitates patient scanning in a variety of postures thanks to a unique, three-axis patient handling system. The motorized patient table, or bed, can be rotated to any angle between 0 (horizontal) and 84 degrees (nearly vertical). Unlike a conventional recumbent MRI patient table, which can only move into or out of the scanner’s bore, the Upright MRI bed can be translated with two degrees of freedom, in/out and up/down. User-friendly software allows the scanner operator to move the anatomical region of interest precisely to the center of the magnet using a cursor placed on a localizer image. Anatomically true image orientation is assured, regardless of the rotation angle of the bed, via computer read-back of the table’s position. A seat can be hooked onto the bed in a variety of locations, or removed, as needed. Transpolar VersaRests and other devices can be used to keep the patient comfortable and motionless throughout the scanning process.
Product Marketing
FONAR’s principal marketing efforts in the medical equipment segment has been focuses on the Upright MRI, which the company believes is a unique product.
The principal markets for the company’s scanners are private diagnostic imaging centers and hospital outpatient imaging facilities. The company uses internal personnel and independent manufacturer’s representatives for domestic and foreign sales.
FONAR’s marketing strategy has been designed to reach key purchasing decision makers with information concerning the Upright MRI. This has led to many inquiries and some sales of the Upright MRI scanner and is intended to increase FONAR’s presence in the medical equipment market. FONAR focuses primarily on four target audiences: neurosurgeons, orthopedic surgeons, radiologists, and general physicians.
The company’s advertising for FONAR and HMCA reinforces the unique value provided by the FONAR Upright MRI scanner. The company has increased internet awareness of its product by driving patient traffic to the HMCA scanning centers the company manages via the FONAR website, as well as through websites for each HMCA location. These websites give prospective customers of Upright MRI scanners a view of operating Upright MRI centers and highlight the benefits of using the Upright MRI scanner. A complete list of the sites managed by HMCA can be found at HMCA’s website, www.hmca.com.
Service and Upgrades for MRI Scanners
Income is generated from the installed base in two principal areas, namely, service and upgrades. The company expects to maintain service revenues at present levels or better, based on the demonstrated longevity of the Upright MRI scanner and continued customer satisfaction with the product. Critical to this longevity and customer satisfaction is the stream of software improvements and hardware upgrades that FONAR has delivered over the years to keep the scanners competitive with the latest technology in the marketplace.
The company engages with a third-party software vendor, AIRS Medical USA, Inc., to distribute their SwiftMR to its installed base of customers. The company has also formed a new subsidiary, Opus Diagnostic Management, LLC, which is focused on providing service for MRI scanners sold by other manufacturers.
Research and Development
During the year ended June 30, 2024, the company incurred expenditures of $1,735,949, none of which were capitalized, on research and development.
Patents and Licenses
The company’s seminal patent, issued in the name of Dr. Damadian and licensed to FONAR, was United States patent No. 3,789,832, Apparatus and Method for Detecting Cancer in Tissue, also referred to as the ‘1974 Patent’. As of June 30, 2024, a total of 241 patents have been issued to FONAR.
Product Competition
MRI Scanners
FONAR faces competition for MRI product sales from companies, such as Siemens, General Electric, Hitachi, Philips, Canon, and United Imaging.
Government Regulation
The Food and Drug Administration in accordance with Title 21 of the Code of Federal Regulations regulates the manufacturing and marketing of FONAR’s MRI scanners.
Physician and Diagnostic Services Management Business
Health Diagnostics Management, LLC (HDM) is owned by Health Management Corporation of America (70.8%) and investors (29.2%). Health Management Corporation of America is owned 100% by FONAR Corporation. HDM operates under the assumed name ‘Health Management Company of America’ (‘HMCA’).
HMCA provides comprehensive non-medical management services to diagnostic imaging facilities. These services include administrative services, billing and collection services, credentialing services, contract negotiations, compliance consulting, purchasing IT services, hiring, conducting interviews, training, supervision and management of non-medical personnel, storage of medical records, office space, equipment, repair maintenance services, accounting, assistance with legal and regulatory matters, and the development and implementation of practice growth and marketing strategies.
As of June 30, 2024, HMCA managed a total of 42 MRI scanners of which twenty-five (25) scanners are located in New York and seventeen (17) scanners are located in Florida. The utilization of FONAR Upright MRI scanning systems, which are produced under the protection of its patents, accounts for the historically robust patient volume at the scanning facilities.
HMCA Growth Strategy
HMCA’s growth strategy focuses on upgrading and expanding the existing facilities it manages and expanding the number of facilities it either owns or manages for its clients, including new sites. In connection with improving the performance of the facilities, the company has added high field MRI scanners, extremity scanners and x-ray machines to the Upright MRI scanners at certain of the sites where such additional diagnostic imaging modalities are expected to produce the greatest return.
Physician and Diagnostic Management Services
HMCA’s services to the facilities it manages encompass substantially all their business operations. Each facility is controlled, however, not by HMCA, but by the physician owner, or in the case of the six Florida sites owned by HMCA subsidiaries, by the medical director. All medical services are performed by physicians and other medical personnel under the physician-owner’s supervision. HMCA is the management company and performs services of a non-medical nature. These services include:
Offices and Equipment: HMCA identifies, negotiates leases for and/or provides office space and equipment to its clients. This includes technologically sophisticated medical equipment. HMCA also provides improvements to leaseholds, assistance in site selection and advice on improving, updating, expanding and adapting to new technology.
Personnel: HMCA staffs all the non-medical positions of its clients with its own employees, eliminating the client’s need to interview, train and manage non-medical employees. HMCA processes the necessary tax, insurance and other documentation relating to employees.
Administrative: HMCA assists in the scheduling of patient appointments, purchasing of office and medical supplies and equipment and handling of reporting, accounting, processing and filing systems. It prepares and files the physician portions of complex applications to enable its clients to participate in managed care programs and to qualify for insurance reimbursement. HMCA assists the clients to implement programs and procedures to ensure full and timely regulatory compliance and appropriate cost reimbursement under no-fault insurance and Workers’ Compensation guidelines, as well as compliance with other applicable governmental requirements and regulations, including HIPAA and other privacy requirements.
Billing and Collections: HMCA is responsible for the billing and collection of revenues from third-party payors including those governed by No-Fault and Workers’ Compensation statutes.
Cost Saving Programs: Based on available volume discounts, HMCA seeks to assist in obtaining favorable pricing for office and medical supplies, equipment, contrast agents, and other inventory for its clients.
Diagnostic Imaging and Ancillary Services: HMCA can offer access to diagnostic imaging equipment through diagnostic imaging facilities it manages. The company is expanding the ancillary services offered in its network to include x-rays, and other MRI equipment such as high-field (1.5 or 3.0 Tesla magnet strength) MRI scanners and extremity MRI scanners.
Marketing Strategies: HMCA is responsible for developing and proposing marketing plans for its clients.
Expansion Plans: HMCA assists the clients in developing expansion plans including the opening of new or replacement facilities where appropriate.
Diagnostic Imaging Facilities
Diagnostic imaging facilities managed by HMCA provide diagnostic imaging services to patients referred by physicians. The facilities are operated in a manner which eliminates the admission and other administrative inconveniences of in-hospital diagnostic imaging services. Imaging services are performed in an outpatient setting by trained medical technologists under the direction of physicians. Following diagnostic procedures, the images are reviewed by the interpreting physicians who prepare reports of these tests and their findings. The vast majority of reports for the New York facilities are transcribed by HMCA personnel and the remainder are outsourced to professional transcription services. Reports for the Florida facilities are outsourced to professional transcription services.
HMCA develops marketing programs and educational programs to establish and maintain referring physician relationships for the company’s clients and Florida subsidiaries.
To further its position, HMCA is seeking to expand the imaging modalities offered at its managed and owned diagnostic imaging facilities. Four facilities in New York and eight facilities in Florida has two or more MRI scanners. One facility in New York and two in Florida also perform X-rays.
Government Regulation Applicable to HMCA
The company is in compliance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA) requirements, as amended by The Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH), together with other legislation and regulations, and comparable state laws.
History
FONAR Corporation, a Delaware corporation was founded in 1978. The company was incorporated in 1978.
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