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‘Cloud radiologists’ Franklin & Seidelmann raise $12.5 million

The market for teleradiology continues to grow, and Franklin & Seidelmann has expanded into new markets, as well. Earlier this year, it added three Critical Access Hospitals -- far-flung facilities in mountainous areas that provide acute care -- in Pennsylvania, Kentucky and Idaho. At the end of 2008 it announced expanded services that included final reads of scans for night-time emergency departments.

By Chris Seper on September 03, 2009

BEACHWOOD, Ohio — The teleradiology company Franklin & Seidelmann Subspecialty Radiology has raised $12.5 million as it continues to expand into new markets and add services.

The company wouldn’t discuss details of the money-raise. But the business has been slowly changing from a niche teleradiology company to a service that covers any study from a hospital.

“We’ve positioned ourselves from being a subspecialty company to being a comprehensive total solution for radiological needs for community hospitals,” said Clayton Larsen, the company’s senior vice president of marketing.

Earlier this year, Franklin & Seidelmann added three Critical Access Hospitals — far-flung facilities in mountainous areas that provide acute care — in Pennsylvania, Kentucky and Idaho. At the end of 2008 it announced expanded services that included final reads of scans for night-time emergency departments.

Larsen said some customers now do all of their radiology studies offsite — a trend Franklin & Seidelmann refers to as “cloud radiology” (a play off the term cloud computing, in which programs and other functions are running online as opposed to on your computer).

Teleradiologists read and report on electronic medical images remotely, through the use of computer technology and high-speed data connections. Franklin & Seidelmann’s network of 130 subspecialty radiologists report back to health-care institutions — mostly hospitals and imaging centers — from Alaska to Florida. Subspecialty radiologists read only certain types of images, such as MRIs of the knee or ultrasounds of the heart. Company co-founder Dr. Frank Seidelmann is a radiologist who specializes in images of the brain.

One of Franklin & Seidelmann’s distinctions is its robust technologies. The company has invested millions of dollars in computer and information technology so it can quickly and securely transmit images to subspecialist teleradiologists throughout the country.

Investor and board member Tom Embrescia said the company’s success is due to its ability to grow rapidly and respond quickly when client hospitals send their scans. “Nobody has invested as we have and has our ability to scale this thing,” said Embrescia, who invested in Franklin & Seidelmann through his Second Generation fund, which is a family investment firm.

While teleradiology is a lucrative field, it’s also a risky one. Some start-ups, such as Foundation Radiology Group in Pittsburgh, have been winning customers and investors. But others have faltered. Cleveland’s Telerad Express, which received funding two years ago through the Cleveland fund JumpStart, went out of business late last year and returned some of its investment, JumpStart spokeswoman Cathy Belk said. The company struggled to maintain its profit margins while trying to provide better service than its competitors, Belk said.

Other previous investors in Franklin & Seidelmann include Oak Investment Partners, which two years ago invested $25 million to expand the company and improve its technology.