Who wouldn’t be attracted by an annual first-year return of more than 58 percent, with that number increasing each subsequent year for at least the first five years? Some health scan companies are using such projections to catch the eyes of investors in the hopes of securing their investments. But there are many concerns that investors should look into before making an investment into a project that makes such dramatic and unusual promises.
Investing in technology
Health scan technology is a booming industry with a strong demand; medical scanning is proven to reveal health problems in a non-invasive way that allows for treatment before a traumatic event, such as a heart attack, occurs.
Medical imaging equipment is produced by companies such as GE, so the technology is dependable.
With an aging population—38 million Americans will be over the age of 55 by 2017, according to the Bureau of Labor Statistics—demand for medical scans will continue to increase for the foreseeable future, as long as the technology does not become outdated.
Health scan companies such as Advanced Health Scan, also known as Med15, offer investors the opportunity to invest into medical centers that provide scanning services.
Coronary heart disease scans are the primary target for Advanced Health Scan. More than 70 million Americans currently suffer from some form of cardiovascular disease, with an estimated 4.5 to 5 million more being diagnosed with it this year, according to Advanced Health Scan’s marketing materials.
Through a contract with Imgine Incorporated, Advanced Health Scan “will be marketed as an independent provider of preventative medicine to hospitals while operating in conjunction with locally and nationally recognized physicians, universities and well-established medical groups” according to its marketing materials.
Advanced Health Scan’s centers will provide scanning for both doctor-prescribed referrals and walk-in patients without prescribed referrals.
Advanced Health Scan states that its offering is available only to “qualified investors,” which likely means either accredited investors or those who show a certain level of sophistication and experience with investing.
Advanced Health Scan is projecting an annual rate of return of:
Year 1: 58.37%
Year 2: 59.86%
Year 3: 64.78%
Year 4: 69.63%
Year 5: 75.22%
These projections are based on the assumptions that the VCT scanner can perform approximately 7,500 scans per year based on a 40 hour work week. The national average price for imaging in the Elective Market is $710 per scan and the national average price for imaging in the Diagnostic Market is $854 per scan, according to Advanced Health Scan’s marketing materials.
In addition, Advanced Health Scan said it assumes that each physician can provide an average of eight patients per month, with a “standard conservative annual growth rate” of 8 percent, which works out to:
Year 1: 96 patients
Year 2: 103 patients
Year 3: 111 patients
Year 4: 119 patients
Year 5: 128 patients
Those who want to invest can choose one of three levels of subscription: $25,000, $50,000 and $100,000, according to Advanced Health Scan’s marketing materials.
Investors who are considering a health scan investment should perform careful diligence on the company offering the investment to make sure the company is legitimate and reliable. Scams certainly exist in the field, as do inexperienced companies that may make crucial mistakes with investors’ funds.
Investors who are interested in health scan investments should research the amount of experience the company has—not just in the medical field, but also in offering successful investment opportunities.
Advanced Health Scan, for example, has encountered problems with both the Pennsylvania Securities Commission and the Better Business Bureau (BBB) during the past couple of years.
The Pennsylvania Securities Commission ordered Advanced Health Scan and Premier Management Applications to cease and desist because of unregistered activity in 2005.
A Pennsylvania resident was told by an Advanced Health Scan representative that the minimum investment would be $15,000 for a subscription of three limited partnership units and that 600 units were available for a total capitalization of $3,000,000, according to the Pennsylvania Securities Commission press release.
“The PA Resident was not an ‘accredited’ investor and did not have sufficient knowledge and experience in financial matters to be capable of evaluating the merits and risks of the investments,” according to the release.
In response, the Pennsylvania Securities Commission directed Advanced, Premier and all affiliates to stop offering or selling the units in the state, according to the release.
In addition, the BBB page for Advanced Health Scan shows that the company is not a member of the BBB. In fact, the company received an “F” score from the BBB and was cited for improper usage of the BBB’s name and logo on its materials. Advanced Health Scan removed the improper usage, but angry and impatient investors have lodged complaints against the company for failing to fulfill its agreements.
Complainants allege that they invested large amounts of money with the company, that the company failed to even start the project and that the company failed to return their investment, according to the BBB’s website.
Advanced Health Scan responded to most complaints by offering the investor new startup and completion dates for the project and telling some that the project was moved to a new location, but the company failed to directly address the investors’ requests for refunds, according to the BBB’s website.
Unfortunately, NuWire’s attempts to contact Advanced Health Scan for comments and information were unsuccessful. Repeated calls were not returned.
A search in the Yellow Pages online revealed an Advanced Health Scan location in Anaheim in addition to the Newport Beach address of the company’s headquarters. NuWire hoped the Anaheim location would prove to be an actual scanning center that could show whether the company has successfully launched a center, but when NuWire called the Anaheim number it was no longer in service.
The difficulty NuWire had in getting answers from Advanced Health Scan is not encouraging for investors wanting to perform their own due diligence, but the scanning technology is legitimate and the company may simply be inexperienced with investment offerings. Still, investors should think twice before investing with a company that does not facilitate due diligence and that has demonstrated a lack of understanding of the legal process for offering such an investment opportunity.
Investors should investigate a company’s ability to raise proper funding in a timely fashion; obtain and retain enough doctors; and run a successful imaging business. In addition, investors should explore the likelihood that the technology could become outdated, and to that extent adjust the financial projections as well.
When doing research for this article, repeated attempts to contact Advanced Health Scan were made, but they were unresponsive. Two months after this article was published, they submitted a letter refuting various points made in this article. We have chosen to publish their letter without altering or editing it in any way.