Question-and-Answer Session
Operator
(Operator's Instructions) Our first question comes from the line of Amit Hazan.
Amit Hazan - Oppenheimer
Hi. Good afternoon, guys. I wanted to maybe first focus on some of the new proposed reimbursement rules and just with the comments you made, first ask you if you think that in this specific quarter you already saw any delays in orders that were directly tied to those reimbursement cuts at the freestanding clinic.
Timothy E. Guertin
Yeah. Well the changes of course came out on July 1st which was very close to the end of our quarter. It's possible. Unfortunately it is the nature of our business that we do get a fair number of orders in the last week and so it is possible that we were impacted by it in North America in the last few days of the quarter, but it would be very difficult for me to calibrate for you to what extent we were impacted.
Some people were expecting reimbursement issues, so there was probably some of that already built into market behavior, but probably not as much as what we saw when the actual numbers came out on July 1st.
Amit Hazan - Oppenheimer
Okay. And just trying to get a sense from where you stand on some of those cuts to the freestanding clinics. If we look at the big reduction in the IMRT code in the physician fee schedule, do you think at all it was a result of utilization differences between the freestanding clinic and the hospital? So in other words, if we were to assume that something like 25% of all radiation patients get IMRT, is that the same between freestanding and hospital or were there freestanding clinics treating with a higher utilization rate of IMRT that may have brought on these changes?
Timothy E. Guertin
Well unfortunately of course CMS has not shared with us how they did the math so I have not seen their calculations. We do know that they made an assumption of a very high utilization rate and I think that was the principle factor that changed the number. They used a number that was around 90% and of course freestanding clinics are clinics that are usually in rural areas or distant from population centers, and therefore 90% is a totally unrealistic estimate of utilization. Furthermore, for example if you're running a clinic and you have one machine and it's at 90 or 95% utilization, your waiting times will become very long and so you'll probably want to buy another machine. And when you buy that other machine your utilization instantly drops to 45%. So clearly on its face this is not good.
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