Leading Medical Firm is Being Restructured Under New Management

Israel’s Elscint sophisticated medical imaging equipment company, which at one time appeared to lead the world in its field and was invariably cited in Israel as an example of what forward-thinking high-technology firms could do, has been cut down to size and is recasting its financial structure under new management.

And Dr. Avraham Suhami, regarded as a scientific and financial wizard who founded the company and took it to dizzying heights, has now left the company completely, after having resigned as board chairman and managing director two months ago.

In the face of large financial losses, he accepted personal responsibility for mismanagement and went into “exile” as head of the company’s U.S. subsidiary responsible for American sales in Boston. He has now been ousted from that post, also.

His place as head of the company has been taken over by Uzia Galil, his one-time mentor and head of the Elron Electronics firm which holds a majority of the Elscint shares and which helped Suhami launch his medical imaging design and production concern.

THE RISE AND FALL OF SUHAMI

Financial analysts in Israel are now saying that Suhami’s rise and fall were inevitable, given the man’s formidable talents both as scientist and profit-oriented entrepreneur and with what commentators this weekend described as his “dictatorial managerial style and the ferocious pace at which he drove the multi-national concern that he built up but which left a trail of casualties and a growing number of personal enemies that stretched back over the years.”

In effect, they say, Suhami aimed too high too quickly and in the end over-reached himself. He went for massive company growth at a time when the entire market for medical imaging equipment in the U.S. was suffering from a change in the climate of hospital and health-care financing.

To boost American sales, he bought the Zonics firm in Boston which was in financial difficulties and went bankrupt a few weeks later.

(When he resigned from the parent firm, Suhami went to Boston to try and revive the subsidiary there, hoping to increase Elscint sales and marketing, but has now been eased out completely by Galil).

BASIS FOR THE SETBACK

Basically, what set back Suhami and his plans were the delays in receiving U.S. Food and Drug Administration (FDA) approval for the Elscint model of medical resonance imaging equipment. Production delays in the manufacture of giant magnets which are an essential part of the equipment made Elscint miss out on a major medical equipment fair and lose an entire year in public display.

Only six out of 19 companies in the field have so far received FDA clearance, and this, together with ongo- ing cost overruns in numerous Elscint plants in Israel, Europe and the U.S., established or bought to cope with what Suhami had been convinced would be massive sales, led to turnover far less than he had optimistically forecast.

Galil and the new Elscint management have set the company’s sights far lower. If FDA clearance for the Elscint model is finally obtained, Elscint may be on its way to achieving something of what Suhami had planned, though considerably less than his original aims.

Suhami himself, who holds eight percent of the Elscint stock, says he will sit back and rethink his way and then probably establish a new company on a smaller scale but with big long-range hopes — but not a company in competition with Elscint, his own brainchild.