Acuson grows Sequoia platform to lift prospects in ultrasound

Scanner's high price may run afoul of managed care

Ultrasound vendor Acuson sees shades of 1983 in the release ofits new Sequoia ultrasound platform. That was the year that theMountain View, CA, vendor burst onto the ultrasound scene withthe 128 scanner, which elevated ultrasound technology to a newlevel, sparked the rapid expansion of the modality into new applications,and turned Acuson into an ultrasound powerhouse.

Acuson is hoping history does indeed repeat itself. With therelease last week of the Sequoia 512 and Sequoia C256 scanners,Acuson is gambling that clinicians will still pay a premium forcutting-edge image quality, and that technology can still winthe day in a specialty under siege by managed care.

Acuson lifted the wraps on Sequoia on April 29, finally endingmonths of speculation about the project. The new platform wasworth the wait: It features a slew of new advances in ultrasoundinstrumentation, the most notable of which are the system's 512-channelarchitecture and its use of a technology called coherent imageformation in place of conventional beamforming technology.

Sequoia's coherent image former takes as its input the outputof multiple beamformers, according to Nelson Wright, who oversawthe Sequoia project since its inception in 1987. Coherent imageformation enables Sequoia to process the phase data in returningultrasound echoes in addition to the amplitude data processedby conventional machines. Conventional scanners are unable toprocess phase data and simply discard the information, Wrightsaid.

The result of coherent image formation is that Sequoia hasat its disposal more data from which to create ultrasound images,and those images have higher resolution and are processed morequickly than those of conventional scanners, according to SamuelMaslak, Acuson chairman and CEO.

"Sequoia technology multiplies both the accuracy of theimage information and the rate at which it is acquired,"Maslak said.

In addition to the coherent image former, Acuson made otheradvancements in ultrasound technology to develop Sequoia, including:

** SST Color, an improved color Doppler technology that offersbetter sensitivity, better spatial resolution, and faster framerates;

** New transducer technology that features higher bandwidth,better sensitivity, and high-density connectors; and

** A DICOM-compatible workstation, called DIMAQ, integratedinto Sequoia to provide the computer processing power that willbe required for new applications in the future such as digitalimage management and the quantification of Doppler color dataor image contrast data.

These technologies confer benefits across the spectrum of ultrasoundapplications, including gray-scale and spectral Doppler. But itis from Sequoia's improved color Doppler performance that Acusonexpects to see the greatest payoff.

Acuson is reticent about discussing what new applications willbe possible with Sequoia, preferring instead to leave such developmentto clinicians. The company does claim that Sequoia's image qualityenables users to see anatomy and physiology never before seenwith ultrasound.

In clinical evaluations of Sequoia, Acuson says researchershave visualized:

** Coronary arteries and vessels at the apex of the myocardium,which are usually difficult to image due to their small size andlow amount and speed of blood flow;

** Increases in color sensitivity in organs that are infusedwith fine, low-flow vasculature, such as the uterus and ovaries;

** Intricate fetal anatomy, including knee joints and cartilagein a third-trimester fetus, and kidneys and other organs in afirst-trimester fetus; and

** Red blood cell patterns, or spontaneous contrast, in transthoraciccardiac images, which are usually imaged with the use of a transesophageal(TEE) probe.

One clinical evaluator who has worked with Sequoia is Dr. DonaldEmerson, an associate professor of radiology at the Universityof Tennessee at Memphis. Emerson used Sequoia for ob/gyn, abdominal,and small parts imaging, and believed that the system's colorsensitivity stood out.

"The color Doppler is incredibly sensitive, both spatiallyand temporally," Emerson said. "We were able to definevessels that had relatively low flow, and follow them out fairlyfar in their branching."

In one case, Emerson said he was able to visualize low bloodflow in sinusoids connecting the coronary arteries and the rightventricle in a fetus with an abnormal heart. He could see somecolor Doppler of the area with another scanner, but Sequoia provideda more complete picture.

Cardiology platform. Acuson believes that Sequoia technologywill prove particularly useful in cardiac imaging. Sequoia C256features 256-channel architecture, rather than the 512 channelson the radiology version, has slightly different ergonomics, andincludes specialized software for cardiac scanning.

One of the cardiac evaluation sites for Sequoia was the ClevelandClinic, which worked with the scanner for about three weeks, accordingto Dr. James Thomas, director of cardiovascular imaging in thedepartment of cardiology.

Clinicians at the Cleveland Clinic were impressed with Sequoia'simage quality and its tissue penetration at very high frequency,which resulted in higher resolution images. Thomas believes thatthe scanner's image quality could result in new applications.

"The ability to image the coronary arteries on a routinebasis really opens up a lot of potential applications in thisarea, both anatomic and functional," he said. "We wereable to obtain some color flow and pulsed Doppler informationfrom the distal coronary arteries in virtually every patient westudied. That is quite new."

Another echocardiographer who has worked with Sequoia is Dr.Anthony DeMaria, chief of the division of cardiology at the Universityof California at San Diego. DeMaria also found that Sequoia'stissue penetration capability enabled his staff to use higherfrequencies than they normally would, resulting in crisper imageswith better resolution.

UCSD echocardiographers were able to image at frame rates doublethe 20 to 30 frames per second normally used, DeMaria said. Byreducing the sector angle and depth of tissue being imaged, theUCSD researchers using Sequoia reached frame rates of up to 150fps.

Sequoia and managed care. There is one major obstacle standingin the way of Acuson's effort to repeat its 1983 success: managedcare. The hospital executives who now hold the purse strings maynot be as impressed with Sequoia's image quality as clinicians.

Acuson officials say that the list price of a Sequoia systemwill vary depending on the scanner's configuration, global exchangerates, and other costs such as shipping and tariffs, but willfall in a range between $200,000 and $350,000, a substantial premiumover the price of a top-of-the-line 128 XP/10, which lists at$140,000 to $160,000.

Acuson, however, hopes to demonstrate that Sequoia's imagequality can save money by eliminating the need for biopsy in somecases, or by catching pathology earlier, when it can be treatedmore cost-effectively. The company has already held discussionsregarding Sequoia with managed-care organizations, which are veryinterested in the scanner, Maslak said. In fact, Acuson says thatit has a backlog of 38 orders for the system.

Acuson is used to dealing with pricing issues, going all theway back to the 128 introduction in 1983, according to Maslak.

"For many years, the way we trained our sales organizationwas that their competition was price, that they are competingagainst price. That has always been a significant issue in ourstrategy," he said. "What we have looked to do is providevalue where the value is significantly higher than the cost. Andit is clear on Sequoia and it is clear on the XP."

Industry analyst Harvey Klein of Klein Biomedical Consultantsin New York City noted the parallels between the Sequoia introductionand the state of the ultrasound market in 1983, when the 128 scannerwas introduced. The market at that time was also in a state offlux due to the introduction of Medicare's DRG (diagnosis-relatedgroups) reimbursement system.

"In 1983, the competition didn't think they were goingto be able to sell the (128 scanner)," Klein said. "Theysurprised everyone."

There are signs that Sequoia has already revitalized Acuson,which just weeks before the scanner's release date had been writtenoff by some industry analysts as a weakened giant in a fragilemarket. JP Morgan analyst Michael Weinstein downgraded the company'sstock to market underperform in late March, stating that he consideredthe stock overvalued due to "the company's uninspired earningsoutlook and ongoing weak ultrasound market fundamentals."

Indeed, Acuson released first-quarter financial results concurrentwith Sequoia's debut that were less than spectacular. The companysaw its revenues decline 4% to $84.8 million from $88 millionin the same period last year. Net income also fell, to $1.3 millionfrom $2.2 million in the first quarter.

Sequoia has dramatically changed Acuson's prospects, however.News of the product's arrival prompted a sharp spike in Acuson'sstock, and many investment analysts quickly upgraded the stockto "buy."

Emerson of the University of Tennessee believes that Sequoia'simage quality is such that it will drive purchasing, in spiteof the scanner's high price.

"It is going to be harder than it was five years ago,"Emerson said. "But when Acuson first came out with an expensivepiece of equipment (in 1983), no one was used to spending thatmuch money in ultrasound. It took a while for people to get usedto spending more, but they did it ultimately because they gotmore."