ADAC splits off information systems to focus on potential in managed care

November 9, 1994

Vendor creates units for medical equipment and RIS businesses ADACLaboratories last week announced a corporate reorganization thatcreates separate business units for its nuclear medicine and health-careinformation systems products. The move is

Vendor creates units for medical equipment and RIS businesses

ADACLaboratories last week announced a corporate reorganization thatcreates separate business units for its nuclear medicine and health-careinformation systems products. The move is designed to improvethe company's focus on information systems, which ADAC, of Milpitas,CA, sees as a strong growth opportunity in coming years due tothe shift to managed care.

The reorganization creates two new business units. ADAC MedicalSystems will have nuclear medicine and radiation therapy planningequipment under its umbrella, while ADAC's growing informationsystems software business will be handled by ADAC Healthcare InformationSystems. ADAC Laboratories will remain as the parent company,with David Lowe as CEO. Stanley Czerwinski remains ADAC chairman.

ADAC promoted from within to fill the executive suites of thenew units. Andrew Eckert was tapped to lead ADAC Medical Systemsas president and general manager. Mark Lamp was appointed presidentand general manager of ADAC Healthcare Information Systems.

Prior to the reorganization, ADAC's information systems unitwas contained in ADAC SD&G Healthcare Systems. ADAC last yearbought SD&G, a privately held radiology information systemscompany, and integrated its offerings with its own RIS product,MARS II (SCAN 10/20/93). ADAC recently introduced a new RIS product,QuadRIS.

While ADAC SD&G operated somewhat independently of themedical equipment business, ADAC felt that a formal separationwas needed to signify the company's new emphasis, according toEckert.

"We've made a formal split of the imaging and informationsystems side in recognition of the fact that we hope to grow ourhealth-care information systems business aggressively," Eckerttold SCAN. "It's a signal to the market that we are puttinga lot of focus on it."

ADAC believes that the health-care industry's dramatic shiftto managed care is increasing demand for information systems.Hospitals need to be able to track costs, employee productivityand patient outcomes and need software to do it, Eckert said.This will result in higher growth in the RIS business than onthe medical equipment side.

"Unlike the equipment market, which we see as flat withareas of growth around the world, the information systems marketplaceis one that will experience above average growth over the comingyears," Eckert said.

Eckert came to ADAC in early 1990 from the venture capitalfield. His previous position was executive vice president andgeneral manager of the vendor's nuclear medicine business.

Eckert sees continued pricing pressure in the gamma cameramarket, a situation that may become an ongoing phenomenon. Nuclearmedicine has been hit hard over the past year by a slump in purchasingand aggressive price cutting, although ADAC maintains that ithas gained market share over last year (SCAN 10/26/94).

Vendors must adapt to this difficult market by wringing outefficiencies and implementing total quality management (TQM) programsto improve productivity. Companies must also work more closelywith customers to form partnerships in equipment purchasing andmaintenance.

"The period between buying a piece of equipment has extendedfrom five to seven years for a typical institution, so (customers)have to know they are making the right choice," Eckert said."We view each transaction as the beginning of a partnership."