ALI acquires Olicon in deal to build service, installed base

July 1, 1999

ALI acquires Olicon in deal to build service, installed baseNo decisions made yet about technology integration, howeverInstalled base is crucial for long-term market success. At least that’s the message many PACS vendors appear to be

ALI acquires Olicon in deal to build service, installed base

No decisions made yet about technology integration, however

Installed base is crucial for long-term market success. At least that’s the message many PACS vendors appear to be emphasizing lately.

In the latest such move, Canadian PACS firm ALI Technologies has purchased all of the shares of Olicon Imaging Systems for $2.8 million. The company elected to acquire Aliso Viejo, CA-based Olicon primarily to build its installed base, as well as to improve its service capabilities, according to ALI CEO Greg Peet.

The agreement also serves as another stepping-stone in ALI’s evolution beyond its core ultrasound miniPACS offerings to support a full range of radiology applications, Peet said. With the deal, Richmond, BC-based ALI now claims to have 440 image management and teleradiology systems under direct service with end-user customers. The Canadian firm announced last month that it has installed its 250th UltraPACS image management system at the Johns Hopkins Hospital in Baltimore.

The Olicon acquisition also upgrades ALI’s service capabilities, allowing the company access to Olicon’s 11-person field-service organization, Peet said.

“We have previously done all of our service through a call center and by contracting field work back to our hardware vendors,” he said. “Olicon has a nice established field-service organization, and this really makes sense for us as an addition.”

ALI was also attracted by Olicon’s OEM relationship with HIS firm Shared Medical Systems, Peet said. As for how Olicon’s product line will be integrated into ALI’s offerings, no decisions have been made yet, Peet said. He expects final decisions to be made within four to six weeks. ALI hopes to complete the transition by Sept. 30.

In any event, integration will be eased by common technology among the product lines, Peet said. Both ALI and Olicon employ the Windows NT platform, SQL databases, and Intel microprocessor-based hardware.

Olicon’s sales and marketing efforts will be integrated into ALI’s U.S. subsidiary, ALI Imaging Systems. ALI Imaging Systems is based in Hartland, WI, and headed by Tony Lombardo.

Olicon service manager John Braband will serve as general manager of ALI Services (Olicon’s service unit), and Olicon sales executive Donald Lawson will continue with ALI Imaging Systems. As a result of the deal, Olicon CEO Dick Paulsen and vice president of sales Leo Ferrini have left the company, effective immediately. Paulsen was unavailable for comment.

ALI will eventually retire the Olicon brand name. All of Olicon’s commitments will be adhered to, however, according to the company.

Early PACS vendorFounded in 1981 to provide microfilming services for radiological images, Olicon was one of the longest running participants in the PACS market. In 1985 the company was purchased by PACS pioneer Raytel, which allowed Olicon to offer its microfilm customers the option of archiving their film on optical disk systems with Raytel equipment.

Olicon in 1986 launched Teleradiology Archiving Program (TAP), a program that allowed users to store films, either microfilmed or in film jackets, off-site in an archive that Olicon managed. When physicians needed them, the films were digitized with a film scanner and sent to the provider via teleradiology links. In 1990, Olicon separated from Raytel in a management-led buyout.

While Olicon experienced a measure of success at landing some large-scale PACS orders in the mid-1990s, including hospital chain Vencor (PNN 10/97), the company in 1998 moved away from direct sales in favor of OEM agreements with HIS firms such as SMS. As part of the move, 30% of its sales staff was eliminated (PNN 12/98), and rumors abounded questioning the firm’s long-term presence in the market. Soon after the firm’s shift to OEM sales, the company’s TAP and microfilm division was divested to F.Y.I., a document and information outsourcing company (PNN 2/99).

ALI will need to tread carefully as it begins to broaden its focus out of its successful profitable niche in ultrasound, said Michael Cannavo, president of Image Management Consultants of Winter Springs, FL.

“It may have been a wiser move for ALI to expand its OEM relationships than try and compete against the majors in the PACS market,” he said.