COHR rolls out niche MRI effort with first installation of Ortho 8000

October 14, 1998

ISO finally begins sales of InnerVision scannerIt helps to use levers when prying open a new imaging niche. Independent service organization COHR of Chatsworth, CA, hopes to leverage its extensive network of field service engineers to give the

ISO finally begins sales of InnerVision scanner

It helps to use levers when prying open a new imaging niche. Independent service organization COHR of Chatsworth, CA, hopes to leverage its extensive network of field service engineers to give the company the heft of an OEM in support of its marketing effort for a new niche MRI scanner.

COHR installed the first of its Ortho 8000 extremity MRI systems last month, two years after obtaining exclusive U.S. rights to market the system through the acquisition of fellow ISO Vision Medical Services (SCAN 5/22/96). Through the Vision purchase, COHR took over a sales and marketing relationship with the manufacturer of Ortho 8000, InnerVision of London. Ortho 8000 sells for around $350,000.

COHR has a direct sales organization of 21 people to sell the extremity scanner and is in the process of signing up U.S. dealers, according to Bernie Bartoszek, senior vice president. Perhaps more important, however, COHR has an existing network of over 500 service technicians around the U.S. ready to provide support for installed Ortho 8000 systems.

This massive service organization offers COHR the type of product support usually provided by larger imaging OEMs. In fact, the ISO is already a multivendor service provider for Toshiba America Medical Systems of Tustin, CA. That service reach helped when COHR's first purchase order for Ortho 8000 was signed at Tristate Orthopaedics and Sports Medicine in Pittsburgh.

"As soon as we knew we were going to have a unit in Pittsburgh, we grabbed some of our (service) people and brought them up to speed," Bartoszek told SCAN.

In contrast, the marketing efforts of at least one niche MRI firm foundered due to its reliance on a single product for revenues. Magna-Lab of Edgewood, NY, a small start-up firm, ran out of funds last year for its effort to sell an extremity MRI system. It continues on as a shell company, hoping to resurrect itself. Another niche MRI firm, Lunar of Madison, WI, is able to rely on its successful bone densitometry business for diversification. Lunar has been selling its Artoscan MRI extremity scanner since obtaining North American rights from manufacturer Esaote of Italy five years ago (SCAN 10/6/93).

The past two years have been a period of both growth and organizational turbulence for COHR, which faced charges of irregularities in the operation of its Maintenance MasterPlan service program for hospitals. The company has also suffered a significant turnover of executives in the past year and weathered a prolonged period of uncertainty earlier this year when COHR's board pondered whether to divest the company (SCAN 3/4/98 and 6/10/98). The board in June decided not to sell COHR, giving the company the long-term stability that equipment buyers need before committing funds to big-ticket purchases like MRI.

Since the Vision acquisition, COHR has been working with potential clinical users and InnerVision in evaluating and modifying Ortho 8000, according to Bartoszek. This R&D effort was put into high gear over the past six months.

COHR itself developed a new chair system for the MRI unit, as well as software to provide the scanner with a Windows-based PACS capability, Bartoszek said. COHR worked with InnerVision on coil development, helping refine an open design in which the patient can see the arm or leg when it is being scanned.

Apart from its service strengths, COHR offers a senior management team of former OEM executives who know how to position and sell MRI, Bartoszek said. COHR will provide marketing support for its combined direct sales and distribution effort, which will aim primarily at nonradiology markets such as orthopedics. The firm's leasing and asset-management expertise will enable it to provide customer financing as well.

Ultimately, whether or not the niche MRI effort will fly depends on the attractiveness of the concept to a new customer base. Orthopedic and other physicians, who now have to send their patients to neighboring hospitals for MRI examinations following an initial diagnosis and x-ray, will be able to provide the scans themselves, Bartoszek said. This saves effort and time for both physicians and patients. In the process, additional revenue is produced for the doctor, he said. Reimbursement for the scans is the same whether the work is done on a multimillion-dollar, whole-body scanner or a $350,000 extremity-specific unit.

"These guys (the physicians) are saying, 'Let's control our destiny and get some cash flow,'" Bartoszek said.