Consolidation opens doors for smaller PACS players

The major PACS and modality manufacturers aren't the only ones taking advantage of the medical community's growing desire for digital imaging. Despite tremendous industry consolidation this year and a growing consensus that only a handful of players will still be in the running five years from now, the PACS market continues to find room for the little guy.

While the expansion of the market itself is largely responsible for this, technology advances are having a major impact as well. With the emergence of the ASP model and growing pressure for medical equipment companies to improve their time to market with new products, small and mid-sized vendors are finding themselves in the right place at the right time.

This was good news for companies like ALI, Algotec, Aurora, Brit Systems, DeJarnette, Imco, Merge, StorComm, and the plethora of other PACS vendors at the 2000 RSNA meeting-none of whom seemed too bothered by the spate of industry consolidation. They all believe their ability to move more quickly to market with new products and technology enhancements and to offer their customers greater flexibility in systems integration will keep them in the running as the PACS market grows and the technologies evolve.

- ALI president and CEO Greg Peet believes there is still a place for an independent IT software company in the PACS industry, and ALI continues to position itself as such, despite persistent rumors that the Canadian firm is a prime candidate for acquisition. The company launched two new enterprise-oriented PACS products at the RSNA show: ALI Instant Archive and ALI UltraPACS AnyWare. Instant Archive uses network-attached storage redundant array of inexpensive disks (RAID) technology to eliminate prefetching and autorouting routines, giving referring physicians quick access to images from anywhere in the enterprise. UltraPACS AnyWare is an Internet-enabled workstation designed for remote viewing applications. ALI also demonstrated version 4.4 of UltraPACS, which includes 3-D viewing, integrated speech recognition, and video streaming capabilities. ALI is also offering an ASP financing model.

- Algotec emphasized its Web-based approach to PACS and the management of patient information. The company sees the Internet as a business tool for radiologists and as a means of linking radiologists with referring physicians, who in turn can use the 'Net to bring patients more directly into the diagnostic and care process. The company introduced version 4 of MediSurf, its Java-based image display engine that enables radiologists to simultaneously view and compare any series or studies from any modality, regardless of location. MediSurf also offers 3-D viewing and image processing through a new program called 3D Surf.

Other product introductions included MediStore version 3, which features extended support for Algotec's ASP offering and for DVD and AIT storage media, and Med-e-Mail, which automatically combines radiology reports with thumbnails of key images and sends them by e-mail to referring physicians. Users wanting more image detail can use a software link embedded in the Med-e-Mail report to pull up the complete study through the Internet.

- Imco featured its Imco-Rad line of PACS products in four settings designed to match system capabilities with user need, based upon the size of the facility. The company also introduced a regional archiving approach to off-site image storage, an ASP fee-per-use model, and Web browser capabilities for image retrieval and review. Imco's new Secure Storage Center is a regional archive that uses the Internet or a virtual private network to transfer and access images and other medical information, providing high-speed private communication between the customer's site and Imco. The first center is in Wisconsin; the company plans to build or contract with other centers in other regions as demand for the service warrants. Imco has also established a Systems Integration Center, which the company says will allow it to produce a wider variety of systems and improve delivery times, and a Network Monitoring System.

- Image Technology Laboratories made its first appearance at the RSNA meeting, exhibiting its new ITL PACS. The system features a modular Windows-based architecture that makes it appropriate for users from small imaging centers to large hospitals and IDNs (integrated delivery networks), according to the company. It also supports several medical and software design interoperability standards, including DICOM, HL7, HTML, TCP/IP, and CORBA. ITL will sell complete systems or add on to existing PACS and will support a purchase, lease, or ASP model.

- StorComm launched a number of new products intended to support its goal of creating an integrated clinical data repository and electronic medical record. In addition, StorComm and 3M Health Information Systems announced an agreement to integrate StorComm's ImageAccess clinical image management system into 3M's Care Innovation healthcare information system. Through the agreement, StorComm gains access to 3M's client base in information systems and becomes a player in the emerging EMR market. The companies will jointly market the integrated system, which will keep the ImageAccess name.

StorComm also introduced ImageAccess Real-Time Monitoring, which allows radiologists to look at exams in process, and Image Access MedChat, a collaborative feature for MedView that lets users consult in real-time over a LAN or the Internet. StorComm is expanding beyond its radiology focus with new products for echocardiology and orthopedics.

Connectivity companies change course

Even those firms that built their business on DICOM connectivity are finding new business in this age of open platforms and industry standards. Having based its business on connectivity products, Merge Technologies is now taking a phased approach to digital image management that emphasizes workflow applications for small to mid-sized hospitals. Merge takes a radiology-centric approach to PACS, although all of its products are designed to work within other departments as well. Its archiving products can be integrated with any HIS or RIS, and the company is gearing up to launch a full suite of integrated workflow applications that will be sold to OEMs and directly to customers through Merge's new direct salesforce.

After suffering through a number of difficult quarters financially, however, Merge went through a reorganization that included minor staffing cutbacks and internal consolidation. The company expects to begin realizing some financial benefits from these changes in the first quarter of 2001.

DeJarnette is another company struggling to change its reputation in the medical imaging marketplace. The firm has been repositioning itself as a PACS provider and clinical systems integrator for more than a year. DeJarnette introduced its Radiance PACS at the 1999 RSNA show and has since installed it successfully at its beta site in Akron, OH. New features include integrated voice dictation and 3-D reconstruction (through a relationship with Voxar). DeJarnette also announced a partnership with Dynamic Healthcare to jointly develop an integrated RIS/PACS.

Being a smaller player in the PACS market offers several advantages, according to DeJarnette, including being able to offer a lower-priced product and being more responsive to customer needs and technology advances. While some of its DICOM connectivity and software toolkit business has declined, DeJarnette sees growing interest in these products from IS companies, especially in light of the IHE initiative. It is interesting to note, however, that DeJarnette chose not to participate in the 2000 IHE demonstration, although they did participate in Year 1.

Most of the smaller PACS firms see systems integration as critical to their success in the near term. Systems integration is emerging as a market niche within PACS, and some companies are building whole businesses around this strategy. Cassling Diagnostic, for example, recently created an entire subsidiary, Artesian Medical, dedicated to providing systems integration for PACS customers. Artesian actually incorporates the existing networking integration component of CDI, which has more than 300 installations to date. Gary Sunsten, formerly a vice president with CDI and a veteran of the medical imaging industry, is now president of Artesian.

As a systems integrator, partnering is a key component of the company's strategy. Vendor partners include Applicare, Merge, Barco, Cisco, Fuji, FileLink, Dome, Rorke, Vidar, and Voxar. Artesian is also offering an ASP model through a newly formed relationship with InPhact. The company does some of its own product development, primarily through a partnership with MedQ, a small software development firm. MedQ was instrumental in developing Artesian's bidirectional HIS/RIS interface and its continuous voice recognition package, QSpeak, which is based on IBM's MedSpeak technology. Artesian also demonstrated a PACS voice command package as a work-in-progress.

Also showcasing its systems integration talents at the RSNA meeting was SAIC. The firm is leveraging its IT expertise by taking a less radiology-centric approach to PACS, according to Deniese Chaney, practice director for healthcare consulting. Too many healthcare organizations have not reaped the benefits of PACS they expected, Chaney said, primarily because the rest of the healthcare enterprise often remains dependent on film. Rather than talking only to radiology administrators, SAIC approaches both the CIOs and the radiologists to develop an enterprise system from the get-go.

SAIC maintains a vendor-neutral approach, although it has some partnerships in telecommunications and other enterprise technologies. Instead of working with a specific system or technology, the company looks at the various components-viewers, workflow engines, data storage middleware, and storage area networks-necessary to create the most effective system for each customer. The firm claims 16 healthcare customers in the U.S. and Canada.

© 2000 Miller Freeman Inc.
12/13/00, Issue # 118, page 2.