Phone companies focus on medical image sales

June 2, 1993

Advances in the power and versatility of telecommunication technologyare enabling hospitals, radiology groups and imaging centers totransmit high-resolution medical images faster and cheaper. Long-distanceand local phone companies are targeting medical

Advances in the power and versatility of telecommunication technologyare enabling hospitals, radiology groups and imaging centers totransmit high-resolution medical images faster and cheaper. Long-distanceand local phone companies are targeting medical imaging as a primecustomer for their new high-speed data networks. Teleradiologyand picture archiving and communications systems firms are setto ride this gathering wave of transmission technology.

Among the regional Bell operating companies (RBOCs or babyBells) most aggressively targeting medical applications for theirhigh-speed digital networks are Pacific Telesis, through its PacificBell subsidiary in California, and BellSouth in the SoutheastU.S. Pacific Bell has formed a dedicated health care market groupto approach hospitals with telecommunication products for informationand image data transmission.

The first corporate alliance to sell Pacific Bell's HealthLinkline of communications products was formed in March with PACSvendor Advanced Video Products of Littleton, MA, a subsidiaryof Dallas-based E-Systems (see previous story). Products willbe sold only in those areas where Pacific Bell is tariffed byregulators to provide phone services.

Pacific Bell also revealed plans in April to develop a high-speeddata network between universities, hospitals and private companiesfrom San Francisco to Los Angeles. The California Research andEducation Network (CalREN) will enable rapid multimedia patientrecord transmission--including video, still diagnostic images,text and voice.

According to the San Francisco Business Times, CalREN willoperate on a nonprofit basis initially in order to build the $35-millionfiber-optic network that will utilize Pacific Bell's advanceddigital transmission and switching technology. In addition toabsorbing direct network development costs, the phone companyexpects to waive $10 million in phone fees during the first twoyears of the program. Hookup fees paid by corporations will beused to help bring nonprofit customers onto the network at nocharge.

BellSouth signed an agreement last month with GTE and CarolinaTelephone to build a high-speed data network in North Carolinathat will link government offices, schools and hospitals. Thephone companies will use asynchronous transfer mode (ATM) switchesto provide rapid digital transmission of data, including medicalimages and videoconferencing, according to The Wall Street Journal.

BABY BELL COMPANIES ARE PROHIBITED by anti-trust rules from engagingin exclusive supply arrangements. AVP will be a preferred PACSand teleradiology option as Pacific Bell sales representativessell HealthLink products to their hospital customers.

The two firms have displayed jointly at telecommunicationsconferences. Representatives from both companies will cross-trainand combine resources when providing image transmission, managementand display technology to customers, according to David Mahoney,AVP national sales manager.

AVP's wide PACS product line, its high-resolution Megascanmonitor technology and the firm's expressed interest in workingwith Pacific Bell were key elements behind its selection as amarketing alliance partner, said Michael J. Smith, HealthLinkproject manager at Pacific Bell.

Pacific Bell brings its telecommunications expertise to thealliance as well as a series of new switched digital productsenabling faster image transmission at reduced cost, he said.

"Switch digital services parallel how voice services areprovided now," Smith told SCAN. "You pay a low monthlyrate and you pay for usage. This provides more flexibility indesigning a network to meet customer requirements."

The old teleradiology method of transmitting images over analoglines using a modem plugged away at a sluggish 19.2-kilobits-per-secondtransmission rate. Digital transmission using Switch 56 servicecan provide three times that transmission speed, Smith said. Fasteryet is integrated services digital network (ISDN) transmission.

ISDN systems have three channels, each allowing transmissionspeeds of 64 kbps. Technology has also been developed that combinestwo 64-kilobit ISDN channels, providing 128-kbps data transmission.Even faster, for high-volume PACS customers, are dedicated-T1and switched-T1 transmission products, he said.

A single T1 line runs at about 1.54 megabits per second. WhileT1 lines can currently be switched, transmission capability willescalate dramatically with a product called switched multimegabitdata service (SMDS). Later this year, Pacific Bell should be offeringswitched-T1 speeds of up to 16 Mbps, Smith said.

Imaging users require this type of speed to easily handle veryhigh-resolution images, Mahoney said. A single 2048 x 2560-pixelimage contains about 10 megabits of information. Transmissionof one of these images over a standard phone line takes about68 minutes. The same image can be sent in one second or less usingSMDS.

"As technology changes, we are able to offer higher resolutionsystems," he told SCAN.

The Pacific Bell agreement was AVP's first with a baby Bell,although the PACS vendor has an established long-distance communicationsrelationship with Sprint. Sprint has actively targeted the teleradiologymarket (SCAN 12/26/90).

AVP would like to sign with as many baby Bells as possible,Mahoney said. The telecommunications vendor used would dependon specific customer requirements and where the vendor is tariffedto provide the service.

"My objective is comprehensive coverage," Mahoneysaid.

Pacific Bell and AVP fit together well in part because theirproduct lines are segmented similarly, he said.

"They (Pacific Bell) look at the marketplace segmentsas we do: a teleradiology segment, a mini-PACS segment and a PACSsegment." Mahoney said. "Each segment has differentneeds and applications. They have set up a product for each oneof those segments much the same way as we have done with our productline."

Changes in the U.S. health care market are causing potentialPACS customers to view the technology in a new and better light,Mahoney said.

"To maintain a level of success, they (radiology groups)know they are going to have to increase coverage. They can dothat with personnel, technology or a combination of the two,"he said. "More coverage adds to volume. It is a simple matterof supply and demand. You have to increase your volume in a tightereconomy in order to maintain your level of margin and revenue."

Radiology groups that used to turn down requests for image-readingcoverage from remote community hospitals are now seeking out alltypes of business and using PACS technology to make this servicelogistically and economically feasible, he said.