RSNA 2015: Disrupting the Big Four and Technology Partnerships

December 16, 2015

Thoughts on Big Iron, managed fleets, and technology partnerships from RSNA 2015.

Big Iron at RSNA 2015: A Fairly Quiet Story
Siemens Healthcare could have stolen the show at RSNA 2015 if it had chosen to bring to McCormick Place a Magnetom Terra, the breakthrough 7-tesla MRI system it launched clinically earlier in the year. Instead, Siemens and the other major players in the Big Four-GE Healthcare, Philips Healthcare, and Toshiba Medical-made Big Iron at RSNA 2015 a somewhat quieter story.

At least in these four booths, the capital imaging equipment at RSNA 2015 was a showcase of incremental upgrades to existing premium offerings and a launch of high-performance, mid-range, and entry-level offerings. Notably, improved dual-energy (spectral) imaging in CT and enhanced metal-artifact reduction algorithms in MRI were common denominators across at least the top three vendors.

In a nutshell, the major vendors have been working diligently on renewing older products to refresh and polish their portfolios, and filling any remaining gaps to ensure each niche is filled with the right product at the correct price.

Samsung’s Bold Move into Big Iron Territory
Taking advantage of time and enjoying some latitude, contenders such as Hitachi Medical continue to upscale their products, moving closer than ever to the ultra-premium segments.

Meanwhile, Samsung is pursuing its ascension further into Big Iron territory, moving beyond the portable CT equipment already at hand. Arguably, it is Samsung’s unveiling of its new NExCT7 premium CT scanner, some features of which are still FDA 510(k) pending, that captured the highest attention on the RSNA 2015 show floor.

Did this launch of high-end equipment by a colossal new entrant catch the established vendors by surprise? Probably not; everyone in the industry remembers the bold statements Samsung made back in 2011, when it announced its ambitious plan to be “No. 1 in 2020” in medical imaging.

“We have a target to be the No. 1 across ultrasound devices, X-rays and MRIs”; this resounding statement from one of Samsung’s leaders at the time suggests the giant could well break into Big Iron MRI at the next RSNA.

Without any doubt, Samsung’s “new” competitors take the threat very seriously. With such deep pockets and assuming continued commitment to its growth strategy, the Korean giant has all it takes to forge a place for itself among the dominant players in the field, like it has done in many other industries.

Long Way to Go for a Clinical Edge
One cannot help but watch Samsung’s attempts to break into the big league of medical imaging without some level of skepticism. In reality, unless the company is able to quickly ramp up its capabilities in advanced clinical applications and build its direct sales presence in the market, it will take many years before Samsung can really start to compete “medically” with the Big Four.

It is one thing to capture a few market share points in ultrasound and in digital radiography, which Samsung is already doing, and a whole other thing to cater effectively to the imaging sub-specialties with top-tier imaging equipment.[[{"type":"media","view_mode":"media_crop","fid":"44355","attributes":{"alt":"Nadim Michel Daher, Industry Principal, Medical Imaging and Imaging Informatics, Frost & Sullivan","class":"media-image media-image-right","id":"media_crop_2808681188136","media_crop_h":"0","media_crop_image_style":"-1","media_crop_instance":"4947","media_crop_rotate":"0","media_crop_scale_h":"0","media_crop_scale_w":"0","media_crop_w":"0","media_crop_x":"0","media_crop_y":"0","style":"height: 250px; width: 200px; float: right;","title":"Nadim Michel Daher, Industry Principal, Medical Imaging and Imaging Informatics, Frost & Sullivan","typeof":"foaf:Image"}}]]

This clinical lag could be easily remedied by Samsung, however by moving quickly to acquire one of the few remaining stand-alone advanced visualization vendors. Like Toshiba did with Vital Images back in 2011, an applications vendor with a broad and deep portfolio like Terarecon could boost Samsung’s clinical capabilities almost overnight.

However, the real challenge is elsewhere. In many ways, the last thing the medical imaging market really needs right now is another premium CT product. Maybe a premium CT that cuts the price in half could create a big splash, but how could Samsung possibly come in at half the price when the most expensive system components-the detector, the tube, the gantry-are all sourced to third-party manufacturers such as Toshiba, Analogic, or Varian?

Beyond Technology, the Market’s Latent Demand
Did Samsung’s NExCT7 launch catch the established vendors off guard? Probably not either; the Big Four understand it better than anyone else, the days of selling expensive “Toys for Boys” in radiology are gone.

The market started a dramatic shift in 2008 and continues on a major change seven years later. Now more responsible and value-minded, today’s real market demand is for the “right” upgradeable platforms across each modality. The latent but growing demand is for a vendor to come in with the right set of solutions and roll up their sleeves crafting the “right” game plan with only one goal in mind for the prospective customer:

“Commit to helping my shortlisted outcomes’ key performance indicators (KPIs) go from where they are right now to where they need to be by the time I embark on my next upgrade.”

Essentially, more and more hospitals, IDNs, and health systems throughout Europe and North America are taking a closer look at the new generation of multi-vendor (MVS) and managed equipment services (MES) of the Big Four. These MVS and MES 2.0 offerings, which vendors have matured over the past two decades in countries such as the UK and the Netherlands, are being taken to the next level.

These nonconventional business models are moving up from the single modality level to the multi-modality levels, the fleet levels, and even beyond just imaging; they are being wrapped up in innovative, customized, shared-accountability or even shared-profit business models crafted by C-level executives on both sides of the table; and, finally, they are being shown off in press communications, with a little bit of sugar-coating, as technology partnerships, strategic alliances, or happy marriages.

Large-scale, Long-term, and High-dollar Partnerships Here to Stay
There have been just too many in the past two years to call them isolated cases anymore.

The number of hospital networks in various developed and less-developed markets getting onboard large-scale, long-term, and high-dollar contracts with industry vendors has become an accelerating pattern.

Philips Healthcare may have been running with these types of contracts relatively unhampered by any serious competition outside of the UK since 2006, which gave it a head start in the US market with the inking of all-records-breaking contracts recently-think Georgia Regents Medical Center (2013, 15 years, $300 million), Westchester Medical Center Health Network (2015, 15 years, $500 million), or Mackenzie Health in Ontario just a week before RSNA (2015, 18 years, CAD300 million).

Nevertheless, the other major players also have initiated a massive realignment around the C-level consultative selling and analytics-based approach required of this kind of Big Bundle solutions.

GE Healthcare’s ongoing reorganization has already started to bear fruit in Europe as well as in the US with the signing of such nonconventional contracts at an increasing pace. Toshiba continues to advance in its customized solutions approach, although it is showing more conservative on the risk-sharing front. As for Siemens Healthcare, though it has certainly taken notice of the shift, it seems to want to operate the move less quickly.

In this context, and to go back to Samsung, one thing is sure: It is not merely by going in equipped for the Slice Wars that the Korean giant will win this next big battle in medical imaging.