Small PACS firms find survival difficult

December 1, 1998

Small PACS firms find survival difficultShakeout continues at a furious pace in the PACS and teleradiology markets, with Access Radiology and EMED apparently the latest firms to tie their futures together. As more of these small companies join

Small PACS firms find survival difficult

Shakeout continues at a furious pace in the PACS and teleradiology markets, with Access Radiology and EMED apparently the latest firms to tie their futures together. As more of these small companies join forces or are bought out by larger companies, power in the PACS industry is becoming concentrated in fewer and fewer hands.

While mergers and acquisitions provide a new lease on life for small companies and fill out product lines for larger firms, they also accentuate the tenuous existence of small firms and their difficulty in attracting customers.

Despite the hardships of the marketplace, smaller PACS firms have pioneered much of the leading-edge technology that is now standard issue for PACS companies. For example, the use of Windows NT and Web protocols, now employed by nearly all leading PACS firms, were trends begun by smaller firms.

Interest is growing in one-stop shopping for PACS and healthcare information systems, however, and there's no question that consolidation will continue in this sector. Smaller firms, particularly those selling directly to end users, will likely continue to struggle, with few exceptions.

All is not lost for small vendors, however. Innovative companies will continue to come into the market and generate useful PACS technology-but that technology will probably find its way to customers through OEM relationships rather than direct sales initiated by its developer. In the PACS market of the future, David and Goliath will find success through cooperation rather than confrontation.

-Erik L. Ridley, Editor