Signify Premium Insight: The benefits of neutrality – Philips at RSNA 2020

Published: December 4, 2020

Co-authored by Steve Holloway

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Background

As part of its RSNA announcements, Philips has launched its new Radiology Operations Command Center (ROCC). The system will give providers secure, digital virtual access to existing imaging installs across multiple systems and sites, in order to improve operational efficiencies and support onsite staff

The multimodality system works with imaging hardware from any vendor and aims to allow users to employ a hub and spoke model for imaging within their current install base, with virtual imaging assistance, virtual on-demand cross-training and remote management of imaging protocols all made possible by the ROCC.

Vendor Impact

  • Vendor neutrality opens a wider addressable market to Philips ROCC, especially given many large networks operate imaging modalities from an array of vendors, appeasing providers hesitant to commit to a single vendor’s products.
  • Top-end features for imaging hardware are becoming less significant in the eyes of customers compared to the past. Therefore, tools to help providers to better manage and use modalities more efficiently become a more important factor in purchasing decisions.
  • Targeting operational budgets at healthcare providers (staffing, asset management, services) opens potential new opportunities for professional services upsell and longer-term risk or performance-based contracting.
  • “Vendor neutral” or non-proprietary products to initiate a relationship with a customer could prove beneficial, offering an opportunity for further involvement in a customer’s future purchasing decisions, and an avenue to replace incumbent vendors.

Market Impact

  • Operational workflow platforms offer new market growth potential for imaging IT firms, especially in markets where best of breed RIS capability has been replaced by monolithic EMR solutions from non-imaging specialists, such as the US.
  • Healthcare technology vendors with major imaging modality businesses have the upper hand in this segment today, on account of their expertise in imaging hardware, links to imaging fleet services and maintenance and past investment in specialist vendors.
  • The best business model for operational analytics is relatively unclear. Revenues vendors derive from operational tools could increase relatively rapidly assuming professional service upsell is possible after initial implementation. However, healthcare providers’ willingness to invest in these products will wane if measurable improvements in operational performance are not realised quickly.

The Signify View

Philips is not the first vendor to offer a centralised command centre solution for imaging. There are several companies offering their own solutions using a mix of business intelligence tools and analytics to allow healthcare providers to better measure and improve operational efficiency. However, the Dutch firm is the first to promote its solution as vendor neutral for use in multi-vendor imaging fleets. In a world of lingering proprietary systems, this might, at first glance, seem a surprising decision, given the trend for vendors to target their own installed base with such solutions. It also remains to be seen the depth of “diagnostics data” and “control” the Philips solutions can exert over non-Philips modalities. However, there are several benefits to this approach.

Strategic partners, which already have large fleets of Philips hardware, will likely upgrade to the Philips ROCC; this helps to cement their association with Philips and presents opportunity for further professional service engagements. For providers with systems from several different vendors though, it would usually be costly to adopt a proprietary solution, given the need for customised interfacing, or the provider would not get the full benefit of the command centre solution. For these providers, Philips’ vendor neutral solution is being touted as a new alternative, while opening a new potential customer base for the firm.

In addition, the Remote Operations Command Center puts a great onus on vendors to offer ‘solutions’ rather than ‘products’. Unlike a simple product sale, which is in essence a transaction, solutions build an ongoing relationship between vendor and provider, with the vendor and provider effectively becoming partners. This could prove advantageous when the healthcare provider does come to replace, and upgrade its imaging hardware, and imaging IT systems. Philips expects that the vendor neutrality of its new platform will, in the longer term, lead to more partnerships with providers and the opportunity of new customers being signed up to comprehensive managed service deals across its broader portfolio.

The timing of Philips’ announcement is also apt. Purse strings in healthcare are always carefully controlled, but the Covid pandemic and the resultant drop in volumes of lucrative elective procedures has put immense pressure on healthcare provider’s budgets. This has only increased the importance of efficiency for providers, which are now, more than ever, keen to ensure that as much clinical value can be gained from every dollar spent.

Philips hopes its new Remote Operations Command Center will help in this regard, guiding imaging departments to run more efficiently. This will not only enable hospitals to save money, but this operational focus also means that Philips’ command centre offering can tap into a provider’s operational budget (staffing and administration etc.), which will be larger than the comparable capital asset (devices and software) purchasing budget. Equipment purchasing budgets are unlikely to increase any time soon, so by offering a product that can target a different budget pool, Philips is maximising its potential for revenue growth.

Longer-term, by encouraging providers to sign up to these operational solutions, which are part service, part software, Philips, along with other vendors on similar paths are also paving the way for even more comprehensive deals. Philips will also be looking to ink deals that grant it more integration into providers’ imaging departments and a greater role in their management, in return for guaranteeing certain operational performance targets. In entering these agreements, which see vendors sharing operational risks alongside providers, long term partnerships would be forged, making it harder for the vendor to be displaced by the competition. The benefits of these broader partnerships are more thoroughly explored in our recent Premium Insight The Value of Partnerships in Siemens’ Fourth Quarter.

Philips new Remote Operations Command Center is not in and of itself a revolutionary offering. It is the manifestation of a direction that leading modality and informatics vendors have been heading in for a few years. However, its operational focus and vendor neutrality give it a unique selling point against the backdrop of COVID-19 and a challenging outlook for healthcare providers. Consequently, its ROCC solution could help Philips initiate relationships with providers and networks that haven’t, as yet, been swayed into entering large, long-term partnerships, while also helping to cement its position with its core installed base.