Imaging IT Vendors Target Growing Radiology Operational Workflow Market

Publication Date: 12/03/2018

Big modality hardware releases and artificial intelligence were centre stage at ECR 2018. For imaging IT though, the latest market developments were less obvious. While some vendors may have been saving new imaging IT products for the glitz of the HIMSS 2018 show in Las Vegas (more of this in our show write-up coming soon), there was a distinct lack of new software platforms on show. Instead, demo workstations across the exhibit halls were singing from the same tune: workflow tools and operational efficiency. Moreover, many vendors, even those with the most tainted of proprietary legacies, were actively promoting interoperability and cross-vendor collaboration, a far cry from the fiercely competitive PACS market of recent times.

Market Stagnation is Hurting the Bottom Line

This transitory shift in focus and discussion is a result of broad changes sweeping healthcare provision in Europe. Two trends are particularly prominent; firstly, healthcare networks are expanding in scale; secondly, provision of care and funding models are increasingly driven by value, both from a financial and clinical perspective. Combined, these trends have created an imaging IT market with lengthening replacement cycles, more complex implementations and aggressive price competition between vendors. For many PACS vendors, these conditions have also resulted in sluggish business performance and shrinking margins for core products.

Consequently, PACS vendors have been on the hunt for new revenue growth opportunities. Vendor neutral archives (VNA) offered some short-term upside in recent years, though few were able to adequately explain the merits of VNA to customers, nor meet the expectations and promises suggested from frenzied, cross-industry marketing. Moreover, in the still departmental focused European market, the expansive capability of VNA outside of radiology came too soon for most – healthcare providers just weren’t ready for enterprise imaging. The same could be argued for enterprise viewing, a rapidly commoditised market. While in principle some products have enabled cross-departmental collaboration, all too often solutions have underdelivered when it comes to integration and technical capability. Ultimately, both have also provided limited upside for PACS vendors as new growth segments.

PACS Vendors Sniff a Big New Revenue Stream

However, after a period of scrabbling for new opportunities and product development ideas, most PACS vendors are sensibly settling on a strategy to “lock-in” existing clients and ultimately, help them improve their provision of care. At the heart of this approach is a growing array of workflow and efficiency tools, building on basic capabilities that have been embedded in PACS and RIS systems for some time. While every vendor bundles these solutions differently (as upgrade versions, stand-alone products or bolt-on modules) there are essentially four main categories:

  • Operational Workflow – software and tools that have a broader operational reach to users across the radiology department, as well as other clinical staff and healthcare administrators. Examples include: case load balancing, order entry integration, modality fleet management, connectivity and integration support.
  • Practice Management – specific software and tools that support analysis of the working practices of a radiology department and support driving improvements in performance, including regulatory compliance, staff quality audit, quality and outcome measurement tools, dose monitoring.
  • Radiologist Workflow Tools – these tools help improve the working practices and efficiency of radiologists using the system, without having a direct diagnostic influence. Examples include smart and adaptive protocols, rule-engines, auto-triage and more structured reporting support.
  • Diagnostic Tools – most commonly provided in PACS or Advanced Visualisation, these are tools and software that enable radiologists to perform their primary function – making a diagnosis. Examples include automated quantification and decision support tools, advanced visualisation, adaptive hanging protocols and priors pre-fetching.

It is the first three groups that PACS vendors are today more actively targeting than before, because it is here they have most influence and opportunity. As providers of PACS and RIS systems for decades, in many geographies and different types of provider, they have extensive data and expertise in the operational processes of radiology departments. Most are now realising that installed base retention is essential for survival as tender cycles lengthen; there is no better way to retain customers than helping them to run more efficient departments. While software tools and bolt-on modules offer some new revenue growth opportunity, there is an even juicier prize for the larger more established firms – professional services.

Consulting and professional services has been steadily growing in terms of proportion of imaging IT deals in recent years. Most commonly this is due to the growing complexity of implementations in larger health networks, requiring some speciality support from vendors. However, as the push for value-based care grows, momentum for risk-sharing contracting based on outcomes will increase. For vendors, this opens a far greater addressable market. If we take an example from today, core imaging IT (PACS, RIS, equivalent enterprise imaging, VNA and image exchange) accounts for approximately $3 billion in revenues globally. Yet in comparison, the cost to healthcare providers for running radiology services from an operational, workforce and reimbursement perspective is probably twenty-fold bigger. Thus, if imaging IT vendors can work towards deals that offer even a small slice of this much bigger pie, they can extract greater profit from their own installed base, without having to make expensive entry to new markets or new product areas. The growing focus on workflow and operational tools is thus both a protectionist measure for installed base, but ultimately a push for a bigger pot of revenue too.

A Silver Lining to the Professional Services Pot of Gold

While the above may come across as an overly capitalist interpretation, there are benefits to this strategy apart from improving vendor profit margins. As healthcare provider networks are growing in terms of scale and complexity, workflow software must become increasingly interoperable and capable of working across multi-vendor environments. Vendors of proprietary systems will need to work harder on interoperability to gain access to this larger revenue stream, also likely pushing a higher maturity of VNA solution as a foundation. Secondly, healthcare providers will be more able to hold vendors to account, as the penalties for poor software, interoperability or service will be baked in to long-term contracts. Thirdly, this transition should drive continued improvements in how radiology departments in Europe are run, creating a more cost-effective, diagnostically accurate and safer system for patients.

In conclusion, despite the commercial opportunity for vendors in driving the shift towards operational and workflow efficiency, this is no bad thing for providers and patients either – as the running of radiology services should markedly improve. Additionally, no single vendor has all the capabilities in-house today to support the growing role of radiology and imaging within expanding health provider networks. This is forcing imaging IT vendors to get their act together on interoperability and partner more, creating a less proprietary market. We are just at the cusp of this transition and it will take many years for providers to adopt these new solutions, as well as evolve their relationships with imaging vendors towards more managed service, risk-sharing contracts. However, for once, it seems that this will be a shift in market direction that could provide a win-win for both healthcare providers and vendors – assuming the right balance of operational gains for providers and improved balance sheets for vendors can be found.

Related Market Report

Signify Research’s recently published market research report on the market for Imaging IT and Archiving & Management IT provides detailed market intelligence data, forecasts and insights for the complex medical imaging software and archiving market. The report includes detailed product coverage of:

  • Radiology IT (Standalone PACS, Standalone RIS, Enterprise Imaging for Radiology)
  • Cardiology IT (Standalone Cardiology IT, Enterprise Imaging for Cardiology)
  • Archiving and Management IT (Standalone VNA/ICA, Standalone Image Exchange)

Using tightly-defined reported data from numerous medical imaging IT and clinical content management IT vendors, Signify Research has developed a bottoms-up assessment of the market size, outlook and competitive market.

About Signify Research

Signify Research is an independent supplier of market intelligence and consultancy to the global healthcare technology industry. Our major coverage areas are Healthcare IT, Medical Imaging and Digital Health. Our clients include technology vendors, healthcare providers and payers, management consultants and investors. Signify Research is headquartered in Cranfield, UK.

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