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Signify Premium Insight: Futures for the Faithful – Vendor Sentiment Index Q3

This Insight is part of your subscription to Signify Premium Insights – Medical ImagingThis content is only available to individuals with an active account for this paid-for service and is the copyright of Signify Research. Content cannot be shared or distributed to non-subscribers or other third parties without express written consent from Signify ResearchTo view other recent Premium Insights that are part of the service please click here.

As a young and quickly evolving segment of medical imaging, the AI market is more liable than most to be buffeted by both global headwinds and localised eddies. Amidst these challenges, which include inflationary pressures, the risk of faltering economies and stretched healthcare systems, there are also reasons to be optimistic.

The challenges that providers are facing such as staff shortages and huge backlogs of patients may give impetus to adopt new technologies, while regulatory clearances, investor backing, and greater availability of reimbursement highlight the growing regard in which the nascent market is held. Whether vendors themselves are confident in these opportunities is another matter, one which is explored in the latest Vendor Sentiment Index survey, a key deliverable of Signify Research’s AI in Medical Imaging Market Intelligence Service.

 The Signify View

The latest Vendor Sentiment Index survey, which was conducted between July and September 2022 assesses the confidence both imaging IT vendors and AI independent software vendors (AI ISVs) have in securing pilot sites, commercial sites and the overall market in the coming quarter (Q4, October to December 2022) and the coming 12 months (October 2022 to September 2023).

Broadly, the level of confidence vendors hold is stable, with some, ongoing patterns apparent, such as AI ISVs being overall more optimistic about their prospects, than the more tempered views of the imaging IT vendors – an unsurprising difference given the attitudes needed to launch a start-up into a nascent market. There were also some notable changes, however.

Last quarter’s Index, for instance, saw imaging IT vendors hold, in general, an altogether more pessimistic view of the market. An assessment that has since recovered, with the vendors harbouring more positive views. There are several causes for this dip and recovery, the most likely of which, as suggested in the last quarter’s analysis, is simply that there is less activity over the summer months given summer holidays and decision making often delayed until the autumn. The current Q3 index, which, assesses vendors attitudes towards Q4, is not impacted by these seasonal slowdowns, giving vendors a greater opportunity to make both agreements for commercial deals and for pilot sites.

That isn’t to say that there were no impacts particular to the quarter. Both ISVs and imaging IT vendors are far more confident in their commercial prospects in the coming 12 months than they are in for the upcoming quarter. This may be largely a result of RSNA 2022, which, as a major showcase for both AI and imaging IT vendors, absorbs a significant amount of resource. This effort, which can lead to traction at pilot sites and commercial success in the longer term, does however, hamper vendors’ abilities to focus on commercial opportunities in the nearer term.

Confidence Gap

There was one area that diverged from trends established in previous quarters. In past surveys there has been a relatively stable gap in the different types of vendors’ confidence in their ability to secure pilot sites over the coming months. This is reflection of the typically more bullish attitudes held by ISVs, often hungry start-ups, which only operate in one area, and whose entire reason for being is their belief in the potential of AI. In the latest survey, however, the confidence levels of imaging IT and ISVs has almost completely converged, AI ISVs are relatively far less confident than they were in previous quarters.

This suggests that the pilot site pipelines of AI ISVs are running low, and these vendors are struggling to garner much new interest in adopting their solutions on even a trial basis. Again, part of the reason for these thinning pipelines, beyond the known macro challenges of limited resources to assess AI adoption at providers struggling with long waiting-lists and budgetary shortfalls, is likely to be RSNA, which represents a rare opportunity for these vendors to network and expand their reach and so is requiring of their focus. Imaging IT vendors appear to be less affected by this problem. They also have better-established customer bases, an asset they will be able to tap into to secure pilot site agreements. What’s more, compared to many AI ISVs, the customer bases that imaging IT vendors have, furnished the vendors with solid reputations. An invaluable tool when attempting to convince a provider to be a test case for complex new technologies.

A Consolidated Future

While this is merely a single data point, and conclusions should be drawn gingerly, it does suggest the advantages that imaging IT vendors have compared to many ISVs. Trust is essential in adopting a new technology, particularly from an unfamiliar vendor. While imaging IT vendors can leverage the trust built elsewhere, through other products, AI ISVs must build this trust themselves. This is why clinical validation studies and standout performances at pilot sites to garner positive testimony is crucial. The AI market is likely to become very quickly dominated by incumbents, and smaller start-ups will find it increasingly difficult to gain traction, so any vendor that does not want to risk falling behind must push forward quickly to claim share while it is still available.

This also ties into one of the longer-term trends of market consolidation. Over the coming 12 months, the confidence level of securing a pilot site of the most pessimistic imaging IT vendors was 5/10. The figure for AI ISVs on the other hand was 2/10. This very low level of confidence among some dedicated AI vendors emphasises their worries about securing pilot sites, a necessary precursor in many cases, to commercial rollouts. Given the dwindling funding of some AI vendors, the lack of confidence in even the first stage of commercial deals suggests that some firms may begin to struggle over the next 12 months, perhaps finding themselves turning to acquisitive companies to save them from perishing. For those unable to turn the tide, a market exit or pivot may be looming, but one which can be overcome following a buoyant RNSA show, raising further capital, or even securing reimbursement for their solution.

Converting Pilots

Other AI ISVs are perhaps guilty of another sin: overconfidence. While imaging IT vendors are more confident around pilot deployments in the coming 12 months than commercial deployments, AI ISVs are almost exactly as confident in securing commercial sites as they are in securing pilot sites. This optimism may well be misplaced. Aside from the fact that some pilot sites may not derive the expected value from their deployments the sales cycle, which is typically 9-12 months means that any upcoming pilot sites are unlikely to be converted to commercial sites within the coming 12 months assessed by the survey. As such, it suggests they are very reliant on the conversion of their current pilot sites into commercial sites. This is particularly true given the lack of confidence in securing future pilot sites.

There are factors that could change this picture. New products launched and new partnerships entered into at RSNA will help propel the market forward, as will any additional reimbursement for the use of medical imaging AI solutions, which appears to be gaining momentum. Such changes could well see confidence levels rise among vendors as they would move toward achieving commercial traction. But even so, these changes will favour the better-established AI ISVs compared to the long tail of smaller vendors that will, over time, bear the brunt of the anticipated market consolidation.

Ultimately however, while there is variation and pessimism in some quarters, Q422 and the year ahead harbours a lot of opportunity. AI ISVs have the first RSNA in several years to not be overshadowed by Covid-19 to target a large and likely receptive audience, while imaging IT vendors have had opportunity to understand what their clients want from AI and consider how they can best support their users with the technology. Questions surrounding affordability and value remain, which will ultimately lead to consolidation in the market. But, for those more establish and larger vendors that have covered all the bases, invested in clinical validation and health economics studies, and worked to establish their credentials, they can be confident of making headway as interest in AI continues to grow.

About Signify Premium Insights

This Insight is part of your subscription to Signify Premium Insights – Medical Imaging. This content is only available to individuals with an active account for this paid-for service and is the copyright of Signify Research. Content cannot be shared or distributed to non-subscribers or other third parties without express written consent from Signify ResearchTo view other recent Premium Insights that are part of the service please click here