Tag Archives: Microsoft

Signify Premium Insight: From ‘Base Camp’, Nuance Readies for Assault on Fully Ambient Solution Peak

Nuance Communications’ recent announcement of its new AI-automated clinical documentation app is the latest in a slew of innovations from the Microsoft-backed company. 

Nuance describes DAX Express as a ‘workflow integrated, fully automated clinical documentation application’, adding that it is the first solution combining ‘proven conversational and ambient AI with the newest and most capable generative AI technology, GPT4.’ 

In a voice dictation market that has often failed to live up to hype and (unrealistic) expectation, DAX Express potentially brings the holy grail of a ‘fully ambient solution’ one step closer.  

The Signify View 

DAX Express nudges the voice dictation market further along the track. Nuance now occupies a metaphorical ‘base camp’, the peak of fully ambient solutions now tantalisingly in view. Nuance occupies this rarefied space alone, its competitors still acclimatising to the relentless pace of the race.  

Nuance says DAX Express will generate draft clinical notes ‘automatically and securely in seconds from exam room or telehealth patient conversations for immediate clinical review after each patient visit’. It adds that clinicians ‘will benefit from the seamless capabilities of Dragon Medical One, DAX and DAX Express, which are tightly integrated with EHRs, beginning from pre-visit through post-encounter, reducing cognitive burdens and addressing staff shortages’. 

If true, it will be music to the ears of a healthcare industry for whom the reality of voice dictation in the EHR workflow has yet to scale serious heights. Despite rapid technological advances and the promise that innovations like DAX Express hold in transforming EHR workflows, Nuance (and its rivals) must still convince sceptics. And there are many. 

Trust Issues 

Buyers and users Signify Research speaks to confirm that many clinicians still manually type up their own notes in the absence of what they see as viable alternatives. Some complain of ‘unacceptable’ delays between voice entry and order activation. Others state that Nuance’s Dragon software ‘isn’t strong enough inside Epic’ (a reference to Dragon’s integration in Epic’s EHR). 

Most voice dictation technology still requires substantial manual input, either by the physician or transcription service providers. Interviewees say automated transcription quality can be poor, and even when it is good, the transcript must still be ‘translated’ by a human into terminology that the EHR can decipher, and then manually coded into the EHR’s structured data fields. 

Hospital buyers say many staff will start using voice dictation tools with good intentions, but quickly fall back into familiar workflow habits and established methods, due to disappointment with solutions. And some clinicians are also reluctant to do away with medical secretaries, whose job is much more than simply typing up clinician notes. 

A fully ambient solution must not only address these barriers but also accurately capture the patient-physician conversation, and then produce ICD-10 and SNOMED codes for diagnoses, prescriptions and reimbursement claims. The real value here lies in turning ‘unstructured’ data from an encounter into ‘structured’ data in the EHR. No solution does that yet, although Nuance DAX brings it closer to fruition. 

Mission to Convert 

If anyone can convert the doubters and bludgeon their way through the barriers to acceptance of voice dictation solutions, Nuance is the strongest contender.  

Backed by Microsoft, it has the financial and technological muscle to bring sophisticated solutions to market. The company also picks its partners well – Nuance DAX is integrated with world-leading EHR vendors like Epic and Oracle Cerner and their massive installed bases. These relationships run deep: Seth Hain, a Senior Vice President of Research and Development at Epic recently said GPT4 had ‘shown tremendous potential for its use in healthcare, and it will be used to help physicians and nurses spend less time at the keyboard and help them investigate data in more conventional, easy-to-use ways.’ Such ringing endorsements reinforce Nuance’s influence and, once it comes to market, DAX Express will enter the field of play on very solid ground. 

Much Ado About Nothing? 

We wrote very recently about the prospects for AI-powered start-ups (see this Insight) in this market. We concluded that they would struggle to compete with Nuance or other leading vendors like 3M and Dolbey. Given Nuance’s snowballing dominance, perhaps the more pertinent question now is how much more of a wedge will DAX Express drive between Nuance and its nearest rivals?  

Much will depend on whether these rivals can leverage technology from the likes of Microsoft and Google via integrations, but that route is complicated as it would require using underlying technology from some of their biggest competitors. 

It will take something momentous to slow Nuance’s momentum. Having said that, DAX Express will not make its commercial debut until 2025, and that leaves the door slightly ajar for others to make their play. We’re also basing this assessment on the promise offered by DAX Express, which is partly based on the company’s marketing and the disruption, excitement and, in some cases, alarm that ChatGPT has created over the last couple of months.   

Could Google be one of the ‘others’ we refer to above? Not to be outdone by Microsoft/Nuance, it launched Bard, its answer to ChatGPT, just days after the DAX news. Google is actively developing products, via CareStudio and other initiatives, to try to streamline clinical note interpretation in the EHR, which it hopes can challenge Nuance in this market. Elements of CareStudio have now been integrated into MEDITECH’s EHR solution, although to-date this has focused on search functionality. However, this provides a potential springboard for Google that could challenge Nuance. Although not confirmed, it is reasonable to assume that Bard will be integrated into Care Studio if Google continues its strategy of enhancing the smart notes functionality of CareStudio. However, Google has only a limited installed base of legacy solutions and any disruptive influence from it, or other big tech, on Nuance and the voice dictation market at large, will be minimal for now. 

Dollars and Sense 

Although buyers and users we speak to are almost unanimous in their belief in the potential of ambient voice recognition, the technology will remain a relatively expensive ‘luxury’ for the foreseeable future, out of reach of many smaller hospitals and primary care practices. While there are myriads more price sensitive marketplace App Store solutions for bolt-on to an EHR, nothing beats the power of EHR integration and the ability to capture unstructured data. Deep integrations with companies such as Epic, and its ‘Hey Epic’ functionality, offer this and strengthen Nuance’s competitive position on this front.  

Cautious Optimism 

Even as DAX Express gears up to enter the market in 2025, and despite the impressive strides Nuance has made in the market to date, sentiment in the wider voice dictation market in 2023 can be best described as cautiously optimistic. 

There is an inevitability about the journey towards fully ambient.  Even those buyers and users that Signify Research has interviewed on this topic via its Decision Maker Research, whose experiences with voice solutions have been less positive to date, almost unanimously acknowledge the technology’s emerging capabilities – whether that’s ambient listening or voice activated querying and searching – or, its benefits in reducing physician burnout. 

Amid the chatter (pun intended!) surrounding voice dictation, expectations were raised to unrealistic levels. The healthcare industry must shoulder some of the blame for falling for the hype and succumbing to peer pressure. 

But perhaps, at last, the hype and hyperbole are justified. In DAX Express and GPT4 technology, Nuance is considerably upping the ante. As it waits at ‘base camp’ ready for its assault to a fully ambient solution, it is proving that, in this case at least, words are speaking as loudly as actions.  

Signify Premium Insight: What Signify Research Expects in 2023

With the distractions and disruptions of Covid finally fading, digital health enters 2023 with a clarity of vision, if not full predictability, not enjoyed for three years.  

The broader underlying trends driving digital health – for example, the digitalisation of health systems, hospital IT upgrade investments and a shift towards value-based care (VBC) models in the US – continue. These have the overarching goal of reducing the costs of healthcare provision, streamlining workflows, improving patient care and expanding healthcare services reach. 

For some digital health players, particularly the disruptors who entered the market (with mixed success) directly in response to breakneck pandemic-driven demand, the ‘end’ of Covid creates new challenges to their models. In the highly fragmented remote patient monitoring (RPM) market, in particular, some companies will fall by the wayside. For others, the relative calm of 2023 buys time to plan with greater certainty and implement strategic plans. As such, specific trends will emerge in digital health in 2023, which we outline here. 

Big Tech Becomes Mainstream   

After almost a decade of knocking on digital health’s door, Amazon, Google and, to a lesser extent, Microsoft will finally make the leap from pure cloud play into healthcare IT and services. Amazon and Google will build on recent acquisitions and product launches to cement their position as disruptors in healthcare IT and services. 

VBC will drive Big Tech’s move into the mainstream. Amazon’s HealthLake data aggregation solution, launched in late 2020, will kick on. We also foresee Amazon making more acquisitions this year to flesh out its portfolio. This follows its $3.9B acquisition of primary telehealth concierge business One Medical last year.  

VBC will also be the springboard for Google’s digital health strategy in 2023. The company will expect to leverage its $1B Verily investment, the launch of an AI-powered medical imaging suite last October and its Care Studio platform. These, along with an integration tie-up with EHR vendor MEDITECH, promise to disrupt the existing IT vendor ecosystem in 2023. 

In the public cloud market, the power struggles between EHR vendors and Big Tech, which have been a feature in recent years, will make way for a more collaborative approach this year. Partnerships between Google Cloud and Epic (in the US), and Amazon Web Services (AWS) and Dedalus (in Europe) will accelerate the adoption of hospital EHRs to the public cloud (from a relatively low base of just 15% in the US in 2022, for example). As more hospitals complete their migration journeys, hospitals will in 2023 start to realise lower operating costs, total cost of ownership and improved data security. Increasingly analytics and artificial intelligence (AI) will play an influential role in this, particularly in the early stages in the curation of data to support clinical decision making. Big Tech’s role as a conduit for IT vendors delivering software to provider and payer organisations will also evolve during the year.  

VBC Reboot Takes Root  

Having been hamstrung by Covid for three years (after underwhelming and underperforming for the best part of a decade), the US VBC market will finally shake off the shackles and reach its true potential in 2023. The value of the global VBC market is forecast to reach $11.3B in 2025 (with the US accounting for 80% of that), from $6.8B in 2021.  

Large health systems, Integrated Delivery Networks (IDN), big tech, big retail and major EHR vendors will all drive VBC services adoption. Business models will be increasingly predicated around VBC, and new revenue streams realised. 

IT will play a central role in this, especially investment in risk stratification, care management and patient outreach tools. 

US retail health clinics are aligning with this new VBC reality (see also below). This year will also see pharmacy retail giants expand their primary care services to more of the population than ever before. It is forecast that these clinics will, in 2023, account for double the share of the US primary care market than they did in 2022, deploying their financial firepower to develop the scale needed to improve patient experiences and reduce total healthcare costs.  

As more large retail clinics offer primary care services and IDNs continue to acquire practices and hospitals, there will be a continued reduction in the number of small, independent family practices and standalone hospitals in 2023. 

Size is Everything: Consolidation Around Big EHR Vendors to Pick Up Pace    

The trickle towards procurement around large hospital EHR vendors, underway over the last two years, will become a more pronounced stream in 2023. This will widen the gap between the likes of Epic (in the US) and Dedalus (in Europe), and tier-2 vendors. 

In Europe, consolidation around big EHRs will be notable in Germany, where the €4.3B Hospital Futures Act (KHZG) hospital digitisation initiative is being executed. KHZG funding allocations are based on the vendors meeting criteria around 11 main pillars covering diverse technologies. Big EHR vendors hold the cards in this. 

Oracle Cerner is poised to capitalise on this trend in the UK, where the NHS is encouraging Acute Trusts that are part of the same Independent Care System (ICS) to move towards a common vendor for EHR. Oracle Cerner is already well placed in this market. However, the company has challenges elsewhere this year, and the market will be watching its steps closely. It continues to grapple with a steady erosion of US market share to rival Epic, as well as persistent problems with its flagship Millennium EHR solution on a multibillion US Department of Veterans Affairs contract. Cerner, which was acquired by Oracle last year, must also find a way to stage manage fallout from software multinational SAP’s recent announcement that it would pull support for Oracle Cerner’s i.s.h.med EHR solution by 2030. This year, we expect Oracle Cerner to respond to this by offering clarity to its customers on its intentions for i.s.h.med. Until it does, the vultures will be circling.  

Household Names to Become Synonymous with US Primary Care  

Walgreens, CVS and Amazon will become household names in primary care provision in the US in 2023, deploying their unrivalled physical reach and supply chain and logistics expertise to reach more of the US population than ever.  

This follows a 2022 of headline acquisitions including Walgreens company VillageMD’s $9B purchase of urgent care provider Summit Health, and CVS’ $8B buyout of Signify Health. As the US retail pharmacy chains assemble the technology (for example risk stratification, analytics and workflow tools, as we discussed earlier) needed to transform primary care, these, alongside healthcare systems, payers and independent practices, will begin to make more money from VBC. 

The retail giants will, however, face challenges in 2023. These include how to handle higher acuity cases, and how to manage the connection between healthcare provision and securing reimbursement from government and commercial payers. 

Telehealth and RPM to Change Tack   

Telehealth and RPM will adopt a more strategic stance in 2023, replacing the reactive, quick-win approach of the Covid era. Cementing themselves in a maturing VBC ecosystem, telehealth and RPM vendors will support VBC delivery. Real time remote patient data and video/virtual consultations will be at the heart of this effort. 

We expect more acquisitions, partnerships and product launches from telehealth leaders Teladoc and AmWell, as well as VBC pioneers Innovaccer and Health Catalyst. As telehealth and RPM becomes more mainstream and more consolidated, the emphasis here will be on developing toolsets that will manage patients and serve VBC contracts via virtual care.  

 

 

Signify Premium Insight: Amazon in Prime Position with HealthLake Plans

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Last week Amazon made clear its intentions in medical imaging, announcing two new capabilities in HealthLake focused on medical imaging and analytics.

The Seattle-based tech firm says that the abundance of data created in medical imaging is slowing down decision-making in hospitals. In response, the cloud vendor has launched Amazon HealthLake Imaging, which is designed to expedite medical imaging retrieval in clinical workflows, as well as powering existing medical viewers and analysis applications. This, the vendor claims, can result in considerable cost savings.

However, with Microsoft’s Nuanced-derived healthcare expertise, Google’s recent moves into medical imaging, and Oracle’s inherited incumbency via its Cerner acquisition, has Amazon done enough to win the interest of providers?

The Signify View

Tech giants’ interest in healthcare is nothing new. Amazon, like other Nasdaq darlings, has made various approaches to different healthcare markets over recent years, from the launch, and subsequent shuttering of Amazon Care, a primary care service, to its Amazon Pharmacy play. Recently however, several of the world’s biggest tech firms have redoubled their focus, setting medical imaging firmly in their sights. After Microsoft’s acquisition of Nuance, which closed in April 2022 and Google’s recent launch of its Medical Imaging Suite, Amazon has become the latest tech firm to make a concerted imaging effort.

Like Google’s launch before it, the launch of Amazon AWS’ HealthLake Imaging suite is not festooned with brand-new, never-before-seen capability. Instead, many of the tools and partnerships included in the package have been available previously in various guises. However, the new packaging highlights Amazon’s increasing focus on selling cloud services to acute and outpatient providers as interest in, and understanding of the technology increases. While many of the tools have been previously available, it would likely have taken an already knowledgeable user at a provider to capitalise and work out how best the range of tools offered by Amazon could be applied to their own imaging departments. The packaging and positioning of Amazon’s latest effort, however, should help providers more clearly appraise the potential of cloud adoption for their imaging departments, easing the transition for more mainstream providers.

Such positioning, however, is only enough to make AWS more accessible. What Amazon hopes will encourage providers to commit, is its boasts about price. In its blog detailing the new solution, Amazon estimates that HealthLake Imaging helps reduce the total cost of imaging storage by as much as 40%.

The Cost of Delivery

This figure, as is often the case with those used in marketing materials, should be taken with a pinch of salt. No doubt Google, Microsoft and other cloud providers harbour some technologies which are also designed to help reduce the cost of storing images on the cloud. However, the fact that Amazon has publicly stated the savings that providers can expect indicates the vendor’s confidence in its ability to offer providers an affordable option.

Cloud adoption, can, after all be stymied by the cost, or at least perceived cost, of making the transition. While this is less of an issue for flagship academic providers and the premium they are willing to pay to have the latest and most experimental technology, for the acute and outpatient providers, cost is a far greater barrier. If Amazon is to truly capitalise on the revenue-making potential that cloud provision in medical imaging offers, however, this mass market is ultimately where the vendor must target.

By highlighting the cost-savings providers can expect to make if they adopted Amazon’s imaging cloud solution, even if the actual savings delivered are not quite at the quoted 40%, the vendor hopes to overcome the perception that cloud is prohibitively expensive, and at least engage mainstream providers in a conversation.

Even with such savings, cloud could still prove too expensive, depending on the volume, complexity and standards of the data held by the provider, but, crucially, these factors stem from providers’ individual circumstance. Moreover, the shift to cloud for imaging can also require substantial investment in network infrastructure (e.g. local bandwidth) to leverage the benefit of cloud-based performance.  While there will be providers for whom AWS’ HealthLake Imaging product is still too expensive, the advertised and expected cost savings, will likely be enough to convince some providers, particularly when other factors, such as cybersecurity or the requirement to deliver capability across complex outpatient networks, for example, are considered.

Choosing Between Sellers

At present, the key differentiators between cloud providers are still minimal. While different providers may have different strengths, individual niches where they excel and particular partnerships that will ease certain use cases, any of the major cloud providers can, in essence, offer almost the same broad capability in cloud services for imaging. However, despite this comparability, leading cloud vendors are still beginning to better arm themselves and shape their identities in an attempt to build links to certain customer bases. Amazon’s focus on efficiency and the cost savings it offers is one such strategy, a play that, as highlighted, stands to place cloud capability firmly in the reach of acute and outpatient providers.

Other cloud providers also have their own strengths, however. Microsoft’s Azure finds itself in a particularly strong position, largely thanks to its acquisition of Nuance. Most obviously, that acquisition gives Microsoft a direct line to a claimed 77% of hospitals in the United States. However, that acquisition also fits in with Microsoft’s broader portfolio. It is, after all, not difficult to see the possible synergies with Nuance’s Powerscribe solution (and nascent, yet impressive DAX ambient reporting), combined with Microsoft’s ubiquitous tools, including Teams videoconferencing. This could bring ambient listening to all consultations and telehealth visits, leaving essentially every interaction structured and stored on the cloud along with relevant medical images.

Google, meanwhile, may lack the Nuance play that Microsoft can lay claim to, and it may lack the relentless operational focus that Amazon has developed through its commerce heritage, but its expertise in search, AI and broader image analysis, will give its own strengths, making it, for example, an attractive provider for leading academics focused on using their data libraries to develop their own AI algorithms.

Expected Arrival

In most cases though, these are concerns for the future. At present many providers aren’t considering long-term population health-focused imaging data repositories in the cloud, or developing their own AI tools. Instead, most providers are looking to the cloud for improved accessibility, efficiency, security and cost.

With these basics amply covered by all leading cloud providers, at present, which cloud provider hospitals choose is likely to depend more on customer-context, rather than unique capabilities. It doesn’t necessarily matter, for example, if a radiology department harbours a desire for an AWS imaging IT platform deployment if it is part of a large hospital network, which has just agreed an enterprise-wide deal with Azure. Almost all leading Imaging IT software vendors have some degree of flexibility on cloud-provider for hosting their applications, making cloud adoption often an enterprise, as opposed to departmental, decision.

By a similar token, hospitals in regions where there are restrictions on public cloud provision, where there is a preferred partner or a requirement for in-region datacentres, for example, have needs that trump any smaller local preference for individual cloud providers.

Despite these considerations, there is one area where AWS might have an advantage. AWS has arguably worked its way into a broader group of informatics partners (and larger market share) as “preferred” cloud provider, than some of its chief competitors. While some providers will disregard the partnerships their IT vendors have fostered, for many, simply adopting their imaging IT vendor’s preferred cloud provider partner will prove to be the most straightforward route to transition to the cloud, and as such, all else being equal, will be the one that is chosen.

There are some factors that will become increasingly important over time, such as the ability to manage and retrieve unstructured data, the ability to offer analytics so providers can use their cloud resource most efficiently, and even the adoption and ingestion of different data standards from across an enterprise imaging platform. However, in the near term, such subtleties are far from a provider’s priority.

In the near-term one of the main priorities, particularly for many mainstream providers, is cost. As such, Amazon’s claims of cost savings along with its repackaged and repositioned offering may make it an obvious choice for some. And for now, when fresh, first-time opportunities abound, that should be enough for the Seattle-based tech giant to deliver.

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Signify Premium Insight: Google Searches for Imaging Success

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 Research. To view other recent Premium Insights that are part of the service please click here.

In its most high-profile bid to capitalise on the medical imaging market to date, Google has launched a new cloud-based medical imaging suite.

The suite is comprised of several tools, centred around Google Cloud’s image storage and Healthcare API suite, including NVIDIA’s MONAI for AI annotation and automation, BigQuery and Looker to help providers better navigate imaging datasets and Vertex AI to help accelerate the development of scalable AI models. Google says that by offering these tools in one product, it hopes to make diagnostic data more accessible and interoperable, while also readying providers for the development and implementation of artificial intelligence programmes.

While there has been significant promotion of the new suite, many of the tools were already available individually. What, therefore, does the launch really have in store?

The Signify View

Some well-justified scepticism will no doubt surround Google’s launch of its Medical Imaging Suite. The company has looked to expand its role in healthcare beyond feeding the imaginations of hypochondriacs several times, introducing Google Health in 2008 and discontinuing it in 2012, before rebooting it in 2018 and dismantling it again in 2021. It has, in the past also looked to develop front-line AI tools from its DeepMind division, consumer health products via its FitBit acquisition and apps for medical research among others. None of these tools, however, has yet made the significant, lasting impact that was expected by one of the world’s best-known firms.

Despite the sometimes inconsistency of these attempts, however, the company has been making headway in medical imaging with another, broader part of the business.

The adoption of cloud capability in medical imaging is still nascent, but some cloud providers, including Google, have become trusted partners for many earlier adopters. While Amazon Web Services (AWS) and Microsoft’s Azure are the public cloud providers that have seen the most uptake in medical imaging so far, Google Cloud, having reached some significant agreements with notable imaging IT vendors such as Visage, and Change Healthcare, as well as some notable and well-respected providers such as Mayo clinic, is hot on their heels.

Despite this, however, the Alphabet subsidiary’s presence in the market has been less visible compared to that of Azure and AWS. The launch of the Google Cloud Medical Imaging Suite highlights an end to this quiet and heralds the start of a more aggressive approach.

Remaining Relevant

Making such a transition has become increasingly important for the cloud provider. While Google has made progress, as AWS and Microsoft begin to pull away, Google misses its window to capitalise on the first phase of medical imaging cloud adoption. This is particularly true as Microsoft begins to capitalise on its Nuance Communication acquisition, for example, while Amazon continues to leverage its already extensive list of AWS partners.

Google will not countenance these advantages overnight, particularly given that on the face of it, its Medical Imaging Suite, which no doubt will be preferred by some customers with some specific use cases, is not a revolutionary leap. It may offer some advantages, but there is nothing truly ground-breaking that stands as a major differentiator compared to AWS or Microsoft.

That isn’t to say that there aren’t any aspects that aren’t attractive. The emphasis Google has placed on its AI offerings, for example, could swing some providers in its favour if they are looking to capitalise on their medical imaging data and facilitate its use among AI developers or indeed develop their own tools in-house. Its reputation for AI development could, in some cases aid its cause. This is especially true as many of the customers which have chosen to use Google public cloud are highly influential academic hospitals.

Reputation Management

Reputations work both ways though. While Google holds a staunch reputation for technical prowess, there are other factors that may give potential customers pause for thought. Chief among them are several high-profile incidents and agreements surrounding Google and identifiable patient data, including data from the Royal Free NHS Trust in London, and a deal with US healthcare provider Ascension. In these and other cases, Google’s actual culpability is somewhat moot, with the shadow of data insecurity, even if entirely unjustified, potentially enough to push a would-be customer in the direction of one of Google’s competitors.

Another concern for any potential customers considering turning to Google for their cloud provision is the vendors’ long-term commitment to medical imaging. While the more general aspects of Google’s cloud offering will continue to be supported, Google’s repeated high-profile salvos into healthcare, and the associated withdrawals, give the impression of a vendor that has no compunctions about pulling out of a market, reorganising its business units and ending its involvement in certain segments with little notice. Such an assessment may be unfair, particularly given that other cloud providers including Microsoft and IBM have both made equally high-profile pushes and retreats from some healthcare markets, but, with cloud representing a long-term investment, such concerns may weigh on decision makers’ minds when it comes time to signing on the dotted line.

These spectres are not impossible to exorcise, however. Google along with its peers are increasingly forging partnerships with imaging IT vendors in order to effectively create a joint sales strategy. Cloud providers, alongside vendor partners, are combining their efforts to sell to hospital networks, enabling the partners to highlight the benefits associated with a public cloud deployment, while also utilising the expertise from the imaging IT vendor in radiology.

Broader Responsibilities

Such evolution in sales strategy is also being mirrored in service provision. Along with the broader medical imaging market, deals are increasingly transitioning to managed service agreements. In terms of cloud deployments this is beginning to manifest as public cloud providers managing deployments much more closely, with for example, infrastructure and costing falling under the cloud provider’s remit.

Whether any of these factors are enough to sway a decision towards or away from Google, and indeed what influence they ultimately have on a providers’ choice of public cloud vendor, is still overarchingly dependent on individual deal context.

Google’s new Medical Imaging Suite will make the firm’s solution more attractive to many vendors, but any advantages will likely be overshadowed by much more significant influences. A deal’s locality, for example, may be a far more important factor in a provider’s decision if that provider is in a country which stipulates that cloud providers must have datacentres within-region, for instance, or if it is in a market sector that already has a preferred supplier.

As such, there are in most cases considerations far more significant than the differences between comparable cloud competitors. That, however, does not mean that Google’s latest efforts do not represent a significant step.

While the launch of its Medical Imaging Suite is unlikely to reverse the lead that AWS and Microsoft’s Azure have for public cloud departments, it does show Google’s intention. It highlight’s the vendor’s ambition in the space and lays the foundation upon which it can build over the coming years. Moreover, the launch also enables Google to remain competitive as other cloud providers such as Oracle and IBM which have already made their intentions clear, begin to more aggressively promote their own solutions.

Or, to put it another way, Google’s launch ensures it remains on the first page of search results, but, it has not yet offered anything to warrant rapidly climbing through the rankings.

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Signify Premium Insight: IBM Watson’s Path From Jeopardy to Jettison

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 Research. To view other recent Premium Insights that are part of the service please click here.

IBM proved right well publicised industry rumours last week in announcing that it is selling its healthcare data and analytics assets, which currently fall under the Watson Health business.

The assets have been purchased by investment firm Francisco Partners, and include extensive data sets, products, and image software offerings, including the Merge product line and imaging AI products. Financial details of the deal have not been disclosed, although Bloomberg places the value of the sale at more than $1bn.

The deal is expected to close in the second half of 2022. Existing customers will continue to be served by the new independent company, while the current management team is also expected to remain in place.

The Signify View

The news that IBM is pulling out of healthcare might, at first, seem incongruous given that other recent stories have seen tech companies doing the opposite. Last April Microsoft acquired radiology transcription specialist Nuance for almost $20bn, while more recently Oracle announced it was buying up EHR vendor Cerner for close to $30bn. Other rumours, meanwhile, such as those suggesting that Amazon is looking to establish a presence in healthcare with an acquisition, potentially of M*Modal, also contribute to the overall sense that healthcare presents a significant opportunity for tech vendors.

IBM’s divestiture, however, brings its strategy more closely in alignment with its peers than news of a sale would suggest. What has changed is that, like Microsoft, Oracle and others, IBM is no longer trying to capitalise on departmental healthcare, and is seeking to derive revenues instead from the provision of cloud architecture and technical support for AI development, a path that promises a  larger return on investment. As highlighted in our previous Premium Insights, Microsoft’s move on Nuance, and Oracle’s move for Cerner, are deals which, in essence, give the technology firms an expanded customer base in which to sell their core cloud products. IBM will now be able to bring the same focus to the healthcare market as its cloud competitors, providing the architecture and environment for healthcare-specific vendors to develop cloud-based products, without developing and selling imaging IT products itself.

Solving Problems With Spending

This indirect approach to healthcare, which sees the industry simply become one of a number of potentially lucrative markets for IBM’s broader cloud offering, does however represent a marked shift in strategy. In 2015, when IBM launched Watson Health, it almost immediately began buying up companies, including Phytel, Explorsys, Merge Healthcare and finally, Truven Health Analytics, during its first year of operation. Overall, reports suggest IBM spent around $4bn in establishing the new unit, which is, at present, bringing in around $1bn in annual revenue. A figure that shows no significant change compared to the combined revenues of the constituent vendors when they were acquired.

When these vendors were acquired, IBM’s vision was to revolutionise healthcare, and utilise the power of data to solve some of the biggest challenges facing healthcare. These ambitions were never realised. While the vendor has released some innovative technology and enjoyed some small successes, it ultimately failed to live up to IBM’s own, considerable hype. New initiatives, such as Watson for Oncology, failed to live up to expectations and were mothballed.  Not only was healthcare not revolutionised, but IBM seemed, in many instances, to underperform in more established product sectors relative to its competitors. The legacy Merge imaging IT business has hung on to some key customers but has struggled to grow share or win new customers in core markets in the face of stiff competition from vendors such as Visage and Sectra. In emerging technology product sectors, IBM has also faltered. When it launched its AI marketplace, for example, not only was it behind several other imaging IT vendors, it featured algorithms from just five partners. Similarly, with its Imaging AI Orchestrator platform release; with just one confirmed partner and only a small number of other potential partners, the release was relatively underwhelming compared to IBM’s AI promise.

Resultantly, instead of heralding a revolutionary new era in healthcare, Watson Health started to become a disappointing distraction, diverting attention and resources away from IBM’s other interests, even potentially impacting IBM’s reputation. Despite all the original promise and potential, when viewed in such a light it is no surprise that IBM has sought to cut its losses and shed the unit. Although arguably on a more significant scale, IBM isn’t the only technology company to have failed to revolutionise healthcare, with Microsoft, Google and others also having to renege on earlier promises and pull back from well-publicised healthcare investments spectacularly.

Where Next?

As well as highlighting IBM’s strategy, the sale also raises questions as to the future of the divested assets. In this regard, Francisco Partners has several options. One scenario would see the new owner try to succeed where IBM hasn’t. This is unlikely, although Watson Health’s new-found distance from one of technology’s longest-established giants may offer it a new level of agility and freedom to focus, while Francisco Partners may be keen to invest into it. A second option could see Francisco Partners maintaining the vendor as essentially a managed asset. Watson Health’s constituent vendors were, after all, individually successful before they were combined, Francisco Partners may choose to streamline where possible, but otherwise allow its new acquisition to continue delivering revenues, safe in the knowledge that it is relatively secure investment in a stable and saturated market.

A third, more active option, would see Francisco Partners paring off the imaging IT part of the business, which was formerly Merge Healthcare. Not only does this segment sit apart from the rest of the divested assets, Watson Health’s imaging IT business could be an attractive proposition for the right buyer. As well as a market share of around 7% in the US radiology IT market in 2020 (and just under 4% globally), the unit brings a fully featured enterprise imaging solution to a new owner, with platforms to target acute care, outpatient imaging sites, a cardiology solution, the recently released workflow orchestration solution, AI capability and a large amount of valuable data.

Several vendors could be interested in such a package. Intelerad would be among the obvious candidates, with the additional market share taking the vendor straight into the top five of imaging IT vendors in the US. IBM’s technology would also strengthen Intelerad’s offering, creating an opportunity for Intelerad  to retire or replace its legacy PACS component and bolster its larger data management capability, one of Intelerad’s present omissions. Intelerad is also in the midst of a particularly aggressive acquisitive run, having recently purchased Ambra, Insignia Medical Systems, and Lumedx among others. Moreover, IBM has a substantial customer base in the large acute hospital market, an area for which Intelerad has been actively pursuing. With the might of its private equity owners HG Capital, and an obvious appetite for acquisition, Intelerad could be a good match.

The imaging IT market in the US is one which is well-established and saturated, providing very little in the way of organic growth opportunities for vendors. With this being the case, the prospect of an additional 7% market share in the US could also appeal to other vendors. There are a limited number of potential suitors that have both the available funds to make such an acquisition, and the business strategy to acquire and integrate rather than natively build. This still leaves some big names, such as Siemens Healthineers which has been losing share in the US market, or Fujifilm, which may be attracted with the prospect of an instantly increased footprint, or even a smaller vendor, such as Mach7 Technologies, looking to boost its presence and portfolio as possible buyers should Francisco Partners decide to sell. Ultimately, the imaging IT market in the US has long been on course for further consolidation, especially as deal volumes fall, deal sizes increase and contract terms lengthen. Assuming Francisco Partners have been robust in its due diligence and market analysis ahead of the deal, it will know the IBM Merge business line could be a tempting asset for a vendor with ambitions of playing at the top table of imaging IT.

Back to Reality

The sale of Watson Health is the long-expected end to one of the most ambitious projects in imaging IT and wider healthcare. This end was, however, somewhat ingrained in the start. IBM committed to healthcare, but, like some other large tech firms, did so with the boasts and bravado that may please investors but fail to acknowledge the complexity of the healthcare market. Instead of looking at the nuance, the finer detail and clinical intricacy of healthcare, IBM purchased capability and gave itself impossibly broad targets. Making progress in healthcare is hard, it is slow, and what’s more, it isn’t necessarily all that profitable. The humbled IBM will now have a much better appreciation of that.

For the divested imaging IT unit meanwhile, although the future is uncertain, it harbours a lot of value. It has a sizeable market share, competent technology, and continuing development as illustrated by its releases at RSNA 2021. Freed from Big Blue’s orbit, the business formerly known as Merge now has the chance to focus on the detail and the nuance. It may never revolutionise healthcare, but the chance to work on smaller, more tangible problems means that its future could be bright nonetheless.

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