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Signify Premium Insight: Making Plans for Pathology

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One of the motivations providers have for increasingly looking to adopt enterprise imaging solutions is to bring disparate departments together. For some vendors, this requirement means venturing into departments that they previously had no exposure to. Sometimes these transitions are relatively straightforward, with departments already meeting the criteria necessary for a shift to enterprise imaging. In other cases, however, the challenge is far more substantive. In pathology, for example, the general lack of digitisation, the poorly defined return on investment, and the nascency of the technology means the integration challenges facing vendors are very significant. However, some vendors are finding ways to rise to the occasion, with the potential rewards providing significant motivation.

The Signify View

Interest in digital pathology has been steadily increasing over the last decade. Some countries, such as the Netherlands, have wholeheartedly embraced the technology, while others, such as the US have been far more hesitant in their rollout. What many of these countries needed was a catalyst to hasten adoption.

Such a prompt came in the form of the Covid-19 pandemic in 2020, which highlighted the disparity in digitalisation between digital pathology and other departments. Many radiologists in mature markets, for instance, were able to work at home almost immediately thanks to the near complete digitisation of their field. Pathologists, meanwhile, had to continue to travel to hospitals, despite restrictions and the spread of Covid. This gave impetus to plans to digitise pathology labs and finally tackle the challenges that had been holding back the market’s progress.

These challenges are not insignificant. Digital pathology’s lack of standardisation makes it difficult for providers to invest heavily in both hardware and software, for fear that their investments will become obsolete as standards change or that they would not be able to take advantage of improved products from other vendors. Another hurdle is the size of the images produced, with files of 2 GB – 15 GB depending on the magnification, far higher than radiology images, which range between 0.02 GB and 0.05 GB for an X-ray, to 0.5 GB – 3 GB for a CT scan, for example. Whether stored in on-site servers, or in private or public clouds, this represents a significant cost that must be shouldered.

Return to Basics

A more fundamental challenge, however, lies in demonstrating the return on investment. When a hospital shifted X-ray imaging to digital radiology, it was able to demonstrate a clear cost saving given the X-ray film processing consumables were no longer needed. This is not the case in pathology, where providers will continue to face the costs of producing a slide as before, but, in addition, will also face the cost of expensive hardware, expensive software and image storage and transfer.

Digital pathology does offer opportunities for cost savings, but these are often poorly defined. For example, downstream care pathways benefit from ready access to images for clinical review (tumour board setting), while secondary consult and peer review is more flexible and efficient with digitalisation. Furthermore, the need for transport of glass slides is reduced and with flexible digital storage models, long-term archiving of glass slides can be reduced or made redundant. However, many of these benefits are hard to measure within conventional working practices, leading to tentative adoption.

Perhaps the greatest saving with digitalisation relates to many healthcare providers’ most prized and increasingly rare assets – its pathologists. Pathologists are in short supply, and digital workflow software and new AI tools which can automate time-consuming tasks, allowing these doctors to attend to cases more efficiently, offer a clear return on investment. However, in the case of AI, digital nascency has hindered development, such is the limited availability of training data. It will therefore be a long time before these AI-driven resources returns can be seen.

There are some positive advancements being made with regards to digital adoption however. Among the most significant is the recent provision of Class III CPT codes from the American Medical Association, which go into effect from January 2023. While these codes do not grant reimbursement for the use of digital pathology, they do allow additional work and service requirements associated with digitising glass slides to be tracked, representing a likely precursor to reimbursement.

Enterprise Opportunity

As such advancements facilitate and accelerate the uptake of digital pathology solutions, the opportunity for enterprise imaging vendors to capitalise also increases. For several significant lab equipment and consumables vendors offering digital pathology solutions, software, and even in some cases scanner hardware, was not a priority. Instead, it was merely a complementary business to their strong consumable products. Unlike the companies which are encumbered by this legacy, enterprise imaging vendors are free to be more disruptive within digital pathology. As healthcare providers are looking for more holistic imaging solutions, and decisions are increasingly being made at a higher level within a hospital, at a c-suite rather than departmental level, enterprise imaging vendors have the opportunity sell cross-department solutions. Offering a solution which includes significant digital pathology capability will appeal to a provider’s c-suite, helping them realise their ambitions of digitalising their pathology departments and enabling pathology to be used more closely alongside other types of medical imaging.

Different vendors are ensuring they can offer this capability in different ways – some such as Philips and Sectra offer digital pathology solutions in-house. This is a strategy which can offer advantages in the long-term, as these vendors can keep all revenues from digital pathology deals, while also having meticulous control over strategic direction and product development. This, however, comes at a cost. Significant time and investment is required to develop competitive solutions, which may still appear too late to trouble more established competition. What’s more, developing a solution in-house can also lack flexibility. Given adoption of digital pathology remains very nascent, particularly in some key markets such as the US, a vendor risks expending significant resource on developing a system, only to discover that it doesn’t meet the needs of potential customers.

An alternative strategy which, in the near term at least seems preferable, is the partnership route. Siemens Healthineers’ partnership with Proscia and Fujifilm’s partnership with Inspirata are the most high-profile examples of this strategy. In both instances an established medical imaging vendor is bolstering its enterprise imaging offering with tried and tested expertise from digital pathology specialists. While such partnerships lack some of the advantages of a solution developed internally, increased flexibility makes it a smart choice, certainly in the near to mid-term.

A third option is acquisition. While such a move requires greater commitment, the longer-term opportunity of digital pathology, in addition to the relative affordability of many digital pathology vendors means this could also be an attractive route. If a vendor can ensure it makes the right acquisition, in doing so it could pay dividends in the long term.

The Need for an Answer

Regardless of which strategy is selected, what is increasingly important is that a strategy is selected. One of the reasons Siemens Healthineers made a deal with Proscia when it did is that deals in Western Europe increasingly include digital pathology as key component. These providers, and for provider in the US also adopting the requirement, are stipulating pathology provision in deals, but may not wish to include digital pathology as part of a broader enterprise imaging strategy immediately. They may not even have the infrastructure and equipment to do so. However, these providers know the opportunities digital pathology offers in the future and need to ensure that the imaging IT vendor they select, an agreement which could last 7-10 years, must have a strategy in place for facilitating their transition to digital pathology when they need it.

Imaging IT vendors looking to secure such holistic deals need to show providers they are knowledgeable about the needs of digital pathology and options for implementation. This includes accommodating hardware preferences and the input from pathologists (e.g. scanner fleet, best-of-breed research, and clinical analysis software applications), while also helping providers to capitalise on external possibilities including transitions to cloud deployments etc. More importantly, however, IT vendors must be able to highlight the economic benefits that become possible with a connected digital path lab.

Ultimately this is what will help informatics vendors win deals that include pathology. The scanner hardware used, and the specifics of digital pathology set ups will vary from provider to provider, but, if potential value can be realised and measured at the point of diagnosis and across the wider enterprise, adoption will grow.

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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

Signify Premium Insight: Proscia Partnership Shows Siemens’ Pathology Play

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.

Last week Siemens Healthineers and Proscia announced that they had inked a multi-year partnership agreement. The deal will see Siemens continue to build out its enterprise imaging offering, using Proscia’s Concentriq Dx to fortify its digital pathology capability.

The German vendor says the partnership has been catalysed by the increasing demand for digital pathology, amid challenges to the traditional laboratory model faced during the Covid-19 pandemic. Siemens says these challenges, such as a shortage of pathologists and rising biopsy volumes have encouraged laboratories to modernise their operations, however, to do so, they require new enterprise-wide tools. This, Siemens reckons, is where the new agreement will allow it to make an impact.

The Signify View

Proscia has recently been enjoying a run of success. The firm’s focus is rooted in the digital pathology fundamentals of image viewing and management. The vendor has also developed its platform to accommodate new technologies such as AI as they become more significant, but, unlike image viewing and management, these innovations are not foundational. Despite this focus on the core competencies, however, Proscia has thrived over recent years, with the challenges of the pandemic and the subsequent waiving of the usual restrictions on digital pathology playing into the vendor’s hand. The vendor started from a relatively small base, but its revenues have leapt up dramatically, allowing it to increasingly look beyond its US focus and begin tapping into global markets.

This performance is only half the story, however, with the vendor also establishing its credentials as a technological innovator. It has developed strong connections with opinion leaders in pioneer institutions, which has helped to bolster its appeal to Siemens. Aiding the attractiveness of the vendor in particular is its scalability, which for a company like Siemens Healthineers that is looking to expand quickly within digital pathology, is crucial.

This is particularly important for Siemens, given its present lack of pathology capability and the increasing role that digital pathology is set to play in medical imaging IT strategy. As broader enterprise imaging offerings make their way from vendors’ roadmaps and into hospitals, the challenge of pathology will have to be countenanced. What’s more, now is the time to capitalise on this transition. Proscia has been achieved some success in the US market, but is now in a position to expand geographically, first in Europe and then more globally. Siemens, with its strength in Europe, is a good partner to have, especially given its reach and ability to leverage the capability that Proscia offers to increasingly bring digital pathology tools to its customers, deriving additional revenue from their budgets.

Punctual Progress

The timing is also apt from a market perspective. Much of the software used in digital pathology is supplied by the digital pathology scanner hardware vendors. In these purchases, the hardware has been the focus, and resultantly the software supplied by the likes of Hamamatsu and Philips has been overlooked. It has tended towards proprietary, standalone functionality, rather than the far more integrated enterprise packages that Siemens Healthineers (via its Syngo Carbon portfolio) in partnership with Proscia is looking to supply. Other vendors have already started down this route, with challenger imaging IT vendors such as Sectra having already developed their own digital pathology tools in house, incorporating them into their portfolios and even showcasing digital pathology tools within their AI marketplaces.

Another vendor which has made a concerted effort into digital pathology is Fujifilm, which last year formed a partnership with Inspirata, an agreement comparable to Siemens’ tie-in with Proscia. That connection has been an asset to Fujifilm, which has been successful leveraging it in sales within the UK, tapping into tenders that have a digital pathology component, with the vendor increasingly looking to capitalise on this capability within Europe in coming years. Siemens could make this ambition more difficult, however, with both Proscia’s capability and Siemens’ considerable ties to European providers both working against the Japanese vendor.

More broadly, the move underscores Siemens’ wider, longer-term ambition of consolidating hospitals’ imaging procurement, enabling providers to utilise Siemens alone for all of their purchasing. This wider strategy has been successful so far, allowing Siemens to sign longer, ever more holistic deals and continuing to upsell additional components and service elements to providers. By partnering with Proscia, the German vendor hopes this momentum can be expanded into another hospital department, and growth continued, despite the modest increases in the radiology market. Moreover, digital pathology has been an obvious hole in the precision medicine and digital oncology strategy pursued by Siemens in recent years, boosted by acquisition of Varian.

Difficulties in Digitalisation

Plans are never as straightforward in practice as in theory, and the Siemens Healthineers, Proscia pairing will face some challenges. One of the most acute could be the lack of digitisation of pathology labs in general. While there are some pockets of adoption or willingness to adopt, there are also a number of challenges stemming from the nascency of the digital pathology market that will need to be overcome. In many cases Siemens will not only have to convince a provider to adopt the Proscia software it can supply, but it will also have to convince a provider to digitise its pathology department in the first instance. Having a large imaging vendor such as Siemens facilitating the move will make the process easier, but there are still significant barriers inherent in the transition such as a lack of standardisation, regulatory challenges, pathologists’ reluctance and upfront cost requirements.

Siemens will also have to face challenges from other companies. In addition to challenges from the smaller, dedicated imaging IT vendors, large international imaging vendors are unlikely to stand by idly by if Fujifilm and now Siemens are able to capitalise on digital pathology. Philips, for instance is likely to redouble efforts on the market and make a concerted push to develop more integrated software that is better embedded in the vendor’s broader enterprise imaging strategy. GE Healthcare meanwhile could mount another foray into the digital pathology space after previously withdrawing, selling its Omnyx business to Inspirata in 2018.

If so, GE could look to chart a similar course to Siemens once unshackled from its corporate parent, partnering with an established digital pathology vendor. As with its German competitor, this grants the vendor access to accomplished digital pathology capability, without the associated cost of developing that capability internally or making the necessary commitment that an acquisition would require. The market is, after all, young and a difficult one in which to make headway, so being able to easily withdraw is advantageous. One difficulty with such a strategy, however, is finding a suitable partner, with the list of candidates that are qualified and available, short.

As digital pathology gains further momentum, the software segment will no doubt get more crowded.  Renewed digital efforts from digital pathology hardware vendors, AI-start-ups, Lab Information System (LIS) vendors and even regional or global EMR vendors eyeing up a slice of the growing space. Therefore, the timing of this move is also perhaps indicative that Siemens believes digital pathology is now mature enough to commit to, while still gaining some early-mover advantage versus some of its competitive peers.

Better Together

Even as other vendors intensify their focus on digital pathology, the merits of Siemens Healthineers’ partnership with Proscia are evident. These merits will begin to be realised over the coming years with Siemens able to more convincingly tender for large imaging contracts which include a digital pathology component, while also being able to more earnestly promote their enterprise imaging solutions as the vendor moves into departments beyond radiology. This move could also be bolstered by the recent success of Siemens molecular and diagnostics businesses in reagents and consumables, for example, which has already bestowed the vendor with links to some laboratories.

Ultimately though, what this partnership does is signify that Siemens sees digital pathology as an important element of the continued growth of its imaging software business. That it has partnered with one of digital pathology’s most compelling new vendors has the potential to draw a new line in the sand. Assuming the two companies are able to successfully integrate their products, and the potential that they promise is realised, then it could both catalyse the take-up of digital pathology, while positioning Siemens and Proscia right at the crest of that wave of adoption.

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