[This article appeared in the February 2008 edition of DOTmed Business News]

Buyers of new and pre-owned medical imaging instrumentation find it difficult to stay current with all of the changes in imaging technology.

Change occurs so rapidly that imaging devices that were considered leading edge just three years ago are now deemed obsolete by the market.

So what's different in the last few years in X-ray technology advancement and device introduction that has led to what I call, Technology Useful Life Compression.

Consider market conditions as if you were being imaged with a 64-slice CT. In one 10-second breath hold we could: image your whole body, achieve sub-mm resolution, collect data with 1 mm slices, produce 700-1000 images and image the heart in 1-beat

All of this is possible for about $1.5 million.

This is quite the change from three years ago when the market was just beginning to see multi slice CT. And, there's now much more to digital X-ray than just CT.

But in order to understand where the market is headed, some history, technology, insight into the forces driving the buyer, seller and original equipment manufacturer (OEM), the markets and applications is required.

In short, the question that looms: how do DOTmed readers capitalize on the opportunities associated with the migration to digital X-ray from analog.

The Digital Advantage

Ask buyers and sellers about the advantage of transitioning from analog to digital radiography and improved imaging, faster throughput and elimination of film are always the "correct" answers.

Oddly though, with all of the institutions around the world using analog X-ray devices you'd think they'd all be transitioning to digital. But it's been a gradual progression, one very much driven by cost and performance.

Eliminating film was the biggest catalyst, the trend dating back to the late 1970's when two Texas speculators, the Hunt brothers, accumulated a major position in the silver market and then conspired to artificially raise its price. Like so many things there was a down stream effect as silver is a component in film.

Spurred by rising prices, end users began to look for ways to eliminate film and go digital. Thus the move to convert to digital X-ray imaging was on and there was no stopping it.

And with good reason since the first real benefit in going digital is the elimination of film. Others include: elimination of film storage rooms, increased productivity/throughput and improved imaging, though this is application dependent since clinical images are not necessarily better just because they're digital.

Technology

Through the 20th century technological advancement moved at a digestible pace. There came a point at the beginning of the 21st century when technology began moving faster than the market could adapt. How would this change the way we acquire and think about a new technology like digital X-ray?

The advantages or perceived advantages of transitioning from analog to digital are well documented. But let's take the buyer's view as they weigh a move to digital imaging.

In Standard Radiography the primary considerations are patient volume, image reimbursement and acquisition time or throughput advantages. These are reasonably common parameters when qualifying any new technology or device. In most imaging facilities, what's top of mind is broadening applications and increasing the number of patients imaged. If throughput can also be improved, then such facilities can manage the up tick in patient traffic with the same staffing.

The reciprocal is also a consideration. If throughput improves with the new equipment and the patient volume is maintained, then department staffing reductions are an option.

Secondary considerations are many. The necessity for and the impact of equipment change is more than financial. Staff has to adjust work routines and learn new operating systems. This has an immediate impact on productivity.

In addition, image storage and recall of those images is important. Although digital imaging removes the need for space, cabinets and hardcopy storage, electronic storage requires the addition of equipment and software so that these images can be recalled, manipulated and transported for viewing. All of this requires different experience and knowledge, not to mention additional outlay of capital for hardware and software.

Analog to Digital Pathway

This transition requires a change in the staff work routine, with many opting to take small steps at the outset and with a minimal disruption in patient flow.

Computed Radiography (CR) is a way to test the water before diving in. Converting to a digital signal eliminates the need for hardcopy storage and the image is now stored digitally. Moreover, the department should see improved workflow.

Next after CR is Direct Digital Radiography (DDR or DR). Using an imaging plate made from amorphous silica or selenium and sandwiched with a semiconductor device like a charged couple device (CCD), the DR plate can covert the captured X-ray energy to a charge that is read by the CCD and then converted to a digital signal.

The result is that with the replacement of the analog equipment there is no requirement for a scanning step as in CR and the image is available immediately electronically. Again, improved patient throughput is the result.

In the digital scheme the image is captured on an image plate, a receptor. From the receptor the data is transferred electronically to an image management system. From there it's processed in software by an image processor and sent back to the image management system. Once processed the digital image can be stored and retrieved, sent to a patient information system or moved to a communications network where it can be viewed at an adjacent monitor or at a reading station many miles away.

The processing, transferring and archiving of the digital X-ray image is a seamless process dependent on software and bandwidth. But like so many advanced technologies the very switch to digital for the purpose of eliminating film has caused the development of a variety of other technologies like PACS. This is an example of technology breeding technology.

Markets & Applications

There are three market segments in which digital X-ray is making a significant impact.

Veterinary. Vets are using CR and DDR technology. They want to eliminate the use of film and the associated storage of hardcopy files. In general, the veterinarian is focused on cutting costs and is usually interested in securing pre-owned digital X-ray equipment. Equipment portability is important.

Dental. Dentists want their patient base to know that they are employing the latest technology for dental care. The prospect of eliminating the expense of film and its associated processing is an extra benefit. Dentists believe that with the instant imaging available with DDR systems they achieve better throughput and increase productivity.

Human Radiography. By far the largest market of the three, the radiologist is interested in CR, DDR and volume CT, with the latter still garnering most of the interest.

CR and DDR may still be the workhorses of general radiography but CT, originally introduced in 1972, has been reborn with the advances in multi-detector and volume CT.

The new CT with volume detectors and slice capabilities of 40, 64, 256 or higher is center stage. Along with new and interesting applications comes a high acquisition cost. These scanners cost well over $1 million and require expertise to use and technology to deal with the reams of images produced with each scan.

Although the advanced volume CT is more complex and can do more than the single slice scanner, the marketplace drivers are similar.

Those planning for the acquisition of a volume CT consider the effects on daily productivity. Reimbursement as dictated by government and private payers plays a major role too. Many of the applications being promoted for these multi-slice CT's are still subject to spotty reimbursement as are all new applications. Competition for available patients is another factor. Not always easy to quantify, available patients based upon the CT's ability to deliver specific applications will play a significant part in determining the value to be delivered by a $1 million plus purchase price.

Technically inclined radiologists often drive such decisions so the savvy hospital or imaging center administrator needs to understand the market for any new device as well as how much capability needs to be purchased to attract the available patient base.

Another influential market factor behind new CT multi-slice technology is the promise of new applications. As those using this new imaging technology publish new and innovative applications the demand grows. Some say reimbursement is what grows a technology, but without the applications driving the demand for reimbursement, growth in the installed base would be limited. Although you can make the argument that once a new medical device reaches a critical mass resulting in local competition, new limited applications and techniques are implemented to further justify the cost of acquisition.

The View from the Supply Side

What of the vendors of the multi-slice or volume CT, how have they responded to this market?

Their goals for the CT were well established: isotropic resolution (similar resolution in all three planes), increased imaging speed (rotate the gantry faster), shorten scan time (increase applications and improve throughput) and sub millimeter resolution (improve lesion detection).

In 2003-4 we saw the introduction of the first multi-slice CT's. First there were 2 then 4 and 8-slice scanners. By doubling numbers of rows, 16-slices was the next expected with 32 close behind. But something happened. Instead of the doubling effect continuing, there was a technology shift and it jumped from 16 to 40 and then 64. The 256-slice CT was forecasted on the day that the 64 began to be marketed.

With the introduction of the larger or volume CT detector certain attributes of the CT scanner had to be changed to meet the objectives set by the manufactures for improved performance.

The result of these improvements is quite remarkable. Whole body scans in fewer than 10-seconds. The gantry rotates every 0.37 seconds. In 2005, we were excited to learn that this new speed allowed for the imaging of the heart in 5-beats. The first reports considered this quite a breakthrough. But, technology was moving faster than we could digest the change. In a few months it was 3-beats and seemingly overnight it was 1.

Entire body scans are being performed with slice thicknesses of 1-1.5 mm. Each study is generating 500-1000 images. Remember technology breeding technology? Now there is a demand for computer assisted detection (CAD) to handle all of the images produced with each study.

Collecting, processing, archiving and transmitting all of the data resulting from a study is no small matter. Storage devices, network capability and bandwidth are required to move and store the patient studies. This is another example of technology breeding technology.

Lastly, everyone assumes if the scanning is faster, then the radiation dose is less than in conventional analog film imaging. Unfortunately, this is not the case. In CR and DDR imaging, the dose to the patient is similar to film based imaging. But, the dose can be higher because the image appears instantaneously and is easy to do over if not done properly the first time. It is not unusual for an image to be repeated. Film, on the other hand, is a gatekeeper. It has to be developed and there is a quantifiable cost for repeat scans.

One assumes that volume CT almost demands the delivery of a lower dose. It's faster so the dose must be lower. It isn't. When used for CT angiography, the dose rate from a single X-ray source CT is substantially higher than that received by the patient during conventional angiography.

The vendors are working on making alterations to the volume CT scanners to lower the dose. These changes will most likely cause an early obsolescence of the equipment already installed.

Digital X-ray's Market Applications

The applications for digital X-ray can be split into those for volume CT and those in standard radiography.

For CT scanners with 64-slices or higher, with a single or dual source X-ray source, the preeminent application is CT angiography (CT-A). The ability to freeze the motion of the heart and image it in 5 beats or less is phenomenal.

Radiologists and cardiologists see this new technology as a real breakthrough. By studying patients with known or suspected heart disease, examining their anatomy and simultaneously performing a calcium scan, the cardiologist gets a full picture of the condition of a particular patient's heart.

Some even predict this application may replace invasive cardiac catheterization. It's more likely, however, that this technology will identify normal patients and those with limited disease who can be managed medically and with life style changes. Those with serious coronary artery disease will, of necessity, go on to the more invasive cardiac catheterization.

In addition to CT-A, which is overwhelmingly the application of choice for volume CT, there is trauma and vascular imaging too. These last two areas are not gaining much momentum probably because the cost of the equipment and marginal improvement in scan results will limit demand for volume CT use.

In general radiography CR & DDR will continue to replace film based analog equipment. The improvement in imaging may not be evident in standard radiography with digital but in mammography there seems to be no question that the transition to digital from analog yields improvements for the patient and the reader.

It's estimated that about 30% of the mammograms done today are digital. The cost of the equipment and the relatively stable reimbursement may be a reason the equipment is not changing out faster. There will be an ongoing transition to digital in the mammography market as equipment is turned over as part of normal life cycle replacement.

Understanding the Opportunity

This is a difficult task, almost a double-edged sword since technology is moving more rapidly than ever. With each new introduction, technology breeds technology. New applications, which are a result of the capability of the new technology, seem to be arriving monthly.

Moreover, technology and applications are shortening the life cycle. Once it was 5-7 years. Now, however, it can be as short as 24-36 months, which means the entry for a buyer is expensive and the exit at 36-months even more so.

Five years ago a dealer in pre-owned imaging devices might have paid 50cents on the new equipment dollar for a 5-year old device. Now, with the furious pace of new technology introduction by the OEM's the technology life cycle is much shorter. Now a center interested in selling or trading in a device for the purpose of upgrading to the latest and greatest may find that they are being offered 10cents on the dollar. Frequently they are unable to recover enough to retire the outstanding debt.

Summing It All Up

As we consider digital X-ray and the markets involved, we know that transitioning to digital from analog and eliminating film means improvements in productivity, reduced cost with the elimination of film processing and a constant introduction of new technology.

In human radiography we have volume CT with applications mainly in CT-A. Some project an expansion into vascular and trauma but that's an open question. CR & DDR will continue to impact and grow general radiography and mammography.

Technology Breeding Technology. As technology continues to advance, the life cycle shortens. This decreases equipment value and results in expensive entry and very expensive exit for the user of the equipment. Technology life cycles that once were typically 5-7 years are now 2-3 years.

We find ourselves in a truly wonderful time in the development of X-ray imaging technology. What's old is new and now more than ever we are employing more non-invasive techniques to diagnose disease earlier.

About the Author

Wayne Webster founded Proactics Consulting in 2003 for the purpose of providing business planning and strategic acquisition support for diagnostic imaging clinics and hospitals seeking new opportunities in medical diagnostic imaging. Proactics also supports business development efforts for High-Tech electronics & other businesses requiring strategic business planning guidance.

Clients include: GE Health Care, Perkin Elmer, Inc., Neusoft Group, Ltd. (China), and The I.R.I.S. In addition he has supported the business planning process for dozens of imaging clinics and hospitals. Webster also serves as the Managing Director for Diagnostix Plus, Inc. In this capacity he supports the development and implementation of new business opportunities for the company. In addition, he is the Technical Editor for IAMERS, a medical device trade association. Those interested in reading one of Wayne's articles can visit www.Proactics.net and request a copy and learn more about the services offered by Proactics Consulting.