Imaging IT David’s and Goliaths | Joe Marion | Healthcare Blogs Skip to content Skip to navigation

Imaging IT David’s and Goliaths

July 5, 2016
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Over the past few weeks there has been much publicity over McKesson’s decision to spin off its imaging IT business into a JV with Change Healthcare.  This is but one in a long list of companies to change Imaging IT strategies.  Other recent announcements include Lexmark’s initial announced intent to sell off its software businesses, and eventual final sale of the company (  And, of course there is the recent sale of Toshiba’s imaging business that peripherally includes Vital Images (

Does this mean that imaging IT has fallen out of favor?  Do spinoffs or venture capital sales mean better profitability for the remaining entity?  Is the changing healthcare environment in the U.S. having an effect?  All valid concerns, but underlying such transactions might be a subtler reason.  Look at the case of Lexmark as an example.  Initially a “David” in terms of imaging IT, Lexmark went on an acquisition binge over the past several years and acquired a number of companies, including Acuo Technologies and PACSGear.  The strategy was that the combination of these companies would be more effective than the individual companies, creating a “Goliath” in terms of clinical content management.

Similarly, McKesson acquired ALI Technologies among other businesses a number of years ago to create an IT powerhouse.  Initially, the context of STAR and Paragon IT products, along with ALI’s PACS products would create a seamless offering from a single vendor.  In theory, this sounds attractive, but in practice, few healthcare providers are in a position to replace existing products for such a seamless integration.  The net result perhaps is a realization that there may be little pull-through from one product area to another.

Besides this factor, in the case of McKesson, the business model for IT contrasts with that of McKesson’s other healthcare products.  What synergy is there between bandages and PACS?  McKesson may have finally come to the realization that several “David’s” might be more effective than one “Goliath.”  The emergence of the EMR might have also played a role in their decision.  Would an investment in the EMR space be the best use of McKesson resources in light of the position of Cerner and Epic?

Another example has been GE’s changing IT strategy.  Initially just an imaging equipment company, GE realized it could grow the business through relationships and acquisition.  Initial ventures with Cerner never quite panned out, so GE acquired IDX, venturing well beyond its core imaging equipment business.  The same can be said for GE’s acquisition of Amersham, as a branch out into diagnostic imaging agents.  More recently, GE has reduced or exited certain business segments, possibly because of a lack of synergy, and a smaller than acceptable market share.

Healthcare in not alone in this regard.  Numerous examples come to mind.  I have long been a follower of the demise of the Chrysler Corporation.  Back in the glory days of U.S. automakers, Chrysler held its own, and even went on an acquisition and venture binge, including its acquisition of American Motors, and its auto venture with Maserati, as well as its forays into the defense industry.  When its financial fortunes changed, Chrysler sold off many of these “diversified” businesses and returned to its automotive roots.  Survival since then has been based on consolidation with other automakers, initially Mercedes Benz, and more recently Fiat.  So, Chrysler has seen many periods of alternating “David’s” and “Goliaths.”

As with Chrysler and the auto industry, one must adapt in healthcare IT.  It appears that is the case relative to Imaging IT in today’s changing healthcare IT marketplace.  Will a McKesson spinoff be more successful than part of McKesson?  Can it succeed without the pull of an IT/EMR?  Only time will tell.

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