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An Imaging Vendor Evolution?

September 15, 2015
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Sales and support models are adapting to a changing healthcare environment.

Recently I had some interesting conversations about potential changes in the imaging industry that parallel changes taking place in the U.S. healthcare industry.  These discussions centered on how vendors might react to changes taking place with healthcare providers.  Specifically, how do vendors adapt to a shrinking number of healthcare providers resulting from consolidation?  And, how do vendors adapt with changing support models based on evolving equipment configurations.

In the past, vendors have structured their sales organizations around either specific “strategic” accounts, or regions.  Sales activities may have been spread broadly across all provider segments, both small and large.

One vendor in particular has noted that given the consolidation in the provider space, it may make more sense to consider targeted sales activities at these large entities, and emphasize sales arrangements that can accommodate all of the provider’s facilities. 

Carried one step further, providers are looking at “strategic” partnerships that may reflect different acquisition alternatives.  For example, one “strategic” partnership I am familiar with is based on a long-term relationship that encompasses the equipment, support, service, etc. rolled into a consistent monthly payment that enables a facility to “level-load” its expenses over a fixed period, and capitalize on replacement options on what may be a timelier basis. 

For the company considering a change in its strategy, this may also encompass more than just equipment and services.  It may also mean some “skin in the game” for the vendor by taking on even some administrative responsibility for operations – in other words, “managed services.” 

In terms of support, there are perhaps two significant factors affecting support models.  First and foremost is the changes that are occurring based on the impact of commercial off the shelf, or COTS hardware.  In the earliest days of imaging devices and Picture Archive and Communications System (PACS) systems, large portions of hardware were custom solutions.  For example, image resolution requirements for displays far outpaced what was available on the consumer side.  Imaging equipment vendors needed to support such equipment directly, and therefore, most support agreements addressed both hardware and software. 

Contrast that with most modern equipment that takes advantage of COTS, as the performance parameters of most computer and display equipment is more than adequate to meet today’s imaging display application needs.  The result is that many vendors have changed to software-only support models, and rely on third-party hardware vendors to provide support, usually under warranty for the first three to five years.  The vendors are then freed up to simply support their software application, usually via telephone support with on-site support if required. 

To offset the hardware changes, vendors are increasingly focused on greater degrees of “services” as part of support contracts.  As previously mentioned, this can extend all the way to actually managing the assets and providing operational management of them.  In the past, there have been similar schemes proposed that extended to providing imaging staff, including technologists and potentially radiologists.  Again, the objective was to provide “one stop shopping” and a continuity of service.

Such arrangements didn’t get very far in the past, but a changing healthcare delivery model might just be the impetus for such services in the future, freeing management to focus more on patient care and reimbursement and putting operational costs on a more even keel.

Many of these practices may be more in line with other Information Technology (IT) products, but they are a radical change for the classic imaging business.  Adapting to an evolving healthcare industry is important to survival.  It is interesting to see the classical imaging companies evolving with the industry.  This cannot be easy, as these support services have classically been money-makers for the vendors.  It will be interesting to see if these changes provide a competitive edge over the laggards.  One caveat – it’s a tight rope to extend too far and become a threat to one’s customer.  This has caused pause from adopting such strategies in the past, but we are now in uncharted waters relative to provider operations.  Only time will tell.  I welcome your thoughts.



One vendor in particular has noted that given the consolidation in the provider space, it may make more sense to consider targeted sales activities at these large entities, and emphasize sales arrangements that can accommodate all of the provider’s facilities.

So it is really efficiency or larger share of wallet that brings about this change? Is there more to be gained from both parties by pooling purchases/standardizing on a single vendor? Might this also consolidate vendors if there is real traction here?

What role do GPOs have in this restructuring of healthcare being that they include services that pool acquisition ?

With the resurgence on new devices for image acquisition for better dose management - will the classic vendors be in a better bundle space than the more IT vendors? Hmm... PACS was bundled with modalities before, hmm HIS fees offset modality/PACS acquisition or support costs...

Great subject to debate and explore - thanks for bringing it up...

Joe Marion,

Thanks for your thoughts on the changes in the imaging industry and in provider relationships.

It is interesting to see providers exploring different vendor partnership models (e.g. CAPEX vs OPEX; cloud services; IT outsourcing). It is clear that the old, imaging infrastructure 'silos' will be replaced in time by the new, enterprise-based infrastructure which runs multiple applications (not just PACS) more efficiently and cost effectively.

When I read the post and comments, I thought about how the "hub/spoke" IT model is also part of the transformation. Below are few data points to consider.

Why 'Hub/Spoke' Models?
More and more healthcare providers are consolidating their IT facilities into hub/spoke models. The typical configuration includes several large data centers which link to smaller hospitals and to community clinics in the region. With the growing demand for population health management, the hub/spoke model has an important role. It allows providers to interact with individuals in any setting (hospitals, clinics, or at home).

One of the objectives of the hub/spoke model is to help providers to decrease the costs and complexity of managing separate "silos" of IT infrastructure. It also provides the option to reduce the number of clinical applications across the enterprise. Application consolidation is needed at many institutions.

Another advantage of the hub/spoke model is that it gives healthcare providers an opportunity to move onto a "common' IT platform which can be utilized for both on-premise applications and for external cloud services. Going forward healthcare providers need to ask their IT and imaging vendors tougher questions to ensure they avoid investing in silos again. A common IT platform needs to support multiple clinical and business applications cost effectively.

Can Providers use Off-site & On-premise Clouds?
Some providers have expanded their hub/spoke model (even wider) by contracting with external 'cloud' services providers. These cloud providers allow healthcare institutions to move from a CAPEX to an OPEX model where they have a predictable monthly cost. Many cloud providers can provide a range of services from co-location to managed services. Most provide HIPAA compliant services including business associate agreements.

There are also options for healthcare providers to become cloud providers themselves. Some are creating DIY 'private' clouds on-premise. And, a few have created services which they sell to GPO members. One DIY cloud provider actually sells disaster recovery services (or DR-as-a-S) to its regional affiliates.

Imaging vendors will continue to move from silo infrastructure to "enterprise" systems which support a hub/spoke model. Their new imaging platforms will be linked or integrated into Vendor Neutral Archive(VNA)and EMR applications. Some will provide centralized imaging repositories to capture and manage images from a variety of sources (including from consumer smart phone cameras).

Healthcare providers will continue to transform into the hub/spoke model. They will ask their vendors to provide more flexible and cost effective options for procuring IT solutions and services. The vendors will offer additional financial and support services models which help the healthcare providers to manage costs and to improve patient care.

Providers will invest in a "common platform" solution which allows them to control and manage multiple applications. The platform will also serve as a centralized control point for safeguarding and sharing patient data --- no matter where it resides on-site, in a cloud, or in a long-term archive vault.

Along with changes taking place in the U.S. healthcare industry, there are chances to see huge polarization of providers to the closely matched vendors and also we will be able to see good products rising up. I am agree with your argument of change in the strategy of selling services instead of selling product.