Siemens pays $2.1B for Shared Medical Systems

photoAnd just when you thought it was over, the story continues. After all of the bad blood flowing between healthcare IS firms Eclipsys Corp. (Delray Beach, Fla.) and Shared Medical Systems Corp. (SMS of Malvern, Pa.) in recent weeks, both companies have been acquired by larger firms, putting an end to a turbulent chapter in the IS industry.

Siemens Medical Engineering Group (Erlangen, Germany) wrote what should be the final page in the story when it signed a deal in May to acquire SMS in a $2.1 billion stock deal. Siemens will pay $73 per share in a cash tender offer for the outstanding shares of SMS. SMS reported $1.2 billion in sales last year and employs 7,600 people.

The acquisition came after SMS announced in March that it was exploring strategic alternatives while in the midst of a hostile takeover attempt by Eclipsys. Eclipsys ended its attempted takeover and lawsuit when it agreed to be acquired for $1.45 billion by Neoforma.com (Santa Clara, Calif.) on March 30.

SMS President and CEO Marvin S. Cadwell said the Eclipsys situation served as a distraction during the search for an acquisition partner, but Cadwell emphasized that the hostile takeover attempt did not send SMS scurrying for an acquisition partner, as he feels some industry watchers have surmised.

“In March, basically what we said was the board had an interest in strategic alternatives and the interest [in a strategic partner] had proceeded that March announcement,” Cadwell continued. “While the industry believes that the expression of interest we received by Eclipsys stimulated this, I can assure you it did not. [The attempted takeover by Eclipsys] probably did serve to accelerate the activities that were already under way.”

Cadwell said he feels the two companies have minimal product overlap, but both are looking toward Internet-related products in the future. SMS will remain in its current headquarters in Malvern and become a business unit in the Siemens Medical Engineering Group.

“We own about 317 acres on this campus and about 1.5 million square feet,” Cadwell said. “As we get through the integration, I suspect some components of our U.S. business will find reasons to combine.”

The transaction has been approved by SMS board members and is expected to close before June 30, but may come as early as the first week of June, according to Cadwell.


Reinhardt: SMS will strengthen Siemens IT plan

d02b.jpg (10821 bytes)“It was quite obvious from the market development in all industrialized countries that IT in healthcare will play an even more important role in the future.”

So says Erich Reinhardt, president of Siemens’ Medical Engineering Group (Erlangen, Germany), about the company’s surprise plans to acquire healthcare IS firm Shared Medical Systems Corp. (SMS of Malvern, Pa.) for an estimated $2.1 billion.

Siemens has been focusing on developing its IT offerings for several years, going back to the creation of SiemensNixdorf in 1990. Historically, Siemens implemented an internal growth strategy in healthcare IT, but decided more recently to look for an acquisition to grow that aspect of its business, as internal growth seemed too sluggish.

“As we went through that process, it became clear that SMS had a leading position in the American market, which is the lead market in this area,” Reinhardt said. “We are strongest in the software packages that are close to our equipment. These are departmental systems, like radiology, oncology, cardiology, and intensive care systems. SMS is stronger in the clinical and enterprisewide systems. There is very little overlap between our product lines.”

Reinhardt declined to comment on the attempted hostile takeover of SMS by Eclipsys Corp. (Delray Beach, Fla.) or whether it had any effect on Siemens’ discussions with SMS. On March 2, Eclipsys, a smaller competitor of SMS, publicly offered $2 billion to buy SMS and tried to elect four independent directors to SMS’ board of directors.

The SMS deal positions Siemens to move forward with an established Internet-focused business plan for the future.

“If you assess the know-how of both companies in this area – in networking, in content, in process understanding, in technology and customer access – I think you could see this is a very good fit to make a strong e-business program,” Reinhardt said.

An integration team of representatives from both Siemens and SMS is being created to manage the integration.

When asked whether Siemens plans to continue the use of the Shared Medical Systems name, Reinhardt jokingly replied, “That one’s easy – it’s SMS,” making reference to the commonality between Siemens Medical Systems (SMS) and Shared Medical Systems (SMS). The use of the Shared Medical Systems name will be determined following the close of the acquisition.


Computerized Thermal Imaging expands business with Bales buy

Computerized Thermal Imaging Inc. (CTI of Layton, Utah) in April completed the purchase of thermal imaging equipment provider Bales Scientific Inc. (San Francisco) in a stock and cash transaction.

Bales, founded in 1977, manufactures infrared workstations for imaging circulatory, neurological and soft tissue abnormalities. The company recently introduced its Photonic stimulators to increase the blood flow and circulation for the treatment of chronic pain.

As part of the acquisition, founder Maurice Bales will become director of research and chief scientist for CTI. Financial details were not disclosed. David Packer, president and CEO of CTI, said the acquisition will provide both products and expertise to CTI’s lineup.

“Although combining our imaging technologies and experience in the medical market is certainly the most important benefit of the acquisition, I also look forward to taking advantage of Bales Scientific’s expertise and reputation in industrial applications,” Packer said.

CTI currently is pursuing FDA clearance of its thermal imaging system for the detection of breast cancer.

The acquisition comes on the heels of a $5 million investment by Informix Software Inc. (Menlo Park, Calif.) in CTI, announced April 11. CTI uses the Informix Internet Foundation.2000 database to develop and deploy its breast cancer imaging system across the Internet and in hospitals worldwide.

CTI also released its financial results for its third fiscal quarter, ending March 31. The company incurred a net loss of $2.1 million, compared with a net loss of $1.1 million in the third quarter of FY99. CTI attributed the loss to increases in general and administrative expenses and in research and development expenses.

Because CTI is still in the product development stage, there were no sales in the third quarter.


Del Global purchases Villa Sistemi Medicali

Del Global Technologies Corp. (Valhalla, N.Y.) in April completed its acquisition of 80 percent of Italian radiography/fluoroscopy company Villa Sistemi Medicali S.p.A. (Milan, Italy).

The remaining 20 percent of the company will be held by the senior management team at Villa Sistemi.

In January, Del announced its acquisition of 19 percent of Villa Sistemi and the option to expand its ownership to 80 percent of the company.

Financial details of the acquisition have turned a few heads in the industry. According to Leonard Trugman, Del’s chairman, president and CEO, Del issued 50,000 six-year warrants to Union Bank of Switzerland – which previously owned a 90 percent stake in Villa Sistemi – at $7.94 per share.

“The total price of those warrants was around $233,000,” said Trugman. “People don’t believe it.”

Trugman said legal and administrative costs will bring the total cost of the acquisition closer to $1 million, but it is still a drop in the bucket for a company that last reported approximately $20 million in annual sales.

“Our company’s consolidated revenues on an annualized basis will now be approximately $100 million,” added Trugman.

The cross-marketing of products is a big plus in this deal. Trugman said Del is pushing to get Villa’s medical products cleared by the FDA for marketing in the U.S. Villa currently only has dental imaging products available in the U.S.

On the other side of the Atlantic, Villa offers Del’s products in Europe, the Middle East and North Africa.

Villa’s OEM supplier agreement with Philips Medical Systems N.V. (Best, The Netherlands) is not affected by the acquisition and Philips remains a Villa customer. In late March, Del signed a three-year deal with Philips’ German division to provide a family of radiographic products for distribution in the European market. The two agreements are not affiliated, according to Trugman.


HIMSS 2000: The Internet will catapult IS products

The Internet was the message in April in Dallas at the annual meeting of the Healthcare Information and Management Systems Society (HIMSS of Chicago), as imaging companies offered new and improved Internet-based and Web-enabled offerings in all shapes and sizes.

Siemens Medical Systems Inc.’s (Iselin, N.J.) Electromedical Systems division featured enhancements to its Infinity Gateway Suite for patient information exchange between the Infinity Network and hospital and laboratory information systems. Infinity features the new WebViewer Patient Browser, which lets authorized physicians view bedside data, such as waveforms, vital signs and trends over an intranet or Internet in near real-time.

Siemens also has signed an exclusive agreement with Aspen Healthcare Metrics (Englewood, Colo.), a healthcare cost and profitability specialist. The alliance will allow Siemens’ customers in the cardiology field to co-manage the costs of their clinical program, while maintaining clinical standards.

National Imaging Associates (NIA of Upper Saddle River, N.J.) introduced the RadMD.com product. RadMD.com is the Internet-based version of NIA’s radiology management system to better control radiology costs and enhance efficiency. NIA said that RadMD.com creates a common gateway linking providers, payors and consumers in an efficient evaluation of the care delivery process. RadMD.com is designed to help doctors reduce the time they spend checking eligibility and referral networks online. RadMD.com currently is being tested by 160 physicians.

Another online company, RealTimeImage (San Bruno, Calif.), introduced new features for its iPACS service, a real-time Internet gateway to DICOM archives for PACS and teleradiology. New to the iPACS is its CT and MR sequence viewing capability using the page, stack and cine-modes, in addition to the existing X-ray and digital radiography capabilities.

Image distribution specialist Stentor Inc. (So. San Francisco, Calif.) teamed with several other firms to demonstrate its iSite image distribution software at HIMSS. The exhibit showed the imaging technology working with a variety of other applications. Stentor partnered with Compaq Computer Corp. (Houston) for servers, Cerner Corp. (Kansas City, Mo.) and Merge Technologies (Milwaukee) for HIS offerings, and WAM!Net Inc. (Bloomington, Minn.) for remote access capability via the Internet.

Cedara Software Corp. (Mississauga, Ontario, Canada) used HIMSS to focus on electronic healthcare standards and connectivity for HIS/RIS integration as part of its participation in the Integrating the Healthcare Enterprise (IHE) project. Cedara’s VR HardStore 3.0 image management archiving product was used in the IHE to support the exchange of data with more than 25 healthcare systems and the VR Softview external viewer was used to display image data.

Image storage and management provider InSite One (Wallingford, Conn.) featured its InDex (Internet DICOM Express) digital image storage and archiving service. InSite offers a “pay as you go” service for online archiving of DICOM images. InDex uses an open architecture to integrate with any DICOM-compliant PACS and HIS/RIS.

Kaneb Services Inc.’s (Dallas) InformaTech subsidiary debuted its Lan2Go product, which Kaneb bills as a “LAN in a box.” The product is a scaleable LAN (large area network) with built-in WAN (wide area network) and Internet capabilities. The Lan2Go is powered by products from Enterasys Networks, a networks solutions provider that brings standards-based switch routing and wireless LAN connectivity to the Lan2Go product.


Copelco receives purchase offer from Citigroup

Global financial services company Citigroup (New York) has reached an agreement to purchase all outstanding shares of Copelco Capital Inc. (Mahweh, N.J.) from multinational conglomerate Itochu International Inc. (Tokyo).

Financial details were not disclosed. Pending regulatory approvals, the transaction could close as soon as June.

Copelco’s business would be integrated into Citigroup’s equipment finance division, Citigroup Global Equipment Finance. With the addition of Copelco, Citigroup said that it could become the largest U.S. bank-owned leasing company.

Copelco is one of several companies which finance and lease medical equipment. The company currently competes against the likes of DVI Inc. (Newport Beach, Calif.), GE Capital Corp. (Stamford, Conn.), AT&T Capital Corp. (Framingham, Mass.) and CMC Lease Inc. (San Diego).


AIUM show strives to bring ultrasound into public eye

d02c.jpg (8344 bytes)While more complicated imaging technologies, such as CT and MRI, have been gaining notoriety lately, the 44th annual meeting of the American Institute of Ultrasound in Medicine (AIUM of Laurel, Md.) in San Francisco in April sought to bring ultrasound back into the public eye and increase public awareness of the technology.

AIUM declared October as Ultrasound Awareness Month, toting a theme of “Ultrasonography – Sound Images from Head to Toe.” While many people are familiar with ultrasound during pregnancy, few know about the broader applications the technology offers.

One application was highlighted by Christopher F. Njeh, Ph.D., assistant adjunct professor at the University of California, San Francisco Department of Radiology. The presentation featured the use of quantitative ultrasound (QUS) in assessing bone mineral density vs. dual X-ray absorptiometry.

Njeh said that studies have established that QUS variables – such as speed of sound and attenuation in bone – are related to bone density and bone structure. There also is evidence to support the use of ultrasound to study skeletal status in children and other medical conditions, such as rheumatoid arthritis.

Also at AIUM, Beryl Benacerraf, M.D., was awarded the AIUM William J. Fry Memorial Lecture Award for her contributions to the progress of ultrasound. Benacerraf presented a lecture titled “Sonographic Detection of Fetal Down Syndrome: Past, Present and Future,” saying the field of detecting aneuploidy by prenatal ultrasound has “mushroomed,” providing an effective method for screening for Down’s Syndrome.

On the commercial side, GE Medical Systems (GEMS of Waukesha, Wis.) claimed an industry record fourth quarter sales of $212 million in ultrasound, prompting the firm to assert that it is No. 1 in the ultrasound market. GEMS reported 30 percent growth in ultrasound for the past five years, adding that 1999 was a record year for the company in cardiac ultrasound sales.

GEMS displayed its new Logiq 400 Pro Series, a mid-range ultrasound system that allows upgrades to the Logiq 700 level. The 400 Pro uses a digital beam former, wideband multifrequency transducers and Micron Imaging capability. It also offers Tissue Harmonic Imaging, which has migrated from the Logiq 700 system and 3D View capabilities.

Hitachi Medical Corp. of America (Tarrytown, N.Y.) highlighted its Hitachi 6000 platform, which uses a Windows NT operating system and a digital beam former with 256 channel quad processing. Features include tissue harmonic imaging, directional CFA and enhanced artifact suppression algorithms.


FDA, CDRH see all-time high in recalls

The FDA reported an all-time high for the number of recalls and detentions of potentially hazardous products in its fiscal year, ending Sept. 30, 1999.

Leading the way was the Center for Biologics Evaluation and Research, which issued 3,736 recalls. Almost one-third of the notices were connected to non-compliant blood and blood products. The Center for Devices and Radiological Health (CDRH) was the second most active area with 1,263 recalls, almost 30 percent more than the average of the past 10 years.

The CDRH also accounted for approximately one-third of the total number of detentions of food and medical devices. Of 41,474 shipments of unsafe products, 13,353 were CDRH-related.

FDA Commissioner Jane Henney, M.D., attributed the rise in recall and detention action in part to the agency’s emphasis put on the activity.


CT images assist researchers in dinosaur discovery

CT technology has helped formalize a theory that dinosaurs may have been warm-blooded creatures and not the cold-blooded lizards previously perceived.

The new theory questions a number of items about the prehistoric creatures, most notably, their extinction due to the coming of the Ice Age.

d02e.jpg (13275 bytes)A false color 3D CT image of the heart
and upper chest of a dinosaur that lived
67 million years ago.

According to a report from Associated Press, researchers took a fossil of a Thescelosaurs found in 1993 in Harding County, S.D., to Andrew Kuzmitz, an Ashland, Ore.-based physician and amateur paleontologist. Kuzmitz performed a CT scan on what was thought to be a fossilized torso region of the very well-preserved fossil and had seven human and veterinarian cardiologists review the images.

As this was the first time researchers had reviewed soft tissue in a dinosaur fossil, they weren’t sure what they would be able to see. Often in early paleontology, soft tissue was thought to be dirt and scraped away to focus on bones, which is what the researchers thought they were doing this time.

Surprisingly, when the researchers reviewed the CT scans, they found a clear picture of the dinosaur’s heart – and it didn’t look like they thought it would.

To get a clearer picture, Paul Fisher, director of the imaging lab at North Carolina State University Veterinary School (Raleigh, N.C.), transformed the CT data into a 3D image, which clearly showed a four-chambered heart of a warm-blooded animal, such as a mammal.

d02f.jpg (10652 bytes)A CT image showing the dinosaur’s
four-chambered heart

“We were surprised that it is as recognizable as it is,” said Fisher in a Reuters report. “Something that had been in the ground for 67 million years. We didn’t think we could put it together in a 3D model and say ‘Oh my God – it’s a heart.’ It’s one of those things where a picture is worth a thousand words.”

Cold-blooded animals, like most lizards, have three-chambered hearts, giving them less oxygen in their blood and providing little protection against colder temperatures, because they cannot regulate their own body temperature. If dinosaurs were in fact warm-blooded, they would have had much more resistance to the colder temperatures that came with the Ice Age. Some reptiles, like alligators and crocodiles, have four chambered hearts.

Thescelosaurs are thought to have lived from Wyoming and the Dakotas northward into Alberta, Canada.

“This challenges some of our most fundamental theories about how and when dinosaurs evolved,” said Dale Russell, a paleontologist at North Carolina State University (Raleigh, N.C.), according to Reuters.

Due to the success of this project, other paleontologists said they may start performing CT scans on any intact dinosaur fossils they find and become much more cognizant of possible soft tissue samples.

“This is a landmark discovery in the field,” said Jack Horner, a dinosaur expert at Montana State University (Bozeman) in a wire report. “That means dinosaurs were warm-blooded. It’s way cool.”

Photos courtesy of the
North Carolina Museum of Natural Sciences


ADAC Labs gains FDA 510(k) approval on Skylight

d02g.jpg (10679 bytes)ADAC Laboratories (Milpitas, Calif.) wasted no time in gaining FDA 510(k) clearance for its Skylight gantry-less nuclear medicine camera.

After unveiling the Skylight as a works-in-progress at the Radiological Society of North America (RSNA of Chicago) meeting in November, ADAC gained FDA marketing clearance before it had any systems in clinical trials – only an in-house prototype. ADAC expects Skylight to go into trials later this year, but the system won’t be available commercially until the middle of next year.

The unique aspect of the new camera is that it has no gantry. The gamma detectors are mounted directly to the ceiling or on tracks that allow Skylight to move more easily. Originally, ADAC said the tracks for the Skylight and its travel ability were limitless, but, after talking with some clinical sites, ADAC is adapting to the needs of an average hospital.

“The design [of the Skylight] still allows that, but we’ve done surveys about the typical siting configurations and found that there were very few instances where that kind of movement was needed,” said Mohamed Elmandjra, ADAC’s vice president of marketing. “No one has a 40-foot room that they’re going to put a nuclear medicine camera in, so the first phase of the Skylight will not allow for infinite travel.”

ADAC said the flexibility of the system will allow nuclear medicine exams to be combined with CT or ultrasound. ADAC adds that the system’s flexibility means it could be marketed for use during surgeries.

The Skylight prototype uses ADAC’s “standard” Epic detectors, according to Elmandjra. The design of the system allows for other detectors to be incorporated, if desired.

The next step for ADAC is to find clinical sites for trials. While company officials said there are several options at the moment, no details have been released as to where or when installation will occur.

“We want to learn how people will use this in the clinical setting,” said Elmandjra. “The ability to combine this camera with CT or ultrasound is a fundamental advantage of the design. As far as the clinical applications of that, we’ll learn more once they’re in the clinical setting.”

Elmandjra declined to estimate a cost for the Skylight, but did say it would sit near the top of the ADAC price list, when it becomes commercially available.

In other company news, ADAC HealthCare Information Systems (Houston) has signed a deal to use the e-CIMS Web Server development kit and DICOM development kit from Imageon Solutions Inc. (Birmingham, Ala.) in the ADAC Envoi image management system.


Neoforma.com, Eclipsys enter talks to terminate proposed acquisition

Neoforma.com (Santa Clara, Calif.) confirmed it is in talks to terminate its proposed $689 million acquisition of Eclipsys Corp. (Delray Beach, Fla.) and its affiliate Healthvision Inc. (Irving, Texas) a month after the acquisition was announced.

The proposed acquisition was originally announced in mid-April but received a less-than-warm reception from investors from the get-go, causing Neoforma.com stock to plummet nearly 70 percent in the weeks following the deal’s announcement. After trading in the $70 range in February, Neoforma.com stock took a nosedive to under $6 in April on the news of the merger.

The recent surge of healthcare dot-com companies combining with traditional IS firms has been the target of harsh investor reaction of late, causing some market watchers to speculate that the e-health bus has all of its passengers.

A proposed merger between healthcare IS firm IMS Health Inc. (Westport, Conn.) and Internet software firm TriZetto Group Inc. (Newport Beach, Calif.) announced the day before the Neoforma.com deal also reportedly is on the brink of termination due to negative reactions from investors.

The possible termination of the Neoforma.com-Eclipsys deal brought analysts out of the woodwork to comment on the deal and the e-health market overall. In a Reuters report, Dave Francis, an analyst with J.C. Bradford & Co. (Nashville), said the Neoforma.com and Eclipsys merger was announced “just as the air was coming out of the Internet healthcare balloon.”

He added that the collapse of the deal puts Eclipsys in a difficult spot after its attempted takeover of Shared Medical Systems (SMS of Malvern, Pa.) in March. Eclipsys made an unsolicited bid to acquire SMS and failed. In May, SMS unveiled plans to be acquired by Siemens Medical Engineering Group (Erlangen, Germany). (See story on page 10.)

Sheryl Skolnick, managing director and senior eHealth analyst at Robertson Stephens (San Francisco), was slightly less diplomatic when she opined that “sanity returns to e-health. Investors hated this combination, as evidenced by the stock’s acute decline in the wake of this announcement.”

Skolnick said the termination of this merger plan could work to restore faith in the e-health marketplace.

“Since this deal was one of a couple of events that we believe led to the fall of the entire e-health group, the termination of this merger could be the catalyst that starts the group again,” Skolnick said.

No dates were given in terms of a final decision from the companies to scuttle the plan. According to the Eclipsys press release, “There can be no assurances as to the outcome of these discussions, or the timing or terms of any termination, if any.”


Cbyon launches computer-assisted surgery with X-ray software

Cbyon Inc. (Palo Alto, Calif.) has entered the field of computer-assisted surgery with its 3D X-ray vision technology for minimally invasive procedures. The FDA-cleared Cbyon Surgical Operating System is a computer-aided, image-guided system for planning and intraoperative navigation of cranial, spine and cranial biopsy procedures.

Cbyon was formed around a proprietary technology platform of software that allows surgeons to virtually “see beyond” anatomical structures during surgical procedures. Cbyon combines CT and MRI scans with intra-operative endoscopic and ultrasound images, which the company says can provide surgeons with visualization of a transparent patient.

With the PC-based system, the surgeon can look at hidden structures from any point of reference and emphasize or minimize particular anatomical structures in real time. The technology is accomplished by projecting a real-time 3D image of the surrounding anatomy onto the surgical field of view. The Cbyon platform will include virtual endoscopy, image enhancements and the flexibility of add-on modules for specialized clinical applications.

Mitchell Seyedin, Ph.D., president, CEO and co-founder of Cbyon, said the technology was developed with Ramin Shahidi, M.D., assistant professor and director of image-guided laboratories at the department of neurosurgery at Stanford (Calif.) University. Seyedin said Cbyon expects the technology to be available in the United States by late summer or early fall.

The technology receives and combines DICOM CT and MRI or ultrasound images and basically turns them into 3D images, creating a transparent patient. The system also features endoscopy integration, which allows doctors to integrate images in a way that Seyedin said takes endoscopy surgery to the next level.

“This is a volume-rendering technology that allows you to see through, as opposed to surface rendering, where you just look at the surface,” Seyedin said. “You can navigate through the tissues. For example, if you take a surgical tool and go around the skull you should be able to make the skull transparent and you can look at the brain; that’s what we mean by transparent patient – the ability to look at every essential organ inside the body and go through the skin and look at the liver or colon or brain.”

Cbyon is in the process of building a marketing and sales force. “We are trying to be creative here to allow all surgeons access to this technology, but we will be looking for a strategic partnership where our technology and somebody else’s technology may fit together and make sense to be co-marketed,” Seyedin said.

As for a list price, the company is investigating what it will cost to own and operate one of the 3D systems. “Our intent from day one was to make this very cost-effective and make it readily available to surgeons,” Seyedin said.


Cedara streamlines Internet-based image distribution

d02h.jpg (9547 bytes)While the use of the Internet to distribute medical images grows almost daily, two main concerns remain: speed and image quality. Cedara Software Corp. (Mississauga, Ontario, Canada) is making an effort to speed up the distribution of DICOM medical images via a PACS and the Internet with the release of its directDICOM product.

DirectDICOM is a streaming software that allows DICOM images to be retrieved from an archive in pieces rather than all at once to allow information to be distributed to the physician faster. The streaming capabilities eliminate the need for pre-fetching and bulk transfer of images in a PACS.

“The idea is to bring the data from the source or image archive directly to the screen of the user,” said Ian Fine, marketing director for Cedara. “With streaming, we can choose to bring only certain portions of the data or certain frames of the image stack.”

For example, Fine said that with a mammogram that may be 100 megabytes in size, a user could retrieve the “centerpiece” or most important information in that image first and the rest of the image later.

“Typically, there is still a lot of black around the images or there may be four images on a film,” Fine said. “So, instead of bringing over all 100 megabytes, you can bring the portion of the image the physician is interested in first and you can get instant feedback and can start reviewing the image.”

Other target applications for the software include cardiac image loops and CT or MRI image slices, which can be retrieved one at a time if needed.

Cedara’s new program does not affect image quality, according to company officials, but the images are streamed in less than real-time (25 frames per second). Cedara re-implemented a low-level DICOM toolkit geared toward streaming and Fine said the software doesn’t change the format of the data at all.

“As we see the bandwidth getting higher, soon you will begin to download not only data, but visualization components and other applications, pieces at a time,” Fine added. “You might download only the 2D portion of an image viewer, because that’s all you need today and tomorrow you need 3D, so it downloads the 3D portion automatically. We’re going in the direction and this product shows that.”


Algotec, Amicas launch Internet image solutions

Two companies are launching their newest developments in Web-based medical image management systems.

Algotec Systems Ltd. (Duluth, Ga.) debuted its Application Service Provider (ASP) model, designed to offer Internet imaging diagnostic capabilities to users on a pay-per-use basis. Meanwhile, Amicas Inc. (Watertown, Mass.) announced its new commercial Web-based service developed to manage and deliver medical images.

Algotec says ASP service targets smaller healthcare facilities, freestanding clinics and individual physicians on limited budgets.

Algotec will receive medical imaging data from participating healthcare facilities and store it on its own hardware. Physicians will access the Algotec service from their own Internet-accessible PCs to obtain imaging studies and corresponding reports. Doctors will receive images together with the tools needed to process them through JAVA technology.

The ASP installation is intended for healthcare entities interested in minimizing their initial expense, said Joel Oates, director of customer support for Algotec’s U.S. subsidiary. “The reduced initial expense, plus a fee each time [customers] use the service, will still be lower than the total up-front expense [for a PACS],” he added.

Oates said the ASP system is secure, and added that users are able to configure the level of security they desire.

Algotec’s adaptive compression technology is designed to ensure that images decompressed on the receiving end will have the same resolution they had when first compressed for sending over the Internet. Adaptive compression technology evaluates each image individually instead of applying a standard compression formula to images across the board.

Amicas introduced its Amicas system, a Web/intranet image server that company officials claim will speed delivery of critical medical information by linking imaging centers, radiologists and clinicians online. The system also is designed to offer total image management with built-in utilities for record matching, data security and privacy, according to a company statement.

The Amicas system features an interface that can integrate an RIS with existing DICOM workstations to link technicians, administrators and radiologists. Physicians viewing medical images from any other location would need a Web browser, the Amicas viewer software and an Internet/intranet connection.

Amicas introduced a per-image service model with plans to follow with the commercial release of an Amicas.net Internet portal later this year. That portal will offer customers additional services, such as access to offsite archives, cost analysis, dictation and transcription and integration with medical records.


Healthcare distributors answer call for online purchasing

For the second time in as many months, a group of major healthcare companies have teamed to create an online healthcare products purchasing system.

AmeriSource Health Corp. (Malvern, Pa.), Cardinal Health Inc. (Dublin, Ohio), Fisher Scientific International Inc. (Hampton, N.H.), McKessonHBOC Inc. (San Francisco) and Owens & Minor Inc. (Richmond, Va.) have agreed in principle to form an “independent, commercially neutral” entity to streamline the purchasing and distribution of pharmaceutical and medical-surgical products, devices and laboratory products and services.

The new initiative comes one month after Johnson & Johnson (New Brunswick, N.J.), GE Medical Systems (Waukesha, Wis.), Baxter International Inc. (Deerfield, Ill.), Abbott Laboratories (Abbott Park, Ill.) and Medtronic Inc. (Minneapolis) unveiled their collaboration on an Internet-based purchasing entity – the Global Healthcare Exchange – to streamline the purchasing process.

The founding members of the newest exchange expect to require investments totaling more than $100 million. The group will form its own company with a management team and board of directors of the chief executives from the participating members, as well as three outside directors.

The new exchange plans to work closely with group purchasing organizations and – in its words – “explore strategic partnerships that can further open customer access to an even greater array of products and consulting services.”

“Virtual organizations like this new exchange will make the movement of information along the supply chain extremely efficient,” said John Hammergren, co-CEO of McKessonHBOC. “They allow the industry to raise efficiency and quality at the same time.”

Global Healthcare Exchange growing
The Global Healthcare Exchange added three new members in April.

Becton Dickinson and Co. (Chicago), Guidant Corp. (Indianapolis) and Boston Scientific Corp. (Natick, Mass.) have all signed on to be members of the online purchasing enterprise.

The online purchasing entity was announced in late March by Johnson & Johnson (New Brunswick, N.J.), GE Medical Systems (Waukesha, Wis.), Baxter International Inc. (Deerfield, Ill.), Abbott Laboratories (Abbott Park, Ill.) and Medtronic Inc. (Minneapolis).


Lunar nets FDA 510(k) on LVA software

d02i.jpg (10862 bytes)Lunar Corp. (Madison, Wis.) recently received FDA 510(k) clearance for Lateral Vertebral Assessment (LVA), a new software application for the company’s Prodigy fan-beam bone densitometer.

LVA provides a dual-energy image of the lateral spine from the lumbar up through the thoracic region, allowing physicians to see and assess vertebral deformities when evaluating a patient for osteoporosis.

According to Patrick Toner, Lunar’s marketing manager, the LVA dual-energy image delivers both qualitative and quantitative results in a single scan as part of the osteoporosis testing procedure. Low energy attenuates off the soft tissue and high energy attenuates off the bone itself. While answering the qualitative “what does it look like” question that prompts a bone study, the LVA simultaneously calculates the “how heavy is it” density numbers important to evaluation and treatment, he said.

“This is a point-of-care procedure,” Toner said, explaining the single-shot LVA scan. Rather than patients having to prepare for a bone density test of the hip or spine and then wait for a second procedure, an X-ray to provide further medical information, they have one scan with the LVA.

The all-in-one scan also addresses the reservations that Toner said doctors, equipment operators and patients have about exposure to radiation.

The LVA is available to existing Prodigy densitometer

customers as a software upgrade with a list price of $4,900.

The company has not set a shipping date, but Toner expects shipments to begin in late spring to early summer.

The LVA does not qualify for reimbursement and that is a problem, Toner admitted. Lunar is working with the National Osteoporosis Foundation and pairing with its competitors in the industry in a low-key campaign for LVA reimbursement, he said.

“As much as we don’t like to, we do pair up with our competitors; in cases like this, we do work together,” he said. “There is strength in numbers. It’s better for the industry to have reimbursement.”


BioSphere nets initial FDA OK on Embosphere Microspheres

Embolic agent developer BioSphere Medical Inc. (Rockland, Mass.) has received clearance on its new embolic agent, the Embosphere Microspheres. The clearance covers use in the treatment of hypervascularized tumors and arteriovenous malformations.

The BioSphere product is different from other embolic agents in that its particles are perfectly spherical whereas particles of the most common embolic agent, polyvinyl alcohol (PVA), are different shapes.

Company officials said orders are being taken now and the product will be distributed in the U.S. by a direct sales force and supported by a clinical support team, both of which are being created.

The new agent is currently under Phase I clinical evaluation for use in uterine fibroid embolization to determine if it is as effective as PVA. Linda Hughes is an interventional radiologist at the Miami Cardiovascular Institute (Miami), one of the facilities testing the product for the FDA. Hughes feels the spherical nature of the Microspheres may be an advantage in UFE.

“If you look at the PVA, no two particles look alike,” Hughes said in an interview with Medical Imaging. “With the BioSphere product, the theory is that these are perfectly round symmetric spheres and you’re going to get a better embolization with something that’s perfectly round versus something irregular.” Hughes also reported that the Microspheres felt “smoother” to inject than PVA.

James Spies, M.D., chief of interventional radiology and associate professor at Georgetown University Medical Center (Washington, D.C.), also is participating in the multi-center clinical trial of the use of Embosphere Microspheres in UFE, but said it may be four months before definitive results are seen.

The Microspheres are already cleared for marketing in Canada and Australia for use in general embolotherapy.


NHD signs supply deal with InSight

Imaging supply and service chain NHD Inc. (Cleveland) has signed a deal to provide imaging supplies and equipment service to imaging center operator InSight Health Corp. (Newport Beach, Calif.). The contract covers an extensive array of supplies and is expected to be worth an estimated $2 million in new business for NHD and its 22 shareholder companies.

The contract will be rolled out regionally at 14 sites in California and Arizona before going national to 32 states.

NHD also will give InSight Internet-based ordering through its Managed Inventory Program. NHD President Steven Johnson said, “InSight will use NHD’s Electronically Enabled Managed Inventory Program to lower transaction costs, reduce the cost of inventory on the shelves, and streamline the supply acquisition process.”


Fischer receives orders for Kodak

Eastman Kodak Co. (Rochester, N.Y.) is preparing for its entrance into the digital radiography (DR) market via a complicated multi-level agreement that will provide Kodak with DR systems in 2000.

At the annual meeting of the Radiological Society of North America (RSNA) in November, Kodak unveiled a deal with Analogic Corp. (Peabody, Mass.) and Direct Radiography Corp. (Newark, Del.) for the two companies to collaborate to provide Kodak with DR systems.

Analogic, in turn, signed a deal with Fischer Imaging Corp. (Denver) to supply X-ray and hardware components that Analogic would integrate and finalize for delivery to Kodak.

In April, Fischer received the finalized multi-million-dollar order from Analogic to supply the X-ray system and hardware. Lou Rivelli, president of Fischer, said the company planned to begin deliveries in May. While Rivelli declined to reveal how many systems were set to ship, he said there are “substantial quantities involved” and that Kodak is planning a “very substantial launch and support of the new product.

“We are also responsible for the after-market support on these systems,” added Rivelli. “That includes installation and support.”

Kodak is planning to launch three new DR systems this year. The DR 9000 system will be a full-room system for general purpose radiology for facilities installing new X-ray rooms or converting to fully digital environments. The DR 7000 system will be an upgrade or retrofit system for an existing X-ray room, while Kodak’s DR 5000 system is designed for dedicated chest exams.


Philips signs three deals

Philips Medical Systems North America (Shelton, Conn.) has signed an agreement for Diagnostic Imaging Inc. (DI of Jacksonville, Fla.) to work on product sales and service.

DI’s parent company, healthcare products supplier PSS World Medical Inc. (Jacksonville), said the deal provides for “a more integrated selling and service relationship between the organizations for an expanded breadth of products.”

Philips also recently signed a sole-source contract with Broadlane, the new purchasing arm of Tenet Healthcare (Santa Barbara, Calif.). Philips will supply 113 Tenet-owned acute care hospitals and 400 affiliated Broadlane members with medical and interventional cardiovascular equipment and service.

Philips’ Integrated Clinical Solutions group has selected Force 3 Inc. (Crofton, Md.) as a network integration teaming partner for North America. Force 3 will provide integration services and related internetworking and security solutions to Philips’ PACS customers.


Instrumentarium unveils digital mammo platform

Instrumentarium Imaging Inc. (Milwaukee) has introduced a new platform for digital breast imaging.

The Diamond platform – unveiled at the ACR Breast Cancer Conference in San Francisco – was submitted to the FDA for marketing clearance in March, according to Timo Ihamaki, product manager for Instrumentarium. The company plans to use the platform as the basis for its digital products in the future.

“From its very beginning, Diamond has been designed to be the digital platform for all digital modalities, including spot, stereotactic, full-field digital mammography and 3D TACT,” said Ihamaki. Diamond also offers film/screen features, such as the AutoPoint detector.

The Diamond platform uses a new X-ray tube with precision-machined cathode constructions, providing a Gaussian intensity distribution within the focal spot for highest possible resolution. The ParkBack feature allows the tube head to be moved from the image receptor to offer more working space during interventional studies.

Instrumentarium also showed its Performa at the ACR conference. Performa is a high-throughput mammography system, which also features the Diamond tube in a smaller footprint. The Performa is currently available for sale.


Siemens unveils Sonoline Elegra 5.0 upgrade

The Ultrasound Group of Siemens Medical Systems Inc. (Issaquah, Wash.) put a further emphasis on the IS side of healthcare recently, when it announced that its 5.0 upgrade to the Sonoline Elegra ultrasound system includes new DICOM features that allow for the seamless integration of text and image data into existing hospital-wide PACS and HIS.

“The workflow is improved by eliminating the need for a technologist to enter redundant data and, therefore, the chances of incorrect data entry can be reduced,” said Daniel Grob, senior network engineer for Siemens’ Ultrasound Group, in a prepared statement.

The expanded DICOM features are in compliance with the Integrating the Healthcare Enterprise technical framework developed jointly by the Radiological Society of North America (Chicago) and the Healthcare Information Management and Systems Society (Chicago).

Siemens also entered into a three-year contract with oncology care provider Network Cancer Care for a variety of Siemens’ oncology care products. Members of NCC can purchase several products from Siemens to help diagnose and treat cancer. These products include the Primus linear accelerators, the Lantis verification system and CT scanners. NCC has chosen Siemens as the primary provider of oncology products to its members for the length of the agreement.


DRC strikes distributor deal with NAI for retrofits

Direct Radiography Corp. (DRC of Newark, Del.) has made a strong move toward marketing its digital radiography system as a retrofit or upgrade product by unveiling plans for a master distributor program specifically for retrofit products.

A plan originally mentioned at the November meeting of the Radiological Society of North America (Chicago) was formalized in April when DRC named imaging tube and components supplier North American Imaging Inc. (NAI of Camarillo, Calif.) as the first of its “master distributors.”

As a master distributor, NAI will enlist a number of qualified sub-dealers to sell and service the retrofit DR systems. NAI will handle the actual transaction and support the regional dealers in the installation and service of the systems. NAI officials said the firm has been installing and servicing image intensifier upgrades and retrofits for close to 16 years and feels that experience will serve the company well in the new venture.

“We have 12 resellers that we’re talking with now that will give us coverage into 18 states and 30 major metropolitan markets,” said Paul Dempster, general manager of NAI’s Technology Products Division. “We have about 12 upgrade proposals now that we’re working with through our distributors. We don’t have any agreements as of yet, but we’re working on the premarketing.”

Frank Csencsits, director of new business development at DRC, said the firm had talked with a number of smaller distributors and opted for NAI because of that firm’s experience in distribution and service of imaging equipment.

James D. Culley, director of marketing at DRC, agreed with Csencsits, saying, “We’ve decided to go with a couple master distributors that will then establish relationships with sub-distributors or regional distributors that would then do the modification and installs. Equipment sales will be through the master distributors.”

Dempster said a company like NAI and its smaller distribution partners will devote more time and energy into service of installations than a large manufacturer. The geographics of the distribution are left up to the master distributors to work out.

“When there is another distributor brought on, there will be some overlap and it will a competitive market which is good for the consumer,” Dempster said. “I think there will be a large degree of cooperation by master distributors so we can minimize the redundancy in geographics. They’ll probably target different segments of the market as well, but until they’re named and identified, we won’t be able to say what they bring to the table versus what we do.”

DRC currently has two retrofit installations up and running at Brooke Army Medical Center (San Antonio, Texas) and Mount Auburn Hospital (Cambridge, Mass.). The company is using those for a model with future projects. The company has kits set up to retrofit two of the most popular radiography tables from GE Medical Systems (Waukesha, Wis.).

The current list price for the retrofit is $250,000.


Financial Pulse

Health Care Markets Inc./Medical Imaging Stock Index Analysis

Imaging agent developer Cytogen Corp. (Princeton, N.J.) is blaming stock market conditions for scuttling plans – at least temporarily – to offer an additional 6 million shares of its common stock.

The price of Cytogen shares dropped sharply in April, leading company officials to delay its stock offering until it can garner a higher price for its stock.

Cytogen stock was trading in the $9 range in late March when the company filed its S-3 form with the Securities and Exchange Commission (SEC) to offer the additional shares. It had dropped to approximately $5 per share by mid-April, which led the company to shelve the offering.

Cytogen expected to collect $50.9 million from the stock sale, based on an assumed price of $9.11 per share, according to the company’s prospectus filed with the SEC on March 28.

The company planned to use the funds for continued development, manufacturing and commercialization of certain technologies, research and development of more products, expansion of sales and marketing capabilities, and other general corporate purposes.

“If you look at virtually all the biotech stocks, they have been out of favor as a sector for the last few weeks,” said Richard W. Krawiec, Ph.D., vice president of investor relations and corporate communications. “The market conditions were just not appropriate for this type of offering.”

In response, Cytogen, which manufactures the ProstaScint and OncoScint imaging agents, filed a shelf offering with the SEC, which means – in Krawiec’s words – the company has “the intention of selling securities, but not immediately.” Krawiec said a shelf offering can stand for up to two years.

He added that Cytogen would have to update its S-3 filing before it offers the six million shares. He declined to say under what market conditions Cytogen would consider refiling to offer the shares. Cytogen went public in 1986.


Financials

Trex Medical Corp.’s (Danbury, Conn.) search for a buyer apparently has scared customers and caused sales to plummet in the second quarter. Trex reported sluggish revenues and an increased net loss for the second fiscal quarter, ending April 1. Revenues fell to $41.1 million, a 31 percent decline from $60.2 million in the same quarter a year ago. The company’s net loss grew to $6.6 million, up from a loss of $4.2 million in FY99’s second quarter. Company officials said the process of looking for a buyer, which was announced in January, has caused uncertainty among customers and dealers.

Imaging agent developer Epix Medical Inc. (Cambridge, Mass.) reported a strong increase in revenues for the first quarter, but saw its net loss climb $1.5 million on increased expenses. Revenues ended at $859,000, almost three times $287,000 in the first quarter of 1999. Expenses grew nearly $2 million in the quarter to bring the company’s net loss to $5.2 million, up 40 percent from the $3.7 million net loss reported a year ago.

ADAC Laboratories Inc. (Milpitas, Calif.) saw a strong turnaround in the second quarter of fiscal 2000, reporting increased revenues and net income for the three-month period ended April 2. Revenues edged up to $90 million, a 3 percent step-up from $87.4 million a year ago. Net income was $3.1 million, compared with a net loss of $20.8 million in the second quarter of FY99, which included $18 million in pre-tax charges. Company officials credited tighter control of expenses and improved