February 2002

The Imatron C300 EBT scanner now is part of the CT portfolio at GE Medical Systems.

The stock transaction converts every 100 shares of Imatron stock into five shares of General Electric Co. (GE of Fairfield, Conn.) common stock, plus $3.73 in cash in lieu of fractional shares of GE stock. GE stock traded in the range of $40 per share at the time of the closing.

For GEMS, the addition of Imatron’s EBT technology adds another dimension to its LightSpeed CT line. Imatron’s line has been used chiefly for cardiac imaging, including coronary artery calcium scoring and to detect coronary artery disease. Imatron estimates that its EBT scanner currently is in use at more than 150 medical facilities and imaging centers around the world.

Peter Arduini, GEMS’ general manager of global CT, said the company will continue to invest in the development of both its LightSpeed CT line, as well as Imatron’s EBT systems.

GEMS unveiled its newest multi-slice CT scanner at the 2001 annual meeting of the Radiological Society of North America (RSNA of Chicago). The LightSpeed Ultra is designed for cardiac, lung and colon applications, as well as to reduce patient radiation dose and enhance patient care in hospitals and freestanding imaging centers.

Also in Chicago, Imatron debuted its new EBT scanner, the C300. The PC-based system features an enhanced graphical user interface and image reconstruction delivery within three seconds.

GEMS plans to keep manufacturing operations for Imatron’s EBT C300 scanner in South San Francisco.

In December, Imatron reiterated its expectations that its second-half financial results would be close to the break-even point, while the company posts a profit for all of 2001.

In addition, Imatron said “decreases in consumer spending and confidence in the economy has lead to a number of lost orders which were forecasted for the third and fourth quarters of 2001.” The company cited several cases where foreign and domestic orders were placed on indefinite hold or cancelled.

Imatron was projecting sales of $71 million in 2001, down from its previous forecast of approximately $80 million in revenues.

EMI says the target of GEMS’ interest is InSightec, which develops and manufactures real-time, image-guided and monitored high intensity focused ultrasound systems for soft-tissue coagulation. InSightec says the technology may replace some surgical procedures, while reducing morbidity, surgical complications and hospitalization.

In November 2001, the FDA cleared InSightec for a Phase III investigational device exemption (IDE) for breast fibroadenomas. The company also currently is conducting FDA IDE-approved Phase II protocols in breast cancer and uterine fibroids.

The InSightec system is installed in 10 sites worldwide. The company plans to install 10 more devices by the end of 2002. InSightec still is at what EMI describes as the “research and development stage.”

Under the agreement, GEMS would invest $10 million in InSightec in a combination of cash and equipment for 11.8 percent of InSightec’s shares. GEMS also will convert its previous 5 percent holdings in InSightec’s subsidiary into an additional 5 percent holding in InSightec. EUBV’s holdings in InSightec will be diluted following this transaction to 61.14 percent.

In addition, GEMS will receive warrants for the purchase of an additional 5 percent of the shares of InSightec for $3 million, exercisable for three years.

The Georgia World Congress Center hosts HIMSS 2002 from Jan. 27 through 31. This year’s event features more than 600 exhibitors, more than 150 educational sessions and a bevy of workshops addressing the latest healthcare information technology, products, services and topics.

Cerner Corp.’s RadNet ProVision RIS/PACS product

Three internationally known keynote speakers headline the HIMSS agenda. On Monday, Jan. 28, Donna Shalala, former secretary of the U.S. Department of Health and Human Services, delivers the keynote address. On Tuesday, Jan. 30, former vice president Albert Gore Jr. headlines the day’s events, while actor Ben Vereen addresses HIMSS 2002 on Thursday, Jan. 31. Vereen has become heavily involved in humanitarian activities with the creation of Celebrities for a Drug-Free America, since his near fatal car accident in 1992.

HIMSS 2002 highlights include the third year of the Integrating the Healthcare Enterprise (IHE) initiative with demonstrations that profile integration solutions. IHE plans include the first examination for HIMSS’ new certification program — Certified Professional in Healthcare Information and Management Systems (CPHIMS) — and separate tours of Emory University Hospital (Atlanta) and the Centers for Disease Control and Prevention (Atlanta).

As of January, HIMSS reunified with the Center for Healthcare Information Management (CHIM), creating a corporate membership within HIMSS. The addition of corporate membership is intended to enhance the industry’s voice on public policy and to create new opportunities for providers and healthcare information technology suppliers and consultants to collaborate on the effectiveness of healthcare information and management systems.

On the exhibit floor, Agfa HealthCare (Ridgefield Park, N.J.) will demonstrate a new informatics initiative, the Clinical Content Manager. The works-in-progress includes software designed to facilitate the diagnosis and care of patients by providing related images and educational content via a PACS and a physician’s desktop. Clinical Content Manager will offer proprietary mining, authoring and presentation tools for added efficiencies and rapidly retrieving related data to facilitate the diagnostic process.

Another on-display works-in-progress is Agfa’s IMPAX v4.5 workstation review software. Features include an automated exam work list and a study display management system. Customization tools on IMPAX v4.5 let a user design the look and functionality of the workstation to meet individual needs. IMPAX v4.5 is expected to be available commercially early this year.

Also look for Agfa’s IMPAX OT3000 orthopedic display station for bone and joint replacement specialists, as they develop and distribute pre-surgical plans. The unit is an extension of Agfa’s IMPAX radiology diagnostic workstation DS3000. The OT3000 also is set for commercial release early this year.

Agfa also is setting its sights on the heart with Web1000 for Cardiology, an enhanced version of its Web1000 enterprise Web server, which enables physicians and clinicians to view information and images remotely through a LAN (local area network), WAN (wide area network) or the Web. The release of IMPAX Web1000 for Cardiology is pending.

Algotec Inc. (Duluth, Ga.) will bring a new version of an old favorite to HIMSS 2002. The newest version of the company’s Web-based product line incorporates new features for enhanced integration and workflow. MediSurf version 4.0 includes upgraded applications for integrated workflow tools, such as customized worklists and worklist management. Other features include reference lines for indication of the anatomical position of each slice in CT and MRI, stack reading or an automatic grouping of images, and new scrolling and linking features.

The company’s newest MediPrime workstation software, version 2.0, integrates advanced 3D image post-processing into the primary reading process, equipping desktops for high-volume CT and high-resolution MRI scanners.

MediSurf 4.0 is set for availability by the end of the first quarter. MediPrime 2.0 is expected to be commercially available in the second quarter.

Another new highlight for HIMSS is the RIS Sync feature for ImagiNet — Algotec’s overall management system. RIS Sync software ensures that RIS data is synchronized with any and all PACS data.

Amicas Inc. (Newton, Mass.) will reprise Office Suite 4.0 at HIMSS. The Internet-based, software-only PACS permits authorized users to access a patient’s current and prior studies from any location in or outside of a hospital. It includes three products: Personal Office, which puts PACS in a single workstation; Radiology Office; and Enterprise Office. Most of Office Suite 4.0 is commercially available, with current Office Suite customers receiving upgrades automatically.

Small business is the latest market for Brit Systems Inc. (Dallas). Brit’s Roentgen Files PACS product sports a new module called MiniRIS, designed for use by small clinics and hospitals conducting fewer than 20,000 exams annually. MiniRIS provides integrated scheduling and reporting and includes physician demographics, exam status and management tools, report storage, and an HL-7 and DICOM interface. It is compatible with IBM’s DB-2 database, and can run on either Windows 2000 or Windows XP systems. The package is scheduled for release in May.

Cerner Corp. (Kansas City, Mo.) will showcase its three-monitor, integrated RIS/PACS that premiered at RSNA 2001. With Cerner ProVision PACS and RadNet, radiology information system/ enterprise-wide clinical imaging is now part of the electronic medical record.

In addition, Cerner will announce its patient accounting and revenue cycle management solution, ProFit. With successfully functional alpha and beta sites, the company says ProFit is the world’s first fully integrated clinical and financial patient accounting system. ProFit has proven to post a 1-to-2 percent increase in healthcare facility savings and increase consumer satisfaction.

eMed Technologies’ Image Manager

eMed Technologies Corp. (Lexington, Mass.) will focus on integration of information management systems and HIPAA compliance. The company will discuss its new relationship with Network Appliance Inc. (Sunnyvale, Calif.), which will provide storage for eMed’s new Network Attached Storage (NAS) image archiving solution. Other new products include the latest software release for DataBridge, eMed’s HIS/RIS integration engine. The new version automatically updates the PACS database every time the HIS/RIS is updated. It includes automatic demographic updates and practical administrative tools for database management, all driven by DataBridge.

Fujifilm’s ClearView-ES digital chest x-ray system

Fujifilm Medical Systems USA Inc. (Stamford, Conn.) has a host of products to highlight this year, including its Synapse Web-based PACS. Synapse has brokerless HIS/RIS integration and works in conjunction with other vendors’ technologies and voice recognition.

Fujifilm also will showcase its SmartCR (computed radiography) device. SmartCR has a footprint of three square feet, making it an option as an in-room reader in hospital specialty departments or in smaller facilities or healthcare provider locations.

Fujifilm also will display its ClearView-ES digital chest x-ray system with dual-side reading and energy subtraction (ES). With just one exposure to the patient, Fuji’s patented ES technology produces three displays of an exam — soft tissue only, bone and calcified structures without soft tissue, and a standard chest radiograph.

In addition, Fujifilm will have its Flash IIP console at HIMSS 2002. The compact, fully integrated ID terminal and QC console is designed to enhance throughput and simplify workflow.

GE Medical Systems Information Technologies (GEMSIT of Milwaukee) will introduce the entire clinical suite of its GE Centricity information systems at HIMSS 2002. The GE Centricity clinical suite features computerized physician order entry (CPOE), as well as a single point of access to electronic patient records, as the system helps to manage, archive and display patient information across multiple departments and care areas, terminals, the bedside or on hand-held devices.

GEMSIT also will highlight its expanding wireless and telemetry capabilities, spurred by GEMSIT’s January acquisition of Danica Biomedical A/S (Copenhagen) and its September 2001 purchase of Data Critical Corp. (Bothell, Wash.) and VitalCom subsidiary.

Philips Medical Systems North America (Bothell) brings to HIMSS integrated cardiovascular imaging and information management systems. A demonstration will highlight the integration of the company’s Inturis line for echocardiography and cath labs, its EnConcert products for diagnostic assessment and long-term storage, and its TraceMaster ECG management system with the Apollo cardiovascular information systems platform and CardioChart Web service from Lumedx Corp. (Bellevue, Wash.). Images, waveforms and final reports processed by the various Philips applications will be forwarded to Apollo for universal distribution.

Philips’ new Inturis CardioLogica XR automates cath labs, generates reports, and manages workflow and analyses outcomes. EasyWeb Cardio, also new, is a clinical decision support tool that uses standard Internet technology to deliver enterprisewide access to images, clinical information and ECG waveforms at the desktop.

RealTimeImage Inc. (San Bruno, Calif.) will bring its extended iPACS product line to Atlanta. The iPACS Prism is a turnkey short-term digital solution for image distribution that enables images to be available for local reading and to be streamed over the Internet for distribution to locations without a PACS or other archiving system.

Mega iPACS combines full streaming capabilities and advanced data integration for facilities with multiple distributed servers, such as large individual hospitals with multiple users outside the hospital or organizations that use a distributed architecture for archives.

Implementing best practices to improve workflow and revolutionize healthcare are the messages from Siemens Medical Solutions (Iselin, N.J.).

Three divisions of Siemens will be on hand in Atlanta — Siemens Medical Solutions, Siemens Health Services and Siemens Information and Communication Networks (ICN). ICN is one of the world’s largest providers of integrated voice and data networks for customers, carriers and service providers.

Siemens will showcase its Soarian health information product, which the company launched in October 2001. Soarian is designed with workflow management tools and a smart user interface to help orchestrate all aspects of care. From patient histories to payer contracts to outcomes, Soarian intends to help users synchronize, monitor and track patient care across the healthcare enterprise.

Also on display will be syngo, Siemens’ software for medical imaging that provides a common user interface across all medical modalities.

Stentor Inc. (So. San Francisco) will showcase its trinity of trends, all of which build upon iSyntax, the company’s core technology.

iSite Enterprise promotes an enterprise approach to image distribution using hospitals’ existing PCs. While iSite Enterprise has been available commercially for one year, the company launched version 3.0, with new features that address workflow issues at RSNA 2001.

iSite Radiology separates presentation and navigation on radiology workstations. It presents a complete overview of prior exams and patient history on a separate navigation console, dedicating the diagnostic monitor space for image display.

iVault offers perpetual online long-term image archiving. Using RAID 5, network-attached storage, iVault stores all image data on an active image server and allows immediate data accessibility to all iSite users across the enterprise.

Kodak has begun a search for a new president of the Health Imaging unit.

Before becoming president of Health Imaging in October 2000, McQuade, 46, was the unit’s general manager of worldwide operations. He joined Kodak in 1998 when the company acquired the Medical Imaging Systems business of Imation Corp. (Oakdale, Minn.), which was spun from 3M in 1996. McQuade served as general manager of Imation’s Medical Imaging Systems business at the time of the December 1998 transaction.

Prior to Imation, McQuade had served at 3M since 1982. He held a number of positions in research and development and technical management.

Kodak also announced the promotion of Candy M. Obourn to the post of COO of the Health Imaging unit, effective immediately. Obourn served as senior vice president of Kodak and had been president of the company’s Document Imaging business. Obourn handles the daily operations of Kodak’s second-largest unit.

Obourn, 51, began her career at Kodak as a systems analyst in 1974 and has held executive positions in management information systems, corporate planning, Business Imaging Systems and Document Imaging.

As of Jan. 2, Delft’s majority stake in Rogan rose to 70 percent. It was just a year ago — the start of 2001 — when Delft increased its share in the PACS company from 35 percent to 52 percent.

Rogan specializes in picture archiving and communications systems (PACS) and markets its HyperPACS worldwide. Delft plans to continue to operate Rogan as a separate company.

Rogan currently collaborates with two other Delft Instruments companies — Nucletron B.V. (Veenendaal, Netherlands), which specializes in radiotherapy and thorax imaging technology, and Oldelft Benelux B.V. (Delft), which distributes and services medical equipment.

Rogan’s technology portfolio includes its Everything-On-Line (EOL) concept, which is designed to enable all image material required by doctors, nursing and support staff to be accessed instantly at all times and at all workstations.

Rogan’s latest version combines EOL with the company’s Multiple Archive Storage Server (MASS) concept, which is designed to deliver radiological studies faster.

Smith officially began his tenure at the PACS and web-based medical image distribution company on Jan. 8. Smith most recently served as chairman and CEO of the Potomac Group Inc., a holding company for healthcare software and services.

Smith fills the CEO vacancy left by Caren Mason, who stepped down from the position in May 2001 after 17 months in the post. Mason cited a commute from Wisconsin and family responsibilities for her decision.

Prior to eMed, Mason served as the general manager for GE Medical Systems’ (GEMS of Waukesha, Wis.) Women’s Healthcare Business unit.

Eckert will be responsible for worldwide operations for the company that provides eLearning software for Global 2000 companies.

Eckert left ADAC at the end of February 2001, about a month after Royal Philips Electronics (Amsterdam) completed its $426 million acquisition of the nuclear medicine company.

Eckert began his career at ADAC in 1990 as controller of the customer support division He was promoted to president and COO of ADAC in 1996 and moved into the CEO’s role in 1997. In April 1999, Eckert also was named chairman.

The company, which owns and operates fixed-site and mobile medical imaging services, is looking to ride the wave of increasing MRI, CT and positron emission tomography (PET) procedures to greater revenues and market expansion.

MRI remains king of Alliance’s medical imaging services, accounting for approximately 90 percent of the company’s business. CT is holding strong as a distant No. 2 contributor to revenues, while the blossoming popularity of PET is making modest strides inside Alliance. Alliance’s fourth-largest business segment is lithotripsy.

“The number of CT procedures has just exploded. It is truly on fire,” said Richard N. Zehner, Alliance’s chairman, CEO and co-founder. “We’re not just talking screening, calcium scoring or virtual colonoscopy. We are getting a lot of leads from hospitals that may have two CT [scanners] that are backlogged and want additional time or have construction projects.”

Alliance operates in 42 states, missing some coverage in the more sparsely populated regions of the upper Midwest, Wyoming and Alaska.

As of Sept. 30, 2001, Alliance had approximately 402 medical imaging machines in operation. The company had only 14 PET machines in service, with plans to add more units in 2002, but not at the expense of foregoing MRI upgrades.

“We will buy approximately twice as many MRI [systems] in 2002 than PET units in total numbers,” Zehner said. “We ended Sept. 30 with 335 MRI [systems]. Say, we add one [MRI system] every two weeks — and that is our typical run rate, 26 machines or so [annually] — it still would be a bigger number than our PET business.”

Zehner readily emphasizes that there is market demand for PET imaging that outpaces the number of PET machines available, adding that he believes the demand will continue for the next four to five years.

Looking ahead, Zehner said he expects Alliance to continue to grow with MRI, CT and PET procedures, as well as through acquisition. Alliance has made 12 acquisitions since 1996.

Alliance also expects to benefit from customers who are looking to convert to fixed medical imaging sites. “The demand for us to do conversions [to a fixed site] is probably as good or as great as it has ever been,” he added.

Alliance categorizes income as wholesale (89 percent of total revenues) or retail (11 percent).

While cardiac screening has become a revenue generator in CT, Zehner is cautious about its potential as a long-term source of growth.

“What I am not quite sure about is the longevity of the business,” he said. “I understand the first generation goes through the screening, but what is the repeat business? What is the three- to five-year business? It could be well-used like mammography and be an incredible business or it could be a flash in the pan and be gone. I don’t know the answer to that.”

The bottom-line result is Analogic’s first quarterly loss in 30 years.

Revenues in Analogic’s first fiscal quarter, ending Oct. 31, decreased 7 percent to $75.8 million, compared with $81.6 million in the first quarter of FY2001. The write-off produced a net loss of $6.4 million, compared with net income of $4.6 million in the year-ago quarter. Excluding the first-quarter charge, Analogic would have reported net income of $736,000.

The charge includes a $3.6 million write-off for Anatel’s assets relating to certain voice-over- Internet protocol products and a $5.3 million write-off from Analogic’s Test and Measurement business.

In the quarter, Analogic achieved what it described as “modest growth” in its computed tomography and digital radiography equipment businesses. Also, its Anrad Corp. (St. Laurent, Quebec, Canada), B-K Medical A/S (Gentofte, Denmark), Camtronics Medical Systems (Hartland, Wis.) and Sky Computers Inc. (Chelmsford, Mass.) subsidiaries all increased revenues compared to the year-ago quarter.

Analogic President and CEO Thomas J. Miller expects the security-related CT business will compensate for medical CT business Analogic lost when Philips Medical Systems International B.V. (Best, Netherlands) acquired Marconi Medical Systems Inc. (Highland Heights, Ohio) and its CT line.

“The Philips-Marconi merger, of course, will ultimately cause our CT business with Philips to go down. However, our relationship with Philips remains very strong,” he said. “The immediate means by which we fill [the loss of business] has nothing to do with medical. It will be CT scanners for security imaging or motion detection; the demand for which recently has increased.”

Compiled and analyzed by Health Care Markets Inc. (Hilton Head, S.C.), the stock indices above plot the performance of two market segments: Imaging Devices and Imaging Services. The indices are part of WDI’s healthcare database of more than 1,000 companies. For comparison we also plot the progress of the S&P 500. The indices began in January 1991 with a base of 100.

Conceived in 1999 and established less than a year later, the upstart Quantum has achieved some impressive growth in its short history.

President Scott Matovich said the company “exceeded expectations” in 2001 in shipments, production and distribution. The sales goal for 2001 was $8 million.

“We did probably a little over $10 million [in sales in 2001] in our first year of operation,” Matovich said. “We are anticipating doing close to $20 to $22 million in sales [in 2002]. We certainly would like to exceed that, but it is a realistic goal.”

Quantum now has a presence in 45 countries around the world. The company closed the year with approximately 45 employees, with plans to grow to a work force of 60 by the end of 2002.

Quantum plans to begin shipping the QV-800 universal x-ray system in the first quarter of 2002.

Quantum also began worldwide shipping this past fall of its new Quest HF generator lines. The Quest HF series is designed for both digital and conventional imaging and can operate at a near-constant potential of 120 kHz for x-ray applications. The Quest HF is available in 20 kW and 50 kW models.

As for the immediate future, Quantum plans to hold its course, staying focused on the radiology side of the business, enhancing some of its current product line and advancing R&D on potential new offerings.

Given recent consolidations and acquisitions within the industry, Quantum is facing larger competition. Matovich sees the company as a niche player.

“We look at that as a great opportunity,” he added. “We are probably one of the first new radiographic systems with a complete line with everything designed and built from the ground up for both analog and digital. Yet, we kept the price points very reasonable to be very competitive.”

Today, InSight is looking to move forward by investing more capital, mulling more start-up operations and exploring more acquisitions.

With a combination of fixed-site and mobile business — split approximately 50-50 in terms of total revenues — InSight’s goal is to grow both segments.

“We have 177 pieces of equipment and our job is to maximize the return on all that equipment,” said President and CEO Steven T. Plochocki, “whether it is a mobile, fixed site or rental situation.”

As of December 2001, InSight had approximately 140 MRI systems in service, 21 CT scanners and six positron emission tomography (PET) devices. Plochocki expected InSight to have 10 PET scanners by the end of 2001.

“From where we sit, PET is definitely an evolving modality. We are building it up slowly,” Plochocki added. “One of the advantages of having a mobile system is that when you introduce a new modality into your company, you can do it in a low-risk way. You can park it at four or five different institutions during the week as you build your critical mass. If you introduce PET into a fixed site, you have to very quickly mature the behavior patterns in that market.”

As for InSight’s portfolio mix, Plochocki does not see it changing, as long as MRI and CT procedures continue to increase.

“Our operating logistics models are geared nicely for our fixed sites to run MRI- and CT-based businesses,” he added. “We don’t want to be shortsighted, but aside from PET, we don’t see a whole lot of new technology coming down the pike.”

In its fiscal year, ending June 30, 2001, InSight posted revenues of $211.5 million and net income of $13.8 million.

When InSight went back into the hands of private investors, it did so with the goal of becoming a $500 million in five years. Plochocki said that goal depends, in part, on future federal budget allocations for healthcare — especially in light of the Sept. 11, 2001 terrorist attacks in the United States — and the government’s emphasis on defense spending.

InSight currently is in 28 states, with 70 fixed sites and 90 mobile units. Business expansion will come by adding onto the markets where InSight currently has a presence.

“We like the idea of building our regional pods, because we can leverage management, billing, scheduling and supplies by having a hub service five or six centers,” Plochocki said. “As we continue to grow in the market, we can add more centers and capture more market share through managed care contracts.”

With the bulk of InSight’s mobile business in the eastern United States, he added that InSight “will probably spread that more west of the Mississippi [River].”