| HCFA expands Medicare reimbursement for PET |
| Positron emission tomography (PET) advocates, equipment manufacturers and suppliers received very welcome news from the Health Care Financing Administration (HCFA) on Dec. 15.
The agency issued a decision to expand Medicare reimbursement for PET scans for older Americans in six cancers — lung, colorectal, lymphoma, melanoma, head and neck and esophageal. In each of these cases, PET will be reimbursed from diagnosis and staging to assessment of therapy and the recurrence of disease. The additional coverage will include FDG (fluorodeoxyglucose) cardiac scans for the evaluation of myocardial viability and neurological scans for the presurgical evaluation of patients with epilepsy. According to the Academy of Molecular Imaging (Washington, D.C.), HCFA’s action marks the first time the agency has set a national coverage policy that allows physicians to use their judgment of how best to use PET to improve the care of their patients. The coverage also provides for determining which patients will benefit from revascularization in heart disease and for identifying epilepsy patients who will benefit from surgery. PET certainly has caught the eye of medical imaging manufacturers over the last two years, as HCFA has begun to approve more indications for reimbursement. The PET market began to accelerate by mid-1998, as HCFA in January of that year cleared payments for PET imaging to detect solitary nodules and initial staging of diagnostic lung cancer. Reimbursement for additional indications have buoyed the PET market even further. The industry consensus is that PET equipment sales could top $500 million worldwide in the next 12 to 18 months. “That’s what happens when an industry sees PET as a powerful tool that can save lives,” said Beth Klein, vice president and global general manager for nuclear medicine and PET for GE Medical Systems (Waukesha, Wis.), speaking with Medical Imaging at the meeting of the Radiological Society of North America (RSNA) in November. “PET is the most specific and sensitive device for detecting cancer,” she added. “You can detect lesions earlier with PET; sometimes before they can be seen anatomically. The earlier you detect lesions, the higher that correlates to saving lives.” Klein said that PET sales now account for approximately 50 percent of GEMS’ nuclear medicine revenues. “So many of the [industry] meetings over the past year have showcased PET,” Randy Weatherhead, vice president of nuclear sales and marketing for Siemens Medical Systems Inc. (Iselin, N.J.), told Medical Imaging at RSNA. “The technique is so powerful for showing cancer.” The additional HCFA reimbursement approvals also are expected to aid in the growth of mobile PET equipment sales and mobile services to facilities looking to provide PET imaging for patients. |
February 2001
| GEMS closes 2000 with Elscint, Critikon deals |
 GE Medical Systems (GEMS of Waukesha, Wis.) put the wraps on one acquisition agreement and closed on another purchase just before the new year began.
On Dec. 31, 2000, GEMS and Elscint Ltd. (Haifa, Israel) finalized their agreement for GEMS to purchase Elscint’s 50 percent share of Elgems Ltd. (Haifa), the companies’ joint venture created in 1997 to manufacture nuclear imaging systems. GEMS paid $30 million for 100 percent ownership of Elgems, which becomes a wholly owned GEMS business. Elgems has been a big contributor to GEMS’ products over the last three-plus years, providing research and development, engineering and the manufacture of all GEMS gamma cameras and other nuclear imaging and PET products. Among the innovations to come from Elgems is GEMS’ FDA-cleared Hawkeye, which was the first system to combine computed tomography and nuclear medicine, fusing anatomic and functional data into one image. Elscint will continue to act as the primary source for the components used in Elgems’ nuclear imaging products. Four days prior to the Elscint pact being completed, GE Medical Systems Information Technologies (GEMSIT of Milwaukee) completed its acquisition of Critikon Co. LLC (Tampa, Fla.), a privately held, noninvasive blood pressure monitor maker, for an undisclosed amount. The Dec. 27, 2000, transaction follows an existing joint development alliance the companies crafted in December 1999 for GEMS to integrate Critikon’s Dinamap blood pressure monitor into GEMS’ Dash 3000 Pro patient monitor. Critikon will operate under the GEMSIT name and maintain its operations in the United States and Mexico. |
| Eastman Kodak realigns its global organization with Health Imaging |
| The Health Imaging (HI) division of Eastman Kodak Co. (Rochester, N.Y.) began the new year with a new organization, a change the company said is intended to take advantage of operational efficiencies and increase customer satisfaction.
The new structure creates: “The structure will help us grow more rapidly and facilitate an improvement in our customer relations,” said Rick Cimino, general manager of the Americas Area and vice president of Health Imaging. “The Americas and EPMAR areas will be chartered primarily with the marketing and selling of solutions. The director of global operations will serve us as the owner of operational services so we can focus on marketing and selling, and that organization will take the processes to the next level to improve customer satisfaction.” Cimino explained that the change allows Kodak to streamline its decision-making process and consolidate common operations functions, while remaining mindful of regions’ differences. Previously, all areas operated separately, linked only at the highest levels of company-wide strategy, he said. The company is not incurring any new costs as a result of the organization, he said, calling the move an “alignment of existing resources.” |
| Kodak completes Lumisys buy |
 Christmas came a day late for Eastman Kodak Co. (Rochester, N.Y.), but the company knew it was just a matter of time before it would close on its acquisition of Lumisys Inc. (Sunnyvale, Calif.).
The desktop computed radiography (CR) and X-ray film digitizer company officially joined Kodak’s Health Imaging division on Dec. 26, 2000. Kodak paid $4.05 per share for Lumisys stock, valuing the transaction at $39 million. J. Michael McQuade, president of Health Imaging, said Lumisys’ digitizer business allows Kodak to add that equipment option for customers who are transitioning to PACS and digital radiography. Lumisys’ desktop CR, the ACR-2000 system, McQuade added, also would stretch Kodak’s offerings to the lower end of the market, complementing Kodak’s midrange CR 800 for distributed image processing and premium CR 900 model for centralized image processing. With the introduction last year of new digital radiography (DR) products, Health Imaging registered more digital sales than analog sales for the first time in its history. Kodak also gains auntminnie.com through the Lumisys acquisition. McQuade said that it is “important” that the radiology information portal — which will remain as a Lumisys subsidiary — “stay as an independent outlet and objective editorial source.” |
| Insource Management Group, HealthLink merge |
| Insource Management Group Inc. (Houston) and HealthLink Inc. (Charlotte, N.C.) have become one, creating a privately held IT services company. Combined, the two companies will have 2000 revenues of $27.6 million and projected 2001 revenues of $35 million.
The new company — named Healthlink — will have its headquarters in Houston. Ivo Nelson, president and CEO of IMG, will serve as CEO. Bill Augustine, founder and CEO of HealthLink Inc., will be the new group’s senior executive vice president. Merger discussions between IMG and HealthLink began early last year. The two companies later scrapped their talks because the framework of the transaction was not working. “We rethought how we were going to put the two companies together, and in September kicked [talks] off again and signed a letter of intent,” said Nelson. The new Healthlink will continue to do what both firms have done in the past — provide a comprehensive set of solutions designed to help clients solve their problems from an IT and cost standpoint, reducing their cost through better use of information systems. Targeting large, integrated delivery networks (IDNs) and healthcare organizations, Healthlink will have 180 consultants to provide solutions for managing and improving services via technology and process improvement. The new company’s combined customer base and geographic focus areas have little overlap — approximately 10 percent, estimated Nelson. The client list includes Baylor College of Medicine (Houston), Texas Children’s Hospital (Houston) and The Mayo Clinic (Rochester, Minn). “Our ability to sell our services into those clients is key, because what they do is a set of services that is quite different than what we do. There is very little overlap between the two [companies],” Nelson said. Geographically, most of HealthLink’s clients are east of the Mississippi River, while the majority of IMG’s customers are in the West. The merger provides instantaneous national coverage. Nelson said the third major factor for the alliance was the companies’ cultures. He said the combination of national coverage and a more comprehensive set of services for clients will mean more revenue per client than the companies have received in the past. “We have more revenue to cover overhead and that allows us to do things bigger, bolder, faster and more aggressively than we have been able to do in the past,” Nelson said. Nelson said that over the last three years, average revenue on a per client basis has been approximately $500,000 for what he described as “key clients.” |
| ATL gets $4.3M from Colorado Medtech for supplies group |
| Colorado Medtech Inc. (Boulder, Colo.) jumped into the new year with its purchase of ATL Ultrasound’s (Bothell, Wash.) supplies group for $4.3 million in cash.
The transaction includes a five-year agreement to develop accessories for ATL Ultrasound systems. ATL’s supplies group sells imaging supplies, such as print media, transmission gels, covers and drapes to ultrasound system users worldwide. Annualized revenues are estimated to be approximately $8 million. Civco Medical Instruments (Kalona, Iowa), Colorado Medtech’s subsidiary, specializes in the design, development and manufacture of ultrasound needle guidance systems, transducer covers and diagnostic accessory devices for original equipment manufacturers. |
| Bracco boosts nuke medicine position |
| The Bracco Group (Milan, Italy) has acquired products and intellectual property of Resolution Pharmaceutical, a private Canadian biotechnology company that specializes in the development of radiopharmaceutical products.
Resolution is active in the development of new approaches to diagnosis, staging and treatment of neoplasias. “Through this acquisition, the Bracco Group strengthens its position in the in vivo imaging sector based on nuclear medicine,” said Diana Bracco, president and CEO of Bracco Group, in a prepared statement. The Bracco Group’s primary nuclear medicine holdings are Bracco Diagnostics Inc. (Princeton, N.J.) and Bracco Research USA (Princeton). |
| MRI to delve into multiple sclerosis |
| The National Multiple Sclerosis Society (New York City) has awarded a $613,687 grant to scientists at the U.S. Department of Energy’s Brookhaven National Laboratory (Upton, N.Y.) to search for clues about the disease.
The three-year study will use Brookhaven’s 4.0 tesla MRI scanner to attempt to identify early warnings signs. “The overall goal of this project is to learn about some of the very early changes that may put people at-risk for the disease,” said William Rooney, the chemist leading the study. Specifically, the Brookhaven scanner will help scientists look for subtle changes in blood vessels that precede multiple sclerosis (MS) activity. MS is characterized by scar-like lesions of the brain and spinal cord and can lead to symptoms, such as mild numbness to severe paralysis or loss of vision. Scientists believe that an early step in lesion formation is an influx of water into the brain through leaky cerebral blood vessels. When that happens, the body’s immune cells attack the insulation surrounding the nerve cells, weakening their ability to transmit electric signals. The blood vessel may reseal, but is left with multiple scars — hence, the name of the disease. MS occurs twice as often in woman as in men and tends to strike in the second through fifth decades of life. The cause remains unknown. |
| Executives on the move |
| Terry Ross, president of Imatron Inc. (So. San Francisco), is retiring. Ross will remain as a member of the board focused on strategic business development.
Fischer Imaging Corp. (Denver) has named Louis Rivelli president and CEO. Former CEO Morgan W. Nields will continue as chairman of Fischer’s board of directors. As chairman, Nields will advise the company on long-term corporate strategy and serve as a corporate spokesperson. Rivelli joined Fischer in October 1999 after serving as director of operations at Logistix (Fremont, Calif.), a firm specializing in integrated supply chain management. He also served as the director of operations at Philips Medical Systems North America (Shelton, Conn.) for 15 years. NeoDyme Technologies Corp. (College Station, Texas) has named Shan J. Moon as president to handle operations and strategic planning. He most recently served as NeoDyme’s vice president of support services. Moon has been with NeoDyme since 1996. Radiologix Inc. (Dallas) has appointed Sami Abbasi as CFO and executive vice president. Abbasi returns to Radiologix after a stint as CFO and COO at Adminiquest Inc. the past 12 months. He was CFO and senior vice president at Radiologix from August 1996 to December 1999. |
| For the record | ||
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| Mild cardiac ischemia puts elderly at greater risk |
| New research shows that a noninvasive heart scan can help identify which senior adults are at the greatest risk for cardiac death.
That’s the word from DuPont Pharmaceuticals Co.’s (Wilmington, Del.) Medical Imaging division (North Billerica, Mass.) about its Cardiolite (Kit for the Preparation of Technetium Tc99m Sestamibi for Injection). In research presented at the American Heart Association’s 73rd Scientific Sessions in New Orleans last November, findings also suggest that more aggressive treatment may be warranted in elderly patients with only mild cardiac ischemia — a decrease in blood supply to the heart caused by obstruction of the blood vessels — than is currently employed in clinical practice. “These findings demonstrate that the ability of a noninvasive heart scan to accurately detect and assess the degree of cardiac ischemia is critical to early intervention and the long-term survival of these patients,” said Leslee J. Shaw, Ph.D., lead researcher and associate professor of medicine at Emory University (Atlanta). “With this new clinical evidence, we are another step closer to improving the management of this often under-treated patient population.” Researchers involved in the study evaluated the prognostic value of stress-induced ischemia in 15,081 patients referred for myocardial perfusion single photon emission computed tomography (SPECT) with Cardiolite to Cedars-Sinai Medical Center (Los Angeles). Patients’ risks were determined by the amount of ischemia evident on SPECT and adjusted by age, from less than 60 to 80 years of age and older. Researchers found that the statistical threshold of increased risk of cardiac death decreased with advancing age. Specifically, 18-month survival was 99 percent or less than or equal to age 70; 98 percent between the ages of 71 and 80; and 94 percent for older than 80 years. “This [research] very strongly supports our continued investment in Phase IV clinical research, which we believe is unprecedented in the integration of Cardiolite testing in major multicenter studies,” said Bradley Pound, director of the Cardiolite clinical development project. “This study centers on Cardiolite’s unique ability to diagnose the presence of coronary artery disease and to use those results to risk-stratify and prognose patient outcomes and direct treatment and therapy.” DuPont has four other major studies under way involving several thousand patients at multiple centers. Those projects look at the utility of Cardiolite in patient management strategies; direct patients to percutaneous intervention or aggressive medical therapy; review early postmyocardial infarction patient groups to risk-stratify patients; and assess and document the prevalence of ischemia in heart-failure patients. At Yale University (New Haven, Conn.), a study is under way looking at the presence of ischemia in asymptomatic diabetics. “What makes this study novel is that we are taking patients who are asymptomatic and studying them,” said Marty Rosenberg, M.D., medical director of DuPont’s imaging business. “We are getting information before they have an [cardiac] event that would make invasive therapy less effective.” |
| Financial Pulse Health Care Markets Inc./Medical Imaging Stock Index Analysis |
| Royal Philips Electronics (Amsterdam) completed its tender offer in December to acquire ADAC Laboratories Inc. (Milpitas, Calif.) for $18.50 per share or $426 million. Royal Philips held 90.5 percent — or 19.7 million — of ADAC’s shares, as the tender closed on Dec. 18, 2000. Royal Philips expected to complete the acquisition in a short form merger and convert the remaining shares into the right to receive $18.50 per share.
Scantek Medical Inc. (Denville, N.J.) has terminated an agreement to sell 36 percent of its Brazilian subsidiary, Scantek Medical do Brasil Ltda, for $2 million to a Brazilian investment group and 750,000 shares of Scantek Medical. Scantek halted the deal due to what the company said was the “failure of the Brazilian investors to comply with the terms of the agreement.” Scantek is concentrating its marketing efforts in South America by completing new clinical studies for its principal product, BreastCare/BreastAlert. Intermagnetics General Corp. (Latham, N.Y.) posted record high quarterly revenues in its second fiscal quarter ending Nov. 26, 2000. Net sales reached $32.4 million, compared with $28.5 million in the same quarter of FY99. Net income more than doubled to $3.1 million, up from $1.5 million in the year-ago quarter. For the six-month period, net sales climbed 16 percent to $64.1 million, compared with $55.3 million in the first half of FY2000. Net income again more than doubled to $5.6 million, compared with $2.7 million in the year-ago period. Intermagnetics General designed and is supplying Philips Medical Systems International B.V. (Best, Netherlands) with a new ultra-high-field 3.0 Tesla magnet for Philips’ Intera 3.0T whole-body MRI system. The Intera 3.0T is pending FDA clearance. AccuImage Diagnostics Corp. (So. San Francisco) posted a nearly threefold increase in revenues in its fiscal year ending Sept. 30, 2000. Revenues reached $3.1 million, compared with $1 million in FY99. The company also posted a profit of $169,797, compared with a net loss of $503,184 in FY99. AccuImage develops, markets and supports software for the visualization, analysis and management of medical imaging data.
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. |
| News briefs |
| Sisters of Mercy Health System-St. Louis (Mo.) has signed a five-year contract extension with Eastman Kodak Co. (Rochester, N.Y.) for the company’s medical imaging products and services. The pact covers most of the system’s 19 acute-care hospitals, a psychiatric hospital, outpatient care facilities, physician practices, skilled nursing and long-term residential care facilities, clinics, a managed-care organization and other health-related services.
E-Z-Em Inc. (Westbury, N.Y.) has inked an agreement with Nycomed Amersham plc’s (Buckinghamshire, U.K.) Imaging division to distribute E-Z-Em products in Central Eastern Europe. Under the three-year pact, Nycomed will be the exclusive distributor of E-Z-Em contrast imaging products, accessories and delivery systems in the Czech Republic, Hungary, Romania, Bulgaria, Slovakia and Albania and the semi-exclusive distributor in Poland. Marconi Medical Systems Inc. (Highland Heights, Ohio) has opened direct operations in Spain and placed a management team in Barcelona. Marconi now will offer direct service for an installed base of some 110 hospitals in Spain. Marconi also inked a contract with the University of Maryland (UM of College Park, Md.) for four Mx8000 multislice CT scanners and workstations. A fifth Mx8000 multislice CT scanner and workstation was purchased by a radiology outpatient center associated with UM radiologists. Swissray International Inc. (New York City) has received orders for its ddR digital radiography systems from four international buyers. The orders are from Oppland Sentral Hospital, (Lillehammer, Norway), Vallingby Hospital (Vallingby, Sweden), Hospital IGEA (Milano, Italy) and National Cheng Kung University Hospital (Tainan, Taiwan). Swissray says it currently has an order backlog that exceeds $14 million, 70 percent of which is in ddR equipment. GE Medical Systems (GEMS of Waukesha, Wis.) has launched its first locally developed CT scanner with helix technology in Shanghai. About 400 of the CT scanners will be manufactured annually in Beijing in GEMS’ first funded enterprise in China. The company expects to export approximately 70 percent of those units. B-K Medical A/S (Copenhagen) has introduced its new Merlin 1101 high-quality portable ultrasound scanner. The Merlin 1101 features digital hybrid beamformer technology (patent pending), as well as application-specific packages for all clinical areas, a wide selection of transducers in its class, high-quality signal processing, continuous uniform focus and scanning at frequencies up to and greater than 10 MHz. The Merlin 1101 also offers a full 10-inch monitor and an integrated floppy disk drive for image storage and system upgrade. B-K is a subsidiary of Analogic Corp. (Bedford, Mass.). Novation has awarded Hologic Inc. (Bedford, Mass.) a three-year, sole-source contract to provide osteoporosis testing technology. Novation is the supply company for VHA Inc. (Irving, Texas) and the University HealthSystem Consortium (Oakbrook, Ill.). Novation manages purchases for some 6,600 national healthcare organizations. AmeriNet Inc. (St. Louis) has extended its purchase agreement for Instrumentarium Imaging Inc. (Milwaukee) to provide mammographic imaging equipment for two additional months. The contract will extend to February 2001. Added to the program are Instrumentarium’s Delta 32 TACT and stereotactic digital upgrades, which recently received FDA clearance. Philips Medical Systems North America (Shelton, Conn.) has entered into a marketing agreement with InSiteOne (Wallingford, Conn.) to incorporate InSiteOne’s InDex archive solution as part of Philips’ Inturis for Radiology PACS (picture archiving and communications system) application service provider (ASP) solution. InDex is designed to store and retrieve DICOM images from medical imaging equipment, such as CT scanners, MRI systems and PACS. |
