July 2000

According to the terms of the agreement, each Lunar shareholder will receive $17 per share, payable in General Electric Co. (GE of Fairfield, Conn.) stock. The final number of shares will be based on trading prices of GE stock for a period prior to the transaction close. According to Securities and Exchange Commission documents filed in May, there were 8,573,705 outstanding shares of Lunar, putting the purchase price at an estimated $145 million.

Lunar also granted GEMS an option to acquire newly issued shares of Lunar common stock, representing 19.9 percent of its total shares outstanding, at the $17 per share transaction price.

Lunar is a $91 million public firm operating primarily in the bone densitometry field, as well as MRI-based orthopedic imaging equipment. Lunar generates 80 percent of its revenues from densitometry products and 20 percent from extremity MRI products.

Lunar produces the Orca mini C-arm, which is a very small revenue source and likely will be integrated into GEMS’s line of C-arms gained in its purchase of OEC Medical Systems Inc. (Salt Lake City) in December 1999.

“It’s too early to tell what will happen with the mini C-arm business, but it is not a big business for Lunar and it seems a best fit with OEC,” said Richard Mazess, chairman and CEO of Lunar. “A lot of the technology is complementary, but I don’t think GEMS will move the 700 OEC employees from Salt Lake City to Madison based on our mini C-arm business.”

The acquisition marks GEMS’ full entrance into the densitometry market, although GEMS has been scouting the market for as long as three years. GEMS has an existing agreement to market the X-Posure System X-ray bone densitometry system from Pronosco (Vedbaek, Denmark) under the GEMS name. GEMS President and CEO Jeffrey Immelt said that deal served as something of an introduction to the market, but GEMS has been doing significant research into bone densitiometry leading up to June’s announcement.

GEMS sees the international market as the strongest potential for the near future, with the U.S. market experiencing saturation.

“In the U.S market there has been a lot of saturation and we see it as a 4 to 5 percent growth market,” Immelt said. “We think the global market is very big and very much unserved at this point. We just finished some market research that indicates that.”

Immelt said the two company names likely will be merged upon closing of the acquisition to form “GE Lunar.” The majority of operations will remain in Madison, while certain areas such as financial and legal operations, will be consolidated into GEMS. The transaction is expected to close in the third quarter.

The acquisition, which closed May 26, was an expansion of Cedara’s existing 8.5 percent ownership in the privately held Dicomit, with the purchase of the remaining 91.5 percent under a share purchase agreement.

The move gives Cedara access to the $3 billion ultrasound market that the company has been eager to enter. In a statement on the acquisition, Cedara CEO Michael Greenberg, M.D. said, “Joining forces with Dicomit positions Cedara in the large ultrasound market with new solutions.”

Customer lists for both firms are similar as many of Cedara’s customers in CT, MRI and nuclear medicine

also are involved in ultrasound. This scenario provides the opportunity to cross-market products to customers and provides package deals with multiple modality software solutions.

Cedara officials said Dicomit will function as an independent, wholly owned subsidiary and will retain its name and current personnel lineup. Both Terry Callahan, Dicomit’s CEO, and Thomas Little, executive vice president, have signed employment contracts with Cedara and will report to Menawat as head of the Core Software and Services division.

Dicomit recently moved into a new location in the Toronto area and Menawat said the plan is to remain in that location, because it is a new facility and because Cedara has no room to consolidate Dicomit into its location on the other side of Toronto.

Four days of seminars and workshops examined recent trends in healthcare technology and peered into the future prospects for the industry.

Setting the tone for the conference was the keynote presentation by William Hendee, Ph.D., senior associate dean and vice president of the Medical College of Wisconsin.

Hendee’s talk on “Professional development in Healthcare Technologies Management” discussed changes in healthcare in the past 10 years that have influenced the development of new technologies and what advances will come in the next decade. Hendee sees the development of integrated information systems for computerized patient records, increased use of telemedicine and the move to medical imaging on a cellular level as significant trends in the next few years.

Ajit Singh, vice president of the health services division at Siemens Medical Systems Inc. (Iselin, N.J.), quoted some interesting market statistics in “PACS Readiness for the Next Millennium.” According to Singh, the healthcare IT market is growing at 20 percent annually, with the PACS market accounting for approximately 4 percent of the total.

“Healthcare IT is less than 2 percent of all healthcare spending,” Singh said. “We spend $1.3 trillion in healthcare, of which $20 billion is healthcare IT — and of that $20 billion, we spend $200 million to $400 million or four percent on PACS.”

“Everything You Need to Know About the Digital X-ray Marketplace,” was the topic, as Mary Tierney, editorial director of Medical Imaging, reviewed the state and direction of the DR market. Industry observers estimate that there were about 100 DR installations worldwide at the end of 1999 and, by the end of this year, the total could reach 325. Of that amount, two-thirds of the units will be in the United States, with the rest in Europe and the Pacific Rim.

The hot issue of proposed voluntary regulations for medical device servicers was reviewed in “FDA’s Proposed Regulation of Services: Part III.” Eliot Sloane, vice president of quality assurance at Mediq/PRN Life Support Services Inc. (Pennsauken, N.J.), updated attendees on the voluntary rules.

The proposal has been reviewed by the FDA and will be distributed for public comment in the coming weeks. The FDA’s representative in the discussions was not available to provide details at HealthTech 2000, but Sloane encouraged attendees to watch for the publication of the document in the Federal Register.

“Give your comments to the FDA in writing so it goes on the record,” Sloane advised attendees. “If you need to write several position papers, then do it.”

Jonathan Sadock, COO of ARMS Medical Resource Management (Strafford, Pa.), outlined the components to “Tracking Utilization for Asset Management.” By calculating utilization — the time an asset is in use divided by the number of days it is available — a facility can determine whether it is more financially prudent to buy or rent equipment.

“If you don’t know what you own and what you’re using, then you don’t know when to rent,” Sadock said. “Often it is more of an economic question, rather than a utilization one.”

As utilization increases, the cost per use decreases.

PACS consultant Stuart Gardner, president of SG&A Consulting Inc. (Arlington, Texas), gave a presentation on the history and outlook of PACS technology titled, “PACS — The Second Generation.”

Gardner said there is some confusion in the PACS industry, as the higher end of the market sees consolidation and the lower end sees expansion. As more companies get involved in selling lower-end PACS systems, the typical consumer may find the market competing against itself. Gardner also urged PACS customers to review carefully what is included in a PACS sale, as price competitiveness leads some vendors to skimp on services previously promised.

Brian Porras, technology assessment specialist with Premier Inc. (Charlotte, N.C.), and F. Scott Varnum, director of clinical engineering at Baystate Health System (Springfield, Mass.), presented “Implementing PACS in the New Millennium.”

Porras said the big myth about PACS is that it is a radiology problem. “It must be thought of as an institutional issue and the IS department must be involved in the PACS process from the beginning,” he said. Facilities also should involve physicians in the process and plan for an HIS/RIS/PACS integration before purchasing a PACS. In addition, the buyer should find out how software upgrades will be handled and consider a procedure-based formula to pay for the system.

Patient influence

Consumerism never has been stronger in healthcare. James Lussier, president and CEO of St. Charles Medical Center (Bend, Ore.), foresees the future of healthcare with “Boomer Wave’ Coming — Transforming Healthcare to High Tech and High Touch.”

The global economy is forcing healthcare into lower costs and higher quality he said, with the new drivers of healthcare being new technologies, managed care and the aging Baby Boomer generation.

“Boomers will spend money on themselves to stay young and healthy, because that is what they have always had and that’s what they continue to want,” Lussier said. “The kinds of things [boomers] are used to are mobility, choice, convenience — all of the things they have found outside of healthcare, they will now ask from the healthcare system. It is fundamentally going to change how we go about delivering services.”

There may be no better example of that phenomenon than the huge popularity of healthcare-related sites on the Web.

Adele Chapdelaine Motter, principal at Philips Medical Systems North America (Shelton, Conn.), said “Consumerism in Healthcare” will alter the model to where “everything will revolve around the patient” and it “consequently will impact research and scientific studies.”

“This generation wants to be involved in their healthcare,” she commented. “Our generation is more proactive and we want to have a choice.”

The question about Web sites is the accuracy of the healthcare information disseminated from them. “Now that more healthcare providers are getting involved in that information, I think a lot of the information is getting cleaned up,” Motter said. “What happened in the past is that someone would [have] a stack of information, but nobody knew if it was right.”

Law and order

There is more to an equipment purchase than just saying, “I’ll take it,” Ronald Katz, partner in the law firm Coudert Brothers (San Francisco), outlined in “Potential Legal Problems with Major Investments in Radiological Technology.”

Katz used the case of a California hospital suing a major OEM over a less-than-satisfactory cardiac cath lab. Problems started with each litigant’s forms, which contradicted and took precedence — at least in the document wording — over the other party’s form.

“Which forms prevail?” Katz asked. “The vendor’s form is very pro-vendor; the hospital’s form is very pro-hospital. In most cases, that battle is not decided. What that means is that a jury will decide.”

Key subjective questions that may lead to litigation are: What is state-of-the-art equipment? Does it meet the subjective evaluation of the physician? How do you know if the equipment works until it is in place? What constitutes downtime?

Alan Moretti, manager of imaging engineering service at Loyola University Medical Center (Maywood, Ill.), had the blueprints for “Imaging Equipment Site Planning and Preparation from Concept to Clinical Use.”

From selecting the equipment and project architect and engineer to site selection — Is the room big enough and centrally located? — one must anticipate surprises.

“The construction phase can be an extremely large variable, especially if you are remodeling,” Moretti said. “New construction is fairly straight-forward. Remodeling is like your home; you never know what you are going to find.”

This is the situation where a cost estimator can be a critical resource “to look at the project to see what the hard costs are going to be before sending the project out to bid.”

Blazing a trail in ASP is GE Medical Systems (GEMS of Waukesha, Wis.) with the news that it has selected a Web-enabled enterprise archive solution from newly named Emageon (formerly Imageon of Birmingham, Ala.) for use in GEMS’ ASP model. The e-CIMS product is a Java application that works with a variety of relational databases, including Oracle and DB2.

GEMS will pilot its ASP offering this month in both the cardiology and radiology segments. A full introduction is expected later this summer in the United States.

Emageon also has signed a deal under which BellSouth Corp.’s (Atlanta) healthcare division will co-market its Web-enabled enterprise archiving service to healthcare customers as part of its networking and Internet solutions.

AccuImage Diagnostics Corp. (So. San Francisco, Calif.) prepared for the ASP explosion with its eStation 3D workstation, which is designed specifically for the Web-based image distribution. Users of the eStation3D server can publish scans and reports in an encrypted, compressed form on the Internet or intranet, allowing any authorized reading or referring physician to view the images via a standard Web browser.

AccuImage, fresh off its first quarter of profitability, also provided demos of its AccuView 3D workstation at SCAR. The AccuView features full-color 3D volume rendering, coronary artery calcification scoring capabilities, and curved, planar and slab views. AccuView also functions as a PACS reading station and a remote review station.

Amicas Inc. (Newton, Mass.) unveiled a deal with IBM (Armonk, N.Y.) to build its Amicas.net Web portal. Amicas.net will provide secure image management and distribution on a pay-per-study basis. IBM’s expertise in customer relationship management will focus on the develop of the e-commerce side of Amicas.net in logging and tracking the imaging transactions of each customer in real-time. Plans call for IBM to host the portal and provide infrastructure to Amicas customer sites. No financial details were disclosed.

Early ASP model developer eMed Technologies Corp. (Lexington, Mass.) waited until the day after SCAR closed to announce its strategic supply agreement with Axolotl Corp. (Tampa, Fla.). According to the deal, Axolotl will allow eMed to image-enable the Elysium suite of clinical information products. Axolotl will use eMed’s Web-based image management and delivery service to provide access to radiology images through an embedded URL link in a narrative report. eMed will maintain and manage all image-related communications infrastructure and support.

Agfa Medical Imaging’s Impax Solutions Group (Toronto) currently is reviewing its options in the ASP business, but came to SCAR with a new PACS offering for smaller healthcare facilities. Dean Kaufman, director of strategic marketing for Agfa, explained that the Impax Basix PACS is a scaled-down version of Agfa’s Impax R4 system that brings PACS to a broader market. The entry-level system offers full-featured Impax hardware infrastructure and is “fully expandable as the customer requires” added Kaufman.

Kaufman said the growth of smaller, outpatient imaging facilities creates a new market for PACS vendors, but requires different products. If a clinic is part of a larger health system, it may serve only as a node on a systemwide PACS, but if it is independent it may need a scaled down PACS, such as the Impax Basix.

Image storage specialists InSite One Inc. (Wallingford, Conn.) brought its new InDex storage and retrieval services to SCAR. According to Richard Friswell, CEO of InSite One, InDex emphasizes online and nearline DICOM image storage and retrieval.

InDex stores and retrieves images through its patented proxy server installed online at a hospital or imaging center. The server is networked to modalities so images are stored automatically and encrypted and sent to InSite One’s digital warehouse where it is burned onto a DVD. The fee-per-use service includes redundant backup and uses a virtual private network to send images. InDex is available to charter subscribers as of July 1.

To provide customers a risk-free introduction to its technology, InSite developed the InFlite system, a mini-server connected to a hospital’s network for a free trial period of at least two months and provides users an introduction to off site digital image storage.

Stentor Inc. (So. San Francisco, Calif.) used the SCAR show to launch its iSyntax Web-based image distribution software. The company has completed beta testing at 14 sites in the United States. iSyntax allows the distribution of lossless images across a hospital enterprise using standard PCs. The system also is equipped with a heartbeat monitoring system.

Barco Display Systems (Atlanta) is sporting a new agreement to supply the Cemax-Icon division (Fremont, Calif.) of Eastman Kodak Co. (Rochester, N.Y.) with displays, graphics controllers and calibration software. According to the long-term, non-exclusive deal, Cemax-Icon is standardized on Barco’s display components for all new workstation requirements. The deal covers Barco’s MGD 521 and MGD 221 monitors, the BarcoMed 2MP2 and 5MP2 graphics controllers and the MediCal calibration software. The two firms have worked in the past, primarily in the supply of graphics controllers.

Dome Imaging Systems Inc. (Waltham, Mass.) turned a few heads with its new Clarity family of flat-panel displays, including the Clarity 3G grayscale model and Clarity 3C color models. The 3-megapixel displays come in both portrait and landscape models.

Real Time Visualization (Concord, Mass.) made its initial showing at SCAR this year after being born from Mitsubishi Electric Research Laboratory (MERL of Cambridge) a year ago. The company exhibited its VolumePro 500-2X, a 3D, real-time volume rendering PCI board for PCs and Unix workstations, which were unveiled in May 1999. The 500-2X board is offered in 128-megabyte or 256-megabyte storage configurations. Features include cropping, gradient-based Phong lighting and Z-axis super sampling.

PACS vendor DeJarnette Research Systems Inc. (Towson, Md.) scored a contract to install its Radiance enterprise-wide PACS at the 600-bed Akron General Medical Center (Akron, Ohio), where the company has been beta testing various components for nine months.

Two SCAR exhibitors unveiled a new relationship. Marconi Medical Systems (Highland Heights, Ohio) will offer film digitizers from Vidar Systems Corp. (Herndon, Va.) to Marconi PACS and teleradiology customers. Marconi will offer both the Sierra and the DiagnosticPro digitizers. Vidar announced on June 2 that it has signed deals to offer its DiagnosticPro digitizer with PACS from Eastman Kodak Co. (Rochester, N.Y.), GE Medical Systems (Waukesha, Wis.), Mitra Imaging Inc. (Waterloo, Ontario, Canada) and Siemens Medical Systems (Iselin, N.J.). A statement from Vidar said agreements currently are pending with Philips Medical Systems North America (Shelton, Conn.) and Agfa Corp. (Ridgefield Park, N.J.).

But graduates of this year’s SCAR University at the 17th Symposium for Computer Applications in Radiology held in Philadelphia got more than a canned speech from a mock celebrity to set them on their paths. They got an opening keynote address by Ronald Arenson, M.D., of the University of California at San Francisco, a closing session by PACS guru Eliot L. Siegel, M.D., of the Baltimore VA Medical Center, and a schedule of educational sessions.

Saturday afternoon saw a lively debate on a lingering question: CR or DR? Four OEM representatives (two CR and two DR) debated the much-discussed, but rarely concluded issue. The debate was moderated by SCAR University co-organizer Bruce Reiner, M.D., of the University of Maryland and American Radiology Services (Baltimore). Representing the CR side of the debate were Todd Minnigh of Fuji Medical Systems (Stamford, Conn.) and Ted Ciona of Agfa Corp. (Ridgefield Park, N.J.). The DR side was represented by Tom Umbel of Direct Radiography Corp. (DRC of Newark, Del.) and Rex Harmon of Swissray America Inc. (New York).

The four panelists debated issues of cost, image quality, portability, workflow and future applications. Ciona said he felt DR’s price tag will never allow it to become cost effective to the average facility.

Umbel came to the debate armed with a list of 17 studies and journal articles comparing the two technologies. Industry watchers often cite the lack of published studies comparing the two technologies head to head as a reason for continuing the debate. Umbel offered results of a study at Mount Auburn Hospital (Cambridge, Mass.), which showed that the average time from when a patient enters the radiology exam room to when a chest image is sent to a diagnostic workstation was 9.9 minutes with CR and 2.5 minutes with DR.

Perhaps the most interesting comment of the debate came from Minnigh, when posed the question, “What if DR had come first?” Minnigh argued that if DR had been in existence and CR came along offering coverage of portables, that clinicians would think it superior to DR for its breadth of coverage.

Ciona said Agfa had a study of its own that showed that CR’s detective quantum efficiency (DQE) rating had markedly improved over previous studies. When asked if Agfa would ever consider a move into the DR market, Ciona replied, “You never know.” Agfa announced two weeks after SCAR that it was entering the DR market through a deal to private label and sell DR systems from Canon Medical Systems (Irvine, Calif.).

Siegel presented several sessions offering the benefits of PACS. In a cost justification session, Siegel said his facility saw up to a 50 percent workflow improvement with PACS. Technologist productivity increased 22 percent and the number of technologists decreased 13 percent through attrition. Siegel also said the PACS resulted in a significant decrease in technologist fatigue.

According to the deal, Varian will acquire the 120-person Impac through a series of pooling of interests, issuing approximately 3 million common shares and 300,000 options for all Impax common and preferred shares and options. Impac would become a wholly-owned subsidiary of Varian.

Varian President and CEO Richard Levy said Varian has been aggressively pursuing acquisitions since it became a freestanding entity from its parent company in March 1999.

“Acquisitions must be a strategic fit which broaden our offerings,” said Levy. “[An acquisition] also has to diversify our business into other touching areas, such as medical oncology and radiation oncology.” Levy added that increasing visibility and quality of radiation products is a high priority in making acquisitions.

The two companies would combine under a wholly owned subsidiary called Varian Impac Medical Systems to be headed by Joseph K. Jachinowski, president and CEO of Impac. Jachinowski also would become a corporate vice president at Varian Medical Systems.

Varian will continue to use the Impac name on its products, including the flagship Multi-Access oncology management system, which combines electronic charting software for radiation, surgery and chemotherapy with practice management applications. Impac will take over the Varis clinical management software from Varian.

Levy commented on the radiotherapy market’s future, saying the limiting factor in radiotherapy is training.

“This is a very software-intensive area,” he said, adding that the companies plan to combine their training organizations soon after the acquisition closes. That closing is expected by late July.

Varian also announced that it has received FDA clearance for the new CT option on its RPM Respiratory Gating System. Respiratory gating is a technique for making cancer radiotherapy more accurate and effective by adjusting for tumor movement caused by breathing.

The system works by placing a reflective marker on the patient’s chest and a video camera tracks it up and down, turning off the radiation when the tumor moves outside the target area during breathing.

The clearance allows Varian to use respiratory gating on a CT scanner to coordinate movements with treatment planning for Varian’s Clinac line of medical linear accelerators. Previously, treatment planning has been difficult due to respiration and radiation has had to be limited to avoid irradiating tissue surrounding the tumor. Varian earlier this year signed an agreement with GE Medical Systems (Waukesha, Wis.) under which Varian supplies customers with GEMS CT scanners.

Last November, Misonix acquired a 51 percent stake in Sonora for $1.35 million. That original deal included an option for Misonix to increase its ownership in Sonora, if certain milestones were met.

The second investment brings the total price to $2.75 million for 90 percent ownership.

“We were interested in how they were growing the business,” said Michael McManus Jr., president and CEO of Misonix. “They’ve been doing much better than we even imagined. So, it just made sense for us to step up to the 90 percent level sooner rather than later.”

The transaction is going through the legal process, according to McManus.

Misonix was swayed to the investment by positive signs in the refurbished medical device market and Sonora’s recent FDA clearance on the BabyFace 3D ultrasound software product it co-developed with Biomedicom (Jerusalem).

“The cost of this plug-and-play device is substantially less than the cost of purchasing a whole new imaging machine,” McManus said, “yet the 3D image produced is the highest quality.”

McManus said most of the guidance provided to Sonora will be done from afar and Misonix will allow Sonora to continue operating independently.

“What they do best is grow a business and do the R&D and invent new products,” he added. “They can do that best from there. The smartest thing for us to do is let them run with the ball.”

McManus said the companies currently are reviewing product lines to see if there are synergies to capitalize on, in terms of product development and cross-marketing.

Sonora officials said the deal provides additional backing to what the company has received since the November investment.

“It has given us a stronger inventory position and the ability to bring in some new talent,” said Bill Phillips, vice president and CTO of Sonora.

Phillips said Sonora plans to introduce six new transducers soon. The project will benefit from the increased capital provided by Misonix.

Sonora also is moving forward with the BabyFace product, which is demonstrated on ultrasound systems from ATL Ultrasound (Bothell, Wash.) and Acuson Corp. (Mountain View, Calif.).

According to documents from the Securities and Exchange Commission (SEC), that process has begun. US Diagnostic currently has locations in 13 states and owns, operates or manages 79 fixed-site diagnostic imaging facilities.

In a prepared statement, CEO Joseph A. Paul said the restructuring plan was “the result of careful consideration of the company’s alternatives. Despite the company’s debt and expense reduction program implemented in 1998 and 1999, US Diagnostic remains burdened by a significant amount of debt with short maturities, high interests and substantial current amortization payments.”

The statement goes on to say that US Diagnostic considered several alternatives, including a merger and refinancing the company’s debt, but saw market conditions as unreceptive to a debt refinancing at the current time.

US Diagnostic grew in 1995 and 1996 primarily through the acquisition of facilities from independent owners. That activity decreased in 1997 due to financial restraints and because the company was unable to overcome the debt incurred by the earlier acquisitions.

The SEC documents add that in April and the beginning of May, the company “contracted to sell four centers in two separate transactions, which are expected to close by the end of June 2000.

In the first quarter, revenues declined to $38.5 million, compared with $39.9 million in the first quarter of 1999. The company reported a net loss of $4.7 million, compared with net income of $1.2 million in the year-ago quarter.

Just when it looked like the company was down for the count, the imaging equipment maker has begun to chip away at its problems and may be poised for a second life in the dental imaging and bone densitometry markets.

The latest step in the company’s rebirth came when Schick announced in June that it settled a $3.4 million class action lawsuit that has been hanging over the firm since December 1998. Eli Schick, investor relations director at the firm, said the suit was filed after Schick announced it was taking some write-offs in 1998 for bad debt.

“After the stock price dropped, the class action suits started coming,” said Schick. “They alleged that the company had misrepresented its financial statements.”

Since then, the company’s stock has dropped and it has been delisted from the Nasdaq exchange. The financial impact of the settlement is expected to be minimal as the payment is covered by the firm’s insurance.

“The most tangible financial impact to us will be probably higher insurance premiums, which would have happened whether we settled it today or in 10 years,” said Schick.

The settlement also is another obstacle out of the way for the troubled Schick, allowing the company to focus on its reorganization plan and future development. In a prepared statement, David B. Schick, CEO of the company, said, “While we believe the lawsuit is without merit, the settlement allows us to avoid the distraction and potential cost of ongoing litigation.”

In terms of the future, Schick’s top priority at the moment is finding a CFO to manage the company’s financial matters. The company has gone through some management changes, including the departure of CFO George Rough in October 1999. In December, Schick finalized a $7.5 million financing with Greystone & Co. and named Jeffrey T. Slovin, managing director at Greystone, as president of Schick. In February, the company named a new vice president of sales and marketing.

On May 1, the company began a deal for Patterson Dental Co. (St. Paul, Minn.) to be the exclusive distributor of Schick’s CDR digital dental products. Schick’s plans include a new marketing plan for its accuDexa bone mineral density assessment product, which will focus on patient education and introducing people to bone densitometry technology.

“That market has been a difficult one for all the companies involved,” said Schick. “Everyone’s looking for the key to unlock that potential.”

Neoforma.com also announced in June that it is “streamlining its operations” to focus on integrated delivery networks and physician practices.

Instead of merging as originally planned, the companies have entered into a co-marketing and distribution deal for Neoforma.com to use Eclipsys’ eWebIT enterprise application integration (EAI) technology and professional services.

The merger collapse has hit Eclipsys hard. According to a Reuters report, Eclipsys officials feel the firm will lose cross-marketing opportunities by not merging and profits for the year will fall well below Wall Street expectations. Company officials are expecting Eclipsys to break even this year after Wall Street predicted a profit of 86 cents per share. For 2001, the company expects earnings of 45 to 50 cents per share, while Wall Street was calling for earnings of $1.06 a share.

Eclipsys plans to become an application service provider (ASP), which would entail the company providing healthcare-related applications to subscribers online.

Neoforma.com stock has dropped since its January IPO from $52.40 to its current level between $6 and $7. Several market analysts downgraded Neoforma.com this week in the wake of the merger’s demise.

Neoforma.com also restructured its 10-year agreement to provide e-commerce procurement services for Novation (Irving, Texas), the supply company for hospital alliances VHA Inc. (Irving, Texas) and University HealthSystem Consortium (UHC of Oakbrook, Ill.). Under the revised terms, VHA will receive 46.3 million shares and own 36 percent of Neoforma.com; UHC will receive 11.3 million shares, or 9 percent, of Neoforma.com.

In the new contract, ATL receives exclusive rights to “bundle” the hand-held SonoSite 180 ultrasound system with sales of its high-end, cart-based ultrasound units targeting hospital markets. The revised agreement also allows SonoSite’s dedicated sales force to sell to private physicians’ offices, as well as hospitals.

SonoSite and ATL unveiled a similar agreement in March, giving ATL exclusive rights to bundle the company’s SonoHeart hand-held echocardiography system with sales of ATL’s HDI ultrasound units and Philips’ catheterization systems. The SonoHeart pact covers the distribution of products in cardiology-related segments worldwide with the exception of Japan.

At the same time, DuPont finalized a second agreement granting DuPont distribution rights for all of Mallinckrodt’s existing proprietary nuclear medicine products in Canada for 10 years.

Both agreements are effective immediately. No financial details were made available for either pact.

Lili A. Gordon, manager of public affairs for DuPont, said the radiopharmacy acquisition extends DuPont’s reach into Toronto, Montreal and Ottawa, furthering the company’s presence in the Canadian nuclear medicine marketplace.

The distribution agreement brings the following Mallinckrodt products into the DuPont nuclear medicine fold: Octreoscan, for localization of primary and metastatic neuroendocrine tumors; UltraVent, an inhalation system for radioaerosol delivery; UltraTag RBC, for the diagnosis and localization of gastrointestinal bleeding and cardiac function assessment; and MAG3, used to assess kidney structure and function.

These two agreements follow the news of DuPont’s recent licensing and development agreement with biotechnology company Adenosine Therapeutics LLC for pharmacologic stress agents ATL-146e and ATL-193.

The new package includes digitally encoded ultrasound (DEU), which is used to enhance and boost a digital ultrasound signal within the body’s tissue.

According to GEMS, the new coded technology is an expansion of its proprietary coded technology to new applications, “allowing encoding and decoding of the ultrasound signal to dramatically improve sensitivity and penetration.”

Peter Boesen, GEMS’ marketing manager for radiology ultrasound, said the coding provides a “signature” for each pulse, which allows the system to track the pulse as it travels through the body and boost or amplify it.

“When you send a pulse into the body you get a lot of reverb, a lot of noise,” he added. “But, if you can identify a specific code or signal from deep in the body, then you’re able to boost the intensity of that signal. The benefit of code is it boosts a weak signal within the body.”

Boesen said a high-frequency signal needs boosting deep within the body, because, as it travels through the body, it attenuates and becomes very weak. High frequencies attenuate more quickly than low frequencies, but the high frequencies have better resolution.

The coding of ultrasound beams allows greater control of the beams, which is especially helpful in ultrasound contrast imaging. A typical ultrasound wave will pop the bubbles in an ultrasound contrast agent, while coded ultrasound allows those beams to be sent at a very specific range to provide maximum resolution without popping the microbubbles.

“The contrast companies are very excited with what we have in these codes for use with agents,” said Jeff Peiffer, GEMS’ manager of the Americas ultrasound marketing. The majority of that work and interest has been done outside the United States, because ultrasound contrast agents still are working their way through regulatory issues with the FDA.

GEMS’ coding technology also may play a big role in developing the B-Flow technology from GEMS, which is used to view blood flow in the body, but provide clearer images of the flow than Doppler ultrasound. The applications for the technology include obstetrics, vasculature carotid artery imaging, abdominal imaging and breast imaging.

The Breakthrough 2000 package includes several productivity enhancements for the Logiq 700 Expert series. Among them are virtual convex imaging, which extends the linear and sector transducers’ field-of-view; Logiq View, which captures an expanded length of anatomy in each view; and pulsatile flow detection, which performs real-time analysis of flow dynamics.

While Philips is best known in the radiology arena for its medical imaging equipment, the firm’s Philips Speech Processing (Vienna) business is a target for growth in the parent company’s portfolio. According to a company statement, the MedQuist acquisition is part of a Philips corporate strategy of developing automated speech technology and dictation programs. In June 1999, Philips Speech Processing acquired speech software provider Voice Control Systems Inc. (Dallas) for approximately $59 million.

“Philips’ investment is intended to lead to the transformation of MedQuist into a multinational, technology-based medical document services provider over broadband networks with accelerated growth,” the statement read.

The Speech Processing business employs more than 700 people worldwide and holds a strong position in its field with a 28 percent worldwide market share in the electronic notetaking and dictation systems market. Its three major product lines are dictation systems, telephony and voice control.

mysono.com is the creation of Medison Co. Ltd. (Seoul) and is in the process of becoming an independent company. The mysono201 system is in the final stage of testing and is expected to be available commercially in the United States by the end of this year after it debuts in Europe.

Even mysono.com employees admit the similarities to the spin-off of portable ultrasound developer SonoSite Inc. (Bothell, Wash.) from its parent company ATL Ultrasound (Bothell).

Unlike SonoSite, mysono.com plans to offer its product primarily through its Web site to keep costs to a minimum. The anticipated list price for the system is less than $10,000.

The online focus is not the only unusual aspect to mysono.com’s sales approach. The company’s Web site describes the mysono201 as follows: “Its compact size with a cute appearance is satisfying beyond your expectation.”

The company also has adopted an auction style of sales and auctioned one of its systems on the Web site. The winner took home a system for approximately $2,400.

GE Medical Systems (Waukesha, Wis.) unveiled a new Internet-based hospital equipment service program called Direct Services. Scheduled to go live this month, Direct Services is aimed at reducing costs of servicing medical and imaging equipment through a single Internet-based source to order parts, product documentation and receive training. Other features are expected to come later this year.

Computer-aided diagnosis (CAD) technology developer Scanis Inc. (Foster City, Calif.) has received clearance to market its Mammex TR CAD system in Canada, giving Scanis its first North American marketing opportunities. The Mammex TR was developed jointly with TRW Healthcare Solutions’ (Pleasanton, Calif.) Center for Medical Image Analysis.

Del Global Technologies Corp.’s (Valhalla, N.Y.) April acquisition of Italian radiographic firm Villa Sistemi Medicali S.p.A. (Milan, Italy) bore fruits recently when an R/F table and two dental imaging systems developed by the Italian firm received FDA clearance. The Vision table, the Rotograph Plus Panoramic Dental Tomography System and the Explorer X70 Intraoral Radiography System will be offered in the United States by Del Global’s distributors.

Web Link Medical Inc. (Phoenix, Ariz.) has scored a five-year deal with the Japanese Mitsui Co. Ltd. (Tokyo) under which Mitsui will distribute Web Link Medical connectivity, processing and Internet-based image archiving products in Japan. Covered in the deal are Web Link’s N-Compass software package, N-Trust archive platform, N-Power nuclear medicine image processing program, and the N-Counter nuclear medicine acquisition system.

Marconi Medical Systems (Highland Heights, Ohio) received a contract to provide teleradiology equipment and service to the Westminster Healthcare Group (London), a private imaging provider in the United Kingdom. Under the six-year contract, Westminster will have 20 sites around London connected to a Marconi teleradiology network. Marconi will provide Westminster with an immediate upgrade of its existing teleradiology network with new hardware, software and service work.

Mobile PET Systems Inc. (San Diego) opened the first private PET facility in the United Kingdom in May. The London PET Center is a wholly-owned subsidiary of Mobile PET and will be operated by PET specialists from London’s Middlesex Hospital.

Columbia/HCA Healthcare Corp. (Nashville, Tenn.) reached a tentative $745 million settlement in its case with the U.S. Justice Department, which has been investigating reports of alleged Medicare and Medicaid fraud at the largest for-profit hospital operator. In 1997, the department conducted a series of raids on Columbia/HCA hospitals from Texas to South Florida. Columbia/HCA officials said the firm has reached an understanding with the Department of Health and Human Services to ensure the company’s compliance with Medicare rules. The settlement would result in a charge of $498 million in the current quarter. The settlement is the first step towards investigators relenting in their probe. A federal judge and other federal agencies must approve the deal. The total amount paid by Columbia/HCA is expected to rise before the final settlement is approved, possibly as high as $1 billion, according to some analysts.

Oncology care provider U.S. Oncology Inc. (Houston) has agreed to purchase 30 PET scanners over the next year from CTI Inc. (Knoxville, Tenn.) under that company’s distribution agreement with Siemens Medical Systems, Nuclear Medicine Group (Hoffman Estates, Ill.). U.S. Oncology also has signed a deal to make PETNet Inc. (Knoxville) the firm’s exclusive provider of radiopharmaceuticals. U.S. Oncology serves up to 15 percent of the nation’s cancer patients.

Dornier Medical Systems Inc. (Kennesaw, Ga.) has signed an exclusive agreement for Diagnostic Imaging Inc. (DI of Jacksonville, Fla.) to distribute Dornier’s Opus radiological surgical tables in 39 states. DI, a subsidiary of Physician Sales and Service Inc. (Jacksonville), will sell the Opus urology product line directly to hospitals, outpatient surgery centers and urology groups.

Eastman Kodak Co. (Rochester, N.Y.) has inked two marketing pacts for its Distributed Medical Imagers and related products. Imaging Associates (Fort Mill, S.C.) will market the line in the eastern U.S., while Quest International (Irvine, Calif.) will handle marketing in the western part of the country. The agreements include specialized Kodak medical films, paper and ink cartridges for medical imaging applications.

Acuson Corp. (Mountain View, Calif.) has begun shipments of its AcuNav diagnostic ultrasound catheter. The first recipient is Rush Presbyterian-St. Luke’s Medical Center (Chicago). The facility also will receive a Sequoia ultrasound system. The intracardiac ultrasound technique works by inserting a catheter through the femoral vein of the leg or jugular vein in the neck, then maneuvering it into the right atrium or right ventricle of the heart. From that location, AcuNav obtains images and Doppler blood flow information throughout the entire heart.

Marconi Medical Systems Inc. (Highland Heights, Ohio) has signed a contract with University College London (UCL) to provide a 4.7T MRI scanner for neurological research and functional brain imaging. The agreement includes a five-year research collaboration agreement. Marconi’s very-high-field 4.7T MRI, currently operating at Marconi’s Farnham (U.K.) facility, is the highest field whole-body imager in Europe. Later this year, it will be installed at Queen’s Square (London) in UCL’s Wellcome High-Field MR Research Lab. One of the first studies to be done will focus on stroke. Marconi assumed the 4.7T MRI contract with UCL as part of its acquisition of Surrey Medical Imaging Systems (Guildford, U.K.) last September.

A new imaging technique takes a radically different approach to imaging the digestive tract — looking at it from the inside out. A new “camera-in-a-capsule” technique entails the patient swallowing a tiny camera that transmits images of the patient’s innards painlessly. One end of the capsule is fitted with a window for light and a camera with a fixed, wide-angle lens powered by a tiny battery. The transmitter sends digital images to a receiver mounted on the patient’s belt and the physician downloads them onto a computer. The technology is in the earliest stages of development, but researchers hope it can replace the more painful colonoscopy techniques. The camera is developed by the Israeli imaging company Swain and Given Imaging. Initial test results were published in the journal Nature. The major drawback to the technology at this point is that it cannot be steered or stopped during its progression through the digestive system. The capsule is not retrieved.

A recent study presented at the 100th annual meeting of the American Roentgen Ray Society found that living kidney donors could benefit from routine CT exams prior to surgery to determine the anatomy of the arteries that supply blood to the kidneys. Researchers from the University of Wisconsin, Madison studied kidneys in 502 potential donors to determine the incidence of anomalies in the arteries. Previous studies found that 72 percent of people have one artery per kidney and 10 percent had two renal arteries. The new study also found kidney artery anomalies in 52 percent of the patients with 22.7 percent having multiple anomalies. Of the patients studied, 78 percent of potential donors had single renal arteries and 19.3 percent had two renal arteries. One subject even had four renal arteries identified. Researchers said that additional vessels could be missed in cadaver dissection because they don’t bleed but are more apparent in CT scans.

Agfa Corp. (Ridgefield Park, N.J.) will supply group purchasing organization Premier Inc. (Charlotte, N.C.) with conventional X-ray film, cine film and conventional film equipment and supplies under a new agreement, effective May 1. The new pact will include dry media, dry imagers, wet laser printers, film and cine processors, as well as other related and other goods and accessories.

ADAC Laboratories Inc. (Milpitas, Calif.) has written its first order for its Skylight nuclear medicine camera. Cedars-Sinai Medical Center (Los Angeles) will buy the gantry-free system along with a C-PET system and three Forte gamma cameras. The units will be installed at Cedar-Sinai’s new S. Mark Taper Imaging Department.

The company has taken an aggressive acquisition strategy in growing its business through purchasing individual imaging centers and chains in recent years.

According to a company spokesperson, the company will not make any of its findings public until the conclusion of the review, “At this stage, it’s a confidential process that is governed by securities laws,” the spokesperson said.

The company said the net loss has led to the suspension of its clinic acquisition program. In the statement, newly appointed President and CEO Brock Armstrong said the review “continues and includes a clinic-by-clinic evaluation of operations, subsidiaries, the carrying value of capital assets and goodwill, the amortization methods applied hereto, and the company’s ability to continue to grow under its current credit facilities.”

The statement also said the company has retained the services of investment bankers to assist in the process.

DC DiagnostiCare reported an increase in sales in its second fiscal quarter, ending March 31, with revenues growing 36 percent to $16.5 million, compared with $12.1 million in the same quarter of FY99. Despite the sales growth gained from newly acquired clinics, the company reported a net loss of $148,975 in the three-month period, compared with net income of $432,295 in the second quarter of FY99. (All numbers are in U.S. dollars.)

Analogic Corp.’s (Peabody, Mass.) revenues were back on track in the company’s third fiscal quarter, ending April 30. Revenues gained 8 percent to $76.5 million, compared with $70.9 million in the third quarter of FY99. Net income slipped to $5 million, down from $5.3 million in the year-ago quarter. For the nine-month period, Analogic’s revenues totaled $208.4 million, down slightly from $210.7 million in the same period of FY99. Net income declined to $8.7 million, compared with $15.6 million in the year-ago period.