November 2001

GE Medical Systems (GEMS of Waukesha, Wis.) on Sept. 24 announced plans to acquire Imatron Inc. (So. San Francisco, Calif.), manufacturer of electron beam tomography (EBT) scanners.

The all-stock proposal calls for Imatron shareholders to receive $1.89 per share, payable in stock from GEMS’ parent company, General Electric Co. (GE of Fairfield, Conn.). Total value of the acquisition is estimated at $200 million, based on Imatron’s approximately 100 million to 110 million outstanding shares.

The companies expect to complete the acquisition before the end of the year.

Imatron also granted GE an option to acquire newly issued shares of Imatron common stock, representing 19.9 percent of its total shares outstanding, at $1.89 per share. Shareholders representing 11 percent of Imatron shares outstanding on a fully diluted basis have agreed to vote their shares in favor of the proposed transaction. The Imatron board of directors also gave unanimous approval to the proposed acquisition.

Dow Wilson, GEMS’ general manager of Global CT, said three key factors figured in GEMS’ purchase of Imatron. He cited the company’s presence in the cardiology market, its EBT technology — which GEMS views as complementary to its own LightSpeed and HiSpeed CT product lines — and Imatron’s manufacturing, service and distribution resources — in particular, its focus on the entrepreneurial segment of the cardiac market.

“Cardiology is really the one big [market],” Wilson said. “The scanner can do other applications, and we will continue to invest and strengthen those, but the focus for us is really about cardiac.”

While it is too early to predict the future of the two technologies in GEMS’ game plan, Wilson observed that a “synergy” exists, allowing the product lines to complement one another.

Wilson noted that Imatron’s manufacturing facilities will remain in South San Francisco. The company has three locations, all in the Bay area.

On the financial side, Imatron posted record revenues of $62.4 million in 2000, a gain of 66 percent over $37.5 million in 1999. The company also scored a profit of $6.3 million, compared with a net loss of $6.6 million in 1999. The company sold 33 EBT Ultrafast CT scanners last year, compared with 19 system sales in 1999.

GE Medical Systems on Oct. 4 completed its acquisition of Coincidence Technologies S.A. (Liege, Belgium).

Terms of the agreement to purchase the designer, developer and manufacturer of synthesis and handling units for positron emission tomography (PET) radiopharmaceuticals were not disclosed.

Coincidence’s lead product is its fluorodeoxyglucose (FDG) Synthesizer, which is used with a cyclotron to provide the final chemical process step to produce FDG. The final step ultimately determines the quantity and quality of FDG.

Coincidence has partnered with GEMS over the last couple of years to sell its Synthesizer with the GEMS cyclotron. GEMS said that the Coincidence synthesizer unit has demonstrated above-average yields of FDG in excess of 60 percent at cyclotron installation sites worldwide. The higher yields have allowed cyclotron users to produce more FDG per production run.

Coincidence was established in 1996 with four employees. Today, the workforce numbers 12 people who are involved in engineering, mechanical, chemistry, electronics and computer software. Coincidence’s products are distributed worldwide to the United States, Australia, Japan and, more recently, China.

GE Medical Systems also in October completed its transaction to bring 3D ultrasound developer Kretztechnik AG (Zipf, Austria) into the fold.

GEMS closed on its deal to purchase approximately 65.4 percent of Kretztechnik shares held by Medison Co. Ltd. (Seoul), while shares representing an additional 27.1 percent of Kretztechnik outstanding stock were tendered by public shareholders to parent company General Electric Co. (GE of Fairfield, Conn.).

The 3D ultrasound company has become a wholly owned subsidiary of GE.

GEMS unveiled plans to acquire Kretztechnik in July, offering $10.30 per share for Medison’s 65.4 percent stake in Kretztechnik. GEMS also offered $14.60 per share for the remaining 4.4 million shares of public Kretztechnik stock. The total value of the transaction would have been approximately $148 million.

Original terms of the transaction did not change.

With the addition of Kretztechnik, GEMS enhances its 3D ultrasound capabilities with a technology that allows patients and physicians to view real-time 3D images of anatomy in motion, also referred to as 4D imaging. 4D imaging is accomplished in large part through Kretztechnik’s mechanical scanning technology.

Kretztechnik posted sales of approximately $100 million for the 12-month period, ending April 30. The company has more than 400 people worldwide, with subsidiaries in Germany, France, Switzerland and Spain.

GE Medical Systems Information Technologies (GEMSIT of Milwaukee) also closed on its acquisition of Data Critical Corp. (Bothell, Wash.).

As part of the Data Critical transaction, GEMSIT also purchases VitalCom, a software and wireless patient monitoring network company that Data Critical acquired in June.

Data Critical shareholders received $3.75 in cash for each Data Critical share it owns. Based on 17.1 million outstanding shares, as of June, the purchase of the wireless telemetry and communications company is valued at approximately $64 million.

GEMSIT sees the addition of Data Critical and VitalCom products as key elements in GEMSIT’s business strategy to market clinical IT infrastructure to entire healthcare delivery networks and individual facilities.

Agfa’s strategic path includes a name change of the medical imaging unit to Agfa HealthCare. The new moniker is intended to reflect Agfa’s shift from a company known primarily for its medical imaging portfolio to a provider that handles medical imaging and information technologies.

“Our core business historically has been in radiology — medical imaging and PACS products,” said John Glass, general manager of Agfa HealthCare. “We now are going further into other departmental imaging areas, [such as] cardiology and women’s imaging. We made a recent announcement about our entry into ophthalmology.”

Agfa’s campaign into the hospital informatics market is made by possible by several key acquisitions over the last 14 months.

In August 2000, Agfa purchased a majority stake in PACS/RIS software developer Quadrat N.V. (Deurle, Belgium). One of Agfa’s first moves at the time was to integrate Quadrat’s Qdoc RIS into Agfa’s IMPAX PACS product line. Quadrat’s other products included Qplanner, a hospital-wide resource planning and appointment software; MedFile, a results distribution server for patient data at the enterprise level; and MedAr electronic patient record.

This past April, Agfa acquired Talk Technology Inc. (Bensalem, Pa.), a supplier of voice-enabled clinical workflow and reporting products. Talk Technology’s TalkStation line was developed for radiology, mammography, pathology and emergency medicine to automate the medical reporting process through features such as speech recognition, digital dictation and transcription, report tracking and retrieval, and advanced report distribution.

Agfa advanced its acquisition mode last month when it announced plans to acquire Mitra Inc. (Waterloo, Ontario, Canada), with which Agfa has been business and technology partners for the last 10 years. Mitra provides healthcare imaging and information management systems and has been instrumental in the development of Agfa’s IMPAX PACS.

The companies hope to complete the transaction in the fourth quarter. Financial terms were not disclosed.

Agfa also has proposed to purchase a minority interest in MediVision — Medical Imaging Ltd. (Yokneam, Israel, and Mountainside, N.J.). MediVision designs, develops, manufactures and markets digital imaging devices — including digital cameras, digital imaging software, and viewing stations — for ophthalmic applications.

Put the pieces together and Agfa believes it has the foundation in place to make a greater impact in the healthcare IT market.

“Hospitals in general see enabling themselves with IT infrastructure and applications as long-term potential to reduce cost and improve patient care,” Glass said.

He added that Agfa sees the healthcare IT market growing at approximately 20 percent a year, while Agfa has advanced “more than 20 percent in this area.”

Glass said that Agfa will continue to fuel this growth through an internal focus on efficiency and effectiveness and through acquisitions.

“We expect to be a consolidator in the industry and a top-tier provider of healthcare IT solutions,” Glass said. “It is still a very large market. It is still growing and still has a lot of companies in it. When the consolidation is finalized in 10 years, we expect to be in the top ranks.”

Agfa HealthCare plans a major worldwide advertising and public relations campaign this fall to promote the name change and concentrated focus in hospital informatics.

Two years ago, Agfa and Mitra formed a jointly owned company, Impax Technology Inc. (Waterloo) to develop and market fully engineered software products building on Agfa’s IMPAX software platform.

Agfa plans to operate Mitra as a separate business unit and keep Mitra’s current management and employees in place. Mitra has more than 300 employees in Canada, the United States, Australia and The Netherlands and will continue to manage its existing business relationships with OEM customers.

Philips’ acquisition of the former HSG for $1.7 billion closed on Aug. 1, some eight months after Philips announced an agreement to purchase Agilent’s healthcare products segment.

Since the transaction was completed, Philips has been working to

integrate the former HSG into one cohesive company with Philips’ previous acquisitions of ATL (Bothell, Wash.), ADAC Laboratories (Milpitas, Calif.) and speech processing and transcription firm MedQuist Inc. (Marlton, N.J.).

“It will be an evolution over the next 12 to 24 months. This is a massive effort,” said Steve Rusckowski, HSG’s former senior vice president and general manager. “We’re talking about a $6 to $7 billion company [Philips], combining five different companies into one. It is a significant effort across the globe and across these various businesses.”

Rusckowski is still in Andover as CEO of Philips’ new Cardiac and Monitoring Systems (CMS) business. CMS includes HSG’s cardiac and patient monitoring product lines.

HSG’s ultrasound line will combine with ATL. The Andover operation is headed by Greg Petras, formerly general manager of HSG’s Imaging Systems division. Petras will report to Tim Mickelson, who continues to serve as CEO of ultrasound.

“We will maintain our separate sales and service organization worldwide for at least the next 12 months,” Rusckowski added. “Since these product lines are complementary, there is no overlap in terms of sales forces, service organizations, R&D, marketing and manufacturing processes.”

The former HSG has annual sales of approximately $1.5 billion and operations in more than 100 countries.

For much of 2000, HSG was a

victim of a very poor hospital market for patient monitors. The sluggish

segment contributed greatly to two consecutive quarters in FY2000 in which HSG posted significant net losses.

Since then, the market “has improved some, particularly in the United States where hospitals are on better footing than they were 12 and 24 months ago,” Rusckowski said. “People are getting things back into balance in terms of contracts with managed care companies and the federal government has relaxed some of its funding, which is helpful. There is only so long [hospitals] can hold back pent-up demand and purchases.”

While there is more buying activity, Rusckowski said the market still has not “significantly improved from where we were 12 or 24 months ago.”

The clinical and information management company unveiled plans to acquire all outstanding common shares of Dynamic Healthcare Technologies Inc. (Maitland, Fla.) in exchange for approximately 363,000 shares of Cerner stock.

Cerner expects to complete the transaction in the fourth quarter, subject to approval by Dynamic shareholders and regulatory agencies.

Dynamic specializes in clinical and diagnostic workflow software and Internet services for pathology, laboratory and radiology services. With approximately 640 clients, Dynamic achieved revenues of $25.6 million last year.

For the first six months of 2001, Dynamic’s revenues totaled $12.6 million, compared with $13 million in the first half of 2000. The company also reported a new loss of $1.6 million, compared with a net loss of $908,844 in the year-ago period.

So far this year, Dynamic said that it has achieved “near record bookings” of its clinical systems, with 23 systems sold during the first half of 2001. Dynamic’s systems and support services backlog grew to $23 million over the same six-month period.

Fortunately for Analogic, its medical imaging business accounts for 75 percent of total revenues and that segment remains financially healthy.

Analogic also has acquired a 19 percent interest in Cedara Software Corp. (Mississauga, Ontario, Canada) for $7.5 million.

The software is utilized for angiography, digital radiography, echocardiology, fluoroscopy, mammography, nuclear medicine and ultrasound, as well as picture archiving and communications systems (PACS) and image-guided surgery systems. Cedara — founded in 1982 as ISG Technologies Inc. — reported revenues of $37.6 million in its fiscal year, ending June 30, 2000.

Analogic also will refinance Cedara’s debt to its bank lender through the provision of a credit facility with Analogic’s principal bank or by refinancing the debt directly. Under the pact, Analogic will have two seats on Cedara’s seven-person board of directors.

Thomas J. Miller, Analogic’s president and CEO, said one reason for Analogic taking a stake in Cedara is because the companies’ customers are “virtually identical. The more important reason is the advantage that a partnership offers our customers in terms to time-to-market.”

Miller added that Analogic’s 19 percent stake in Cedara does not give Analogic the right to any of Cedara’s proprietary or medical imaging software before any other Cedara customer.

FY2001 results

On the financial side, while Analogic posted record revenues in its fiscal year and fourth fiscal quarter, ending July 31, the company is preparing for turbulent financial times.

Revenues reached a record $360.6 million, a gain of 24 percent over $291.6 million in FY2000. Net income increased 8 percent to $15.2 million, compared with $14.1 million in the last fiscal year.

While the overall numbers for FY2001 are impressive, Analogic’s sustained growth over the last several years is about to hit an economic speed bump. Fourth-quarter revenues peaked at a record $96.2 million, compared with $87.8 million in the fourth quarter of FY2000. Net income, however, slumped 77 percent to $1.2 million, compared with $5.4 million in the year-ago quarter.

The obstacle was Analogic’s telecommunications subsidiary, Anatel, and its industrial business. Analogic posted a write-down of $3.2 million in Anatel assets, which reduced the company’s net income by $3.5 million.

Miller said the sharp declines in revenues for Anatel and the Test and Measurements business segment began in the third fiscal quarter, ending April 30, followed by “very, very sharp declines in revenues, such that by the fourth quarter, revenues were negligible for both businesses.”

Currently, Fischer Imaging’s SenoScan will have competition from one other FDA-cleared digital mammography system — GE Medical Systems’ (GEMS of Waukesha, Wis.) Senographe 2000D.

Fischer Imaging says its market research indicates that there are approximately 30,000 film-screen mammography systems currently installed worldwide. With a “large portion” of these systems slated for replacement, the company asserts that healthcare providers could convert to digital mammography systems at a rate of 1,500 units per year by 2007.

“Given the data available, even a small penetration into the digital mammography marketplace will have substantial impact on the growth of our company,” said Fischer President and CEO Louis E. Rivelli in a prepared statement.

The SenoScan also is one of four digital mammography devices chosen to participate in a three-year, $26.3 million technology study sponsored by the National Cancer Institute (NCI of Bethesda, Md.) and the American College of Radiology Imaging Network (ACRIN of Philadelphia). The project aims to compare digital mammography to standard film mammography to determine how digital mammography compares to the traditional method of screening for breast cancer.

Fischer Imaging, GEMS, Lorad (Danbury, Conn.), a division of Hologic Inc. (Bedford, Mass.), and Fujifilm Medical Systems USA Inc. (Stamford, Conn.) will have their digital mammography systems included in the trial.

Fischer Imaging Chairman Morgan Nields, who has seen the development of SenoScan since the beginning, calls the FDA clearance “the single most important technical achievement in the history of the company … Now we will have the satisfaction of watching the technology do its part in improving early breast cancer detection.”

The SenoScan uses Fischer Imaging’s patented slot scanning detector, which the company says provides 100 percent higher resolution and up to 60 percent less radiation dose. SenoScan’s field-of-view also allows for imaging almost any size breast without repositioning the patient.

The system also is designed to handle technology upgrades, such as computer-aided detection (CAD) software, tomosynthesis (3D imaging), and contrast subtraction mammography.

DMS has bought Interim Solutions and Sales Inc. (Minneapolis), Midwest Medical Diagnostics Inc. (Minneapolis) and Nuclear Imaging Ltd. (Sioux Falls, S.D.).

DMS closed Aug. 31 on Interim Solutions and Midwest Medical and followed that with a Sept. 7 closing on Nuclear Imaging. Financial details of the transactions were not disclosed. The purchases on Interim Solutions and Midwest Medical were treated as one transaction, since both companies were owned by Jeff Axelrod.

“The core strategy is twofold: to grow our business organically or internally, and then to grow additionally through platform acquisitions,” said Wayne Sanders, president and CEO of DMS Health Group, parent company of DMS Imaging. “Wherever those opportunities present themselves, we are willing to look at those. We don’t necessarily have geographic limitations.”

All companies will conduct business under the DMS brand name, Sanders added.

With its contracts in Kansas, Missouri, South Dakota, Iowa and Nebraska, the Nuclear Imaging acquisition complements DMS’ existing nuclear medicine-PET (positron emission tomography) business. Sanders described the region as “perfect growth areas” for DMS.

The acquisition of Interim Solutions and Midwest Medical serves as DMS Imaging’s foray into the interim solutions business. Former owner Axelrod will serve as senior vice president of DMS Imaging.

“Another business unit is DMS MedSource Partners, which is our fee-per-scan arrangement,” Sanders said.

Approximately 65 employees of the three companies have joined DMS as a result of the acquisitions. In the case of the Nuclear Imaging purchase, employees who served on the professional side of the practice stayed with owners W. Allan Boade, M.D., and Fred Lovrien, M.D., who retained that segment of the business.

“We are going to leverage the human capital resources that we have along with the financial resources available from our parent company to grow DMS Health Group,” Sanders said. “As this is a very capital-intensive business, the financial resources available to us are key.”

DMS Imaging currently has mobile routes in 23 states and104 assets in MRI, CT, ultrasound, bone densitometry, mammography, PET and nuclear medicine.

Through DMS Health Technologies, a separate business entity, the company provides supplies and accessories and has established a service network as a dealer for products from Philips Medical Systems International B.V. (Best, Netherlands) and printers from Eastman Kodak Co. (Rochester, N.Y.) Health Imaging division.

DMS Health Group is one of seven business units of Varistar Corp., a wholly owned subsidiary of Otter Tail Corp. (Fergus Falls, Minn.). The corporation’s regulated utility operation, Otter Tail Power Co., provides electricity and energy services to households in Minnesota, North Dakota and South Dakota.

Bristol-Myers entered the cash transaction as the fifth-largest drug developer and manufacturer in the world with annual drug sales of $13.3 billion. DuPont Pharmaceuticals’ sales totaled $1.5 billion in 2000. The acquisition is seen to benefit Bristol-Myers on a number of market fronts and bolster the company’s stable of experimental drugs.

Bristol-Myers expects to record a research and development write-off and restructuring charge between $2 billion and $3 billion when the acquisition closed. The company added that the deal could dilute its earnings per share in 2002 by as much as 3 cents per share, but the addition of DuPont Pharmaceutical will enhance earnings by 6 cents to 8 cents per share in 2003.

With DuPont Pharmaceuticals comes the Cardiolite cardiovascular medical imaging agent; Sustiva, the non-nucleoside reverse transcriptase inhibitor for the treatment of HIV/AIDS; and Coumadin, a widely-used oral blood anticoagulant.

In a prepared statement, Bristol-Myers Chairman and CEO Peter R. Dolan said the acquisition will “enable us to play a greater leadership role, particularly in the areas of virology and cardiovascular diseases, where there is a pressing need to expand treatments and find new and better therapies.”

DuPont Pharma continues Bristol-Myers on its strategic path to focus more on pharmaceuticals and less on product lines that do not fit with its core portfolio.

In May, Bristol-Myers reached a definitive agreement to sell its Clairol beauty care subsidiary for $4.95 billion to Procter & Gamble Co. (Cincinnati). The sale is pending.

Bristol-Myers in August completed plans to spin-off its orthopedics subsidiary, Zimmer Inc. (Warsaw, Ind.), into an independent, publicly traded company through a tax-free distribution to Bristol-Myers Squibb shareholders.

P.E.T.Net CEO Mark Rhoads said P.E.T.Net can sublicense the amyloid plaque technology and will consider research partnerships with pharmaceutical companies, using the technology for first animal and then human testing.

Rhoads said the first step toward early in vivo diagnosis of Alzheimer’s disease is “the development of molecular imaging probes to target plaques and tangles as markers for the disease.”

P.E.T.Net also collaborated with the UCLA School of Medicine to establish the LA Tech Center (Culver City, Calif.) to study molecular medicine with the assistance of PET technology.

A study published in the Sept. 11 issue of the Proceedings of the National Academy of Sciences suggests that brain scans that detect reduced metabolism in a key brain region may help predict which older adults will develop Alzheimer’s disease.

Researchers scanned 48 healthy elderly adults using PET and MRI to gauge glucose metabolism in a number of brain regions. Over the three-year study period, 12 participants experienced memory loss, with one developing Alzheimer’s.

The study found that the metabolism in a brain region called the entorhinal cortrex (EC) of those whose memories declined registered 18 percent lower at the start of the study, as compared with participants whose memories did not decline during the duration of the study. The EC area is considered key in memory function and has been shown to be vulnerable to cell death and the “tangles” that appear in the brains of Alzheimer’s patients.

The study’s team also noted that researchers have found lowered EC metabolism to predict which mildly impaired individuals will progress to Alzheimer’s.

While addressing the findings in a positive light, the study’s lead author also cautioned against scanning for Alzheimer’s in the clinical environment.

“This is the first demonstration that this prediction can be made in,” Mony J. de Leon, M.D., New York University School of Medicine, said in a prepared statement.

Whether the brain metabolism changes researchers observed are specific to Alzheimer’s is one of several remaining questions, he indicated. It may be possible to fine-tune the accuracy of such scans by combining them with other tests, such as searching cerebral spinal fluid for protein fragments suggestive of Alzheimer’s.

The board found that claims made in the Amersham patent with respect to microbubbles, which contain perfluorohexane (PFH) gas, are invalid and, as a result, unpatentable.

Imavist, which Alliance is developing jointly with Schering AG (Berlin), is an ultrasound contrast agent comprised of PFH-based microbubbles. Information regarding Imavist’s performance in clinical trials had been submitted to the FDA for approval to market the drug in the United States. According to Alliance, the FDA has reviewed a new drug application (NDA) for Imavist and found it approvable, subject to satisfactory response to issues identified in the review process.

The agency now has earmarked approximately US$265 million (Can $189.5 million) for medical imaging equipment purchases over the last two years.

While the money certainly will buy much-needed equipment throughout the Canadian province, the Ontario Association of Radiologists (OAR) called the allocation “another sleight-of-hand” in the government’s reduction of healthcare spending.

OAR President Guiseppe Tarulli, M.D., said that while the agency is setting aside funds for new radiology equipment acquisitions, the government is “moving forward on a plan to reduce annual operating dollars used to run this equipment.”

The OAR estimates that the agency’s allocation will help buy approximately 300 new pieces of radiology equipment, such as X-ray, ultrasound, mammography, nuclear medicine and fluoroscopy systems.

The organization adds that the allotment “is just a small percentage of the funding needed each and every year to bring Ontario health services up to date.”

The OAR released a report in September 2000, which concluded that there are some 2,400 pieces of outdated radiology equipment in Ontario.

The report also blamed Ontario’s outdated equipment issue on what it called “chronic government underfunding,” adding that the province’s radiology infrastructure has not seen a “real increase in 13 years.” The OAR also contends that the Ontario government has removed approximately US$90 million in funding for radiology equipment.

As for the Health and Long-Term Care agency, Health Minister Tony Clement said the grants “will go a long way towards improving diagnostic and treatment services in the province.”

The move is set for the first quarter of 2002 and will expand Medrad’s current manufacturing capacity by more than 50 percent. Renovations on the new site will begin in January, while manufacturing operations are set to start late in the first quarter. Medrad expects the relocation to continue in the second quarter.

The company currently has 275,000 square feet of manufacturing capacity, including a 13,000 square-foot leased facility in RIDC Park for printed circuit board assembly.

Medrad plans to move as many as 225 employees to the new location. The company currently has approximately 800 employees based in Indianola and plans to add more than 200 employees to its Pittsburgh-area locations over the next four years.

The findings, published in the September issue of the Journal of the American College of Cardiology, come from a study, which utilized both standard and transesophageal echocardiography (TEE) on 581 Minnesota residents. In the TEE procedure, an ultrasound probe is inserted down a patient’s throat to view portions of the heart and aorta that cannot be imaged in a conventional echocardiogram taken through the chest wall.

The study found that more than one-third of the patients surveyed — ages 45 and older — had plaque accumulating on aortic valves. Researchers also discovered what they described as a “strong correlation” between aortic valve sclerosis and hardening and narrowing of the aorta.

Mayo Clinic study author Bijoy Khandheria, M.D., said one conclusion is that aortic valve sclerosis and atherosclerosis are not two different diseases, but “different manifestations of the same disease process.”

“Therefore, if we can determine through a standard echocardiogram that the aortic valve is becoming stiff,” he added, “it is highly likely there are plaques in the aorta and coronary blood vessels as well.”

In addition, the Mayo team found being male and obese, as well as having high blood pressure and elevated levels of the protein homocysteine, “significantly increased the likelihood of plaques forming in the aorta and on the aortic valve.”

Khandheria recommended that men who are older than 40 years of age and are more than 25 pounds overweight should receive a echocardiogram to screen for the cardiac condition. He advised the same procedure for women who are obese and are 50 years or older.

The Clinic says it was prompted to develop the breast shield because of the increasing use of radiotherapy for women who receive treatment for breast cancer. Radiation oncologists and physicists developed the first working model of the mobile breast shield in 1999. A clinical trial demonstrated the shield cut the radiation dose to healthy breasts by 60 to 70 percent.

Roger M. Macklis, M.D., chairman of the department of radiation oncology at The Cleveland Clinic, noted that radiation risks to healthy breast tissue in radiotherapy treatment appear to be insignificant for a majority of women. However, research on contralateral breast cancer risk shows that some patients may be at increased risk for breast cancers in the opposite breast.

In a letter to the ACNP, OIRA Director John D. Graham noted that the “benefits of regulating medical uses of byproduct materials may not justify the costs of the Part 35 requirements.”

Graham’s comments referred to the NRC’s proposed revision of 10 C.F.R. Part 35, which governs the medical use of byproduct material. Nuclear byproduct materials produce tracer elements injected into patients to conduct nuclear medicine procedures, such as cardiac stress tests to analyze heart function, lung scans to verify blood clots, bone scans to diagnose orthopedic injuries, and to determine whether cancer has metastasized.

While the OMB cannot demand that the independent NRC conduct a regulatory analysis of its rule, it is directing the commission to evaluate its program to consider lessening the burden its requirements impose. The OMB also encouraged the NRC to undertake a full appraisal of the benefits and costs of the various requirements of Part 35 and to consider alternatives, such as third-part accreditation and increased reliance on state regulations and professional standards.

Meanwhile, a Society of Nuclear Medicine task force on Medicare and Medicaid reimbursement is up in arms over a proposal to cut the rate for one positron emission tomography (PET) imaging procedure by two-thirds.

On Aug. 24, the Centers for Medicare and Medicaid Services (CMS, formerly the Health Care Finance Administration, or HCFA) published its proposed reimbursement rates for APCs for 2002. What caught the task force’s eye was what it described as a “draconian cut” in reimbursement for FDG (fluorodeoxyglucose) PET imaging in the hospital outpatient setting.

Currently, FDG PET is reimbursed at $2,331.18. CMS proposes to reduce the reimbursement rate to $841.94. Both rates include the cost of the FDG, which generally carries a wholesale price of $750.

The statement from the APC task force asserts that if the reimbursement rate is reduced, there is “the very real possibility that the growth and availability of FDG PET, which has been shown to have a dramatic impact on cancer, cardiac, and neurological diagnosis and treatment, will be severely damaged. This technology is just now entering mainstream clinical practice, and CMS’ proposed action will mean that many people who might benefit from it will not have that opportunity.”

The task force added that the proposed reductions are based on hospital cost data from July 1999 through June 2000. The deadline to submit comments on the proposed rates was Oct. 3.

Toshiba also named Edwin A. Lodgek as senior vice president, general manager and member of TAMS’ board of directors. Lodgek most recently served as vice president of North America for Marconi Medical Systems Inc. (Highland Heights, Ohio). As general manager, Lodgek will lead the full-line sales, marketing and service teams, as well as the ultrasound business unit. He will focus on helping the company strengthen its presence in the U.S. market. The general manager position is a new one for TAMS.

Girish T. Hagan has been named director of business development of RealTimeImage (San Bruno, Calif.). In his position, Hagan will manage strategic partnerships worldwide, with special emphasis on PACS and medical imaging acquisition device manufacturers. His career includes serving as global business development manager for GE Medical Systems (Waukesha, Wis.) and as business development manager and product manager for archive and networks marketing at the former Bayer Corp. Agfa Medical (Ridgefield Park, N.J.) for more than seven years.

PSS World Medical Inc. (Jacksonville, Fla.) has hired William H. Midgley to fill the newly created position of vice president of supply chain management. Midgley had served for 20 years at Sony Electronics Inc. (Park Ridge, N.J.). Over the last seven years, he served as senior vice president of logistics devices, where he directed logistics operations for six diverse business groups with total annual revenues exceeding $12 billion.

Radiologix Inc. (Dallas) has named two new vice presidents. Mark E. Laurent becomes vice president of information services and clinical operations, as well as chief information officer. He joined the company in February 1997 as director of clinical operations. Prior to Radiologix, Laurent served as national director of operations for Healthcare Resource Management Corp. (Davidson, N.C.). Radiologix also named Nancy Brandon as vice president of reimbursement operations. Brandon joined the company in July 2000 after serving as vice president of business services for U.S. Oncology Inc. (Houston).

Dean Tangalakis, president of Medical Imaging Resources (Ann Arbor, Mich.), suggests that hospitals and clinics ask whether or not their medical imaging equipment can effectively serve their community both during a disaster and on a normal workday. The answer isn’t always clear. Medical Imaging Resources helps hospitals assess their capabilities by examining equipment utilization, patient demographics, and current equipment load.

Medical Imaging Resources provides temporary imaging solutions to hospitals and clinics. Mobile equipment serves multiple purposes. It can be used to respond to increased demand after a disaster. Or when a hospital or clinic is renovating or waiting for new equipment, mobile equipment can be used to replace out-of-service equipment. That way, the hospital can continue to serve the community and maintain its revenue stream.

John Vartanian, vice president of Medical Imaging Resources, points out that in many cases, when a hospital completes an assessment of its imaging resources, it finds that its equipment is overutilized and its patients are waiting too long for exams. Again, Medical Imaging Resources can provide solutions so that the hospital can meet those patient needs. Finally, a hospital may be located in a community that doesn’t offer a given imaging service. Rather than purchasing the equipment outright, the hospital can secure a temporary mobile system to make sure that the service works in its community. Mobile equipment helps establish the service, which, in turn, can justify the cost of the new equipment.

Medical Imaging Resources provides a wide range of mobile solutions, including MRI, CT, cardiac cath, angiography, and nuclear medicine, across North America.

IMCO Technologies Corp. (Pewaukee, Wis.) has established a European subsidiary, IMCO Technologies GmbH (Taegerwilen, Switzerland). IMCO will use the subsidiary to help strengthen the company’s global position in Europe, the Middle East and Africa. The image management company has chosen Burgess H. Slabbaert as managing director of the new subsidiary, Kamel Henni as director of marketing and Werner Ullrich as director of product management.

HealthTrust Purchasing Group L.P. (HPG of Nashville, Tenn.) has awarded Hologic Inc. (Bedford, Mass.) a two-year extension for mammography systems from the company’s Lorad division and low-end general radiography equipment. The group purchasing organization has more than 700 member facilities. Hologic also received an exclusive, two-year contract with Broadlane Inc. (San Francisco) to cover the purchase and sale of mammography systems from Hologic’s Lorad division (Danbury, Conn.). The pact includes two options to extend the agreement for an additional year. Broadlane specializes in supply chain management services to the healthcare industry.

TeraRecon Inc. (San Mateo, Calif.) also has received FDA 510(k) clearance for its 3D-capable PACS, AquariusNet. The PACS is designed to enable 2D, 3D, and 4D review and analysis of medical images on multiple remote stations simultaneously. AquariusNet is commercially available. TeraRecon will market the PACS to imaging centers and hospital radiology departments.

Vital Images Inc. (Minneapolis) and the Surgical Navigation Technologies (SNT) division of Medtronic Inc. (Minneapolis) will collaborate on products and services in image-guided surgery and surgical planning. A final agreement to integrate Vital Images’ advanced visualization technology with Medtronic SNT’s image-guided surgery products is expected before the end of the year. The companies also have proposed to partner on new surgical planning software and service offerings.

Alara Inc.’s (Hayward, Calif.) MetriScan bone densitometer has made its debut in China through the company’s partnership with Miles IHW Medical Technology Corp. (Beijing). Miles IHW helps Alara establish a nationwide network to market the MetriScan to regional and local hospitals and clinics. The MetriScan is a self-contained, tabletop device that provides in-office bone mineral density testing on patients at risk for osteoporosis and related bone fractures.

Catholic Healthcare West (CHW of San Francisco) has extended its current purchasing agreement with Syncor International Inc. (Woodland Hills, Calif.) for three more years. Syncor will continue as the sole source provider of radiopharmaceuticals and services to the CHW hospital system. CHW is the largest Catholic healthcare system in the western United States and the largest not-for-profit healthcare provider in California.

AmeriNet Inc. (St. Louis) has contracted with Siemens Medical Solutions (Iselin, N.J.) to provide medical imaging equipment and therapy systems. The three-year pact, which is expected to generate approximately $50 million in sales, went into effect on Oct. 1. The agreement covers Siemens’ products, such as radiographic-fluoroscopic equipment, lithotripsy systems and radiation therapy systems.

Epix Medical Inc. (Cambridge, Mass.) has granted a worldwide, nonexclusive, royalty-bearing license for use of certain patents to Bracco Imaging S.p.A. (Milan, Italy). The pact includes Epix’s Multihance MR contrast agent for imaging the liver and central nervous system. Multihance currently is available commercially in Europe. The patents are owned by Massachusetts General Hospital (MGH of Boston) and licensed exclusively to Epix. Epix will receive $10 million in initial payments, which include a license fee, royalties on past sales, prepayment of future royalties and a contingent license fee based upon marketing approval of Multihance in the United States. In addition, Bracco is withdrawing its opposition to the patents in the European and Japanese patent offices and the companies have settled ongoing litigation with respect to the patents in Europe.

Imagyn Medical Technologies Inc. (Irvine, Calif.) received 510(k) clearance for its 22mm SiteSelect stereotactic breast biopsy system. The 22mm size, along with the 10mm and 15mm size devices, completes the range of sizes available from Imagyn for the diagnosis of nonpalpable breast lesions. This new FDA clearance allows for a larger core of suspicious breast tissue to be removed and diagnosed by a physician.

Sectra AB (Linkoping, Sweden) has signed an agreement with Access Radiologi Sverige AB (Stockholm, Sweden) to help test Sectra’s digital mammography system, Sectra MicroDose Mammography, at St. Goran’s Hospital (Stockholm). This digital mammography system was developed with Mamea Imaging AB. The study will start in October. Sectra is planning to deliver the first commercial units next year.

GE Medical Systems (GEMS of Waukesha, Wis.) is adding another outlet to market its medical imaging equipment. Marketplace@Novation is the Internet supply chain from Novation, the business unit of group purchasing organizations VHA Inc. (Irving, Texas) and the University HealthSystem Consortium (UHC of Oakbrook, Ill.). Terms of the agreement were not disclosed. Marketplace@Novation, powered by Neoforma Inc. (San Jose, Calif.), will help facilitate purchases among GEMS, VHA and UHC.

GE Medical Systems Information Technologies (GEMSIT of Milwaukee) and Corechange Inc. (Boston) have signed an exclusive agreement to integrate Corechange technology into GEMSIT’s clinical information systems. GEMSIT also will distribute the integrated technology to hospitals worldwide and will use Corechange’s Coreport technology throughout GEMSIT. Coreport is designed to provide clinicians with secure, single sign-on access to all appropriate applications and information sources through a personalized user interface. Thirty-five hospitals use Corport technology.

Agfa HealthCare (Ridgefield Park, N.J.) and Brigham and Women’s Hospital (BWH of Boston) will test and evaluate the functionality necessary for a cardiac workstation, including echocardiography, and nuclear cardiology features that Agfa is developing for its IMPAX for Cardiology image and information management system. BWH participated in the initial trials of Agfa’s PACS (picture archiving and communications system).

The AcuNav diagnostic ultrasound catheter from Acuson, a Siemens Co. (Mountain View, Calif.) has received the European Union’s (EU) CE mark, approving the catheter’s distribution in the European Union. AcuNav also is FDA cleared. The catheter images from the right side of the heart to provide real-time mapping of the heart, direct imaging of blood flow and visualization of other catheters during minimally invasive procedures.

Colorado Medtech Inc. (Boulder, Colo.) and Red-M (Milpitas, Calif.) are collaborating to bring Bluetooth short-range wireless communication capabilities to Colorado Medtech customers. The agreement calls for Colorado Medtech to lead development of Bluetooth wireless-enabled medical instruments and devices in conjunction with Red-M’s 3000AS access server and 1000AP access points. The collaboration is intended to offer Medtech customers medical devices and instruments that can wirelessly transmit data to information systems in hospitals and medical practices over a Red-M-powered Bluetooth network. Red-M was created as an internal start-up of Madge Networks N.V. (Amsterdam, The Netherlands).

Computerized Medical Systems Inc. (CMS of St. Louis) and Advanced Radiotherapy Consulting (ARC of South Bend, Ind.) will partner to offer intensity modulated radiation therapy (IMRT) training to radiation therapy clinicians. Under the agreement, ARC will provide complete IMRT training packages to CMS customers. CMS estimates that less than 2 percent of U.S. radiation oncology centers employ IMRT’s treatment technique to radiate cancerous tumors, while sparing healthy surrounding tissue. CMS supplies radiation therapy planning systems, with more than 1,200 installations.

Eastman Kodak Co.’s (Rochester, N.Y.) Health Imaging division is launching a new support program for customers needing to maintain accreditation under the Mammography Quality Standards Act (MQSA). The Min-R Accreditation Advantage program, which was scheduled to begin in October for clinics whose accreditation expires in April 2002, is free to customers using Kodak’s full Min-R mammography system. If a clinic does not receive accreditation on first review after following Kodak’s recommendations, the company will reimburse the clinic for the cost of a second review, under certain conditions.

Approximately 400 U.S. hospitals offered free peripheral vascular disease (PVD) screenings in October as part of the annual “Legs for Life” campaign, sponsored by the Society of Cardiovascular & Interventional Radiology (SCVIR of Fairfax, Va.). PVD, most frequently diagnosed in people over 50, is a buildup of fatty plaques in the arteries, which affects blood flow to leg muscles. Individuals who suffer from PVD report leg cramps while walking, numbness, tingling and leg weakness, and are at increased risk of heart attack, stroke and abdominal aneurysm. Left untreated, PVD in the most extreme cases can result in gangrene, which requires surgical amputation of the affected toes, foot or leg.

Instrumentarium Imaging Inc. (Milwaukee) will become the exclusive U.S. distributor of Intelligent Systems Software Inc.’s (ISSI of Boca Raton, Fla.) computer aided detection (CAD) imaging technology for mammography. ISSI’s MammoReader currently is pending marketing clearance from the FDA. MammoReader is designed to detect primary signs of breast cancer with the assistance of CAD software. After digitizing the film, MammoReader’s processing software is designed to analyze the image and highlight areas that appear suspicious and may be cancerous.

Mango DSP (Jerusalem) has inked an OEM agreement with Marconi Medical Systems Inc. (Highland Heights, Ohio) to develop and produce array processing systems for Marconi’s medical imaging products. Mango estimated the value of the contract at $5 million annually. Mango will provide Marconi with a selection of digital signal processing (DSP), input/output (I/O) and graphics products.

flexScan Inc. (Laguna Hills, Calif.) has ordered five Aquilion multislice CT systems from Toshiba America Medical Systems (Tustin, Calif.). flexScan provides financing to physicians, as well as a wellness-screening program for corporate America as part of an employee benefits program.

Siemens Medical Solutions Health Services Corp. (Malvern, Pa.) will incorporate Health Patterns LLC’s (Chicago) Master Files Manager into Siemens’ new products. Master Files Manager is designed to provide a single point of control over master file updates, eliminating the need for redundant entry of data in each application.

X-Ray Optical Systems Inc. (Albany, N.Y.) says it has developed a prototype lens to improve the quality of mammograms. The product comes in part as the result of a two-year, $750,000 grant from the National Institutes of Health (Bethesda, Md.), in cooperation with the University of Wisconsin-Madison and the Center for X-ray Optics at the University of Albany (New York). The hollow glass tube and lens direct and condense the X-ray bean to bolster the efficiency of the X-ray equipment and lower the X-ray dose of conventional mammograms. The University of Wisconsin-Madison currently is evaluating the prototype on phantoms.

Aurora Technology Inc. has left Lake Forest for larger headquarters in Lake Bluff, Ill. Aurora President Kate H. Sackman said the new location offers the company “broadened engineering capacity and a client-friendly demonstration area.” Aurora provides workstations, archives, storage and distribution systems for community hospitals, clinics and imaging centers.

A new study from market research firm Frost & Sullivan (San Jose, Calif.) predicts that while healthcare providers place an increasing number of orders for open MRI systems, closed MRI equipment will maintain a comfortable lead in annual revenues, due primarily to higher price tags for high-field MRI equipment.

The report calculates that the U.S. MRI market garnered total revenues of $1.16 billion in 2000. Closed MRI sales, compared to open MRI revenues, accounted for 70 percent of that total. U.S. MRI revenues could reach $1.61 billion by 2007, the report forecasts, with closed MRI scanners contributing 65 percent of total revenues.

Research analyst Antonio Garcia cited two factors for the growth in the U.S. MRI market — physicians’, researchers’ and radiologists’ affinity for high-field MRI technology and patients’

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