Report Offers Two Market Scenarios of the Future

Hospitals and health systems that invest in new imaging technology and learn how to maximize profit potential will set themselves apart from the competition in the radiology marketplace, according to a recently published report by Chicago-based health care management consultants Tiber Group.

The report, “Imaging: The Race Is On,” was written from research conducted between 2000 and 2003 from information gathered at the company’s “Sciencescan®” conferences. The authors, including Tiber Group’s vice president, Neal Peyser and group manager, Todd Burchill, as well as radiologist David Paushter, MD, outline five major themes in the report, designed to be helpful to hospitals and health systems in the quest for value and competitive advantage in what has become an increasingly opportunistic environment. Those themes:

Chart illustrates imaging shift from hospital inpatient to the outpatient setting. Reprinted with permission: Tibor Group.
  1. Tremendous growth is occurringthe diagnostic imaging market is estimated at $60 billion to $80 billion annually, and is approaching 10% of total dollars spent on health care. This growth is being driven by new technology, demographics, and consumer preference (consumers are more informed, may be more willing to pay out-of-pocket to access sophisticated technology, and have improved access to emerging medical technologies);
  2. Supply and demand of imaging professionals are in disequilibriumdue to the increased demand for radiologists nationally, it is increasingly difficult for hospitals to operate an efficient 24/7 radiology service;
  3. Nonhospital competitors are well establishedtechnological advancements, patient preferences, and reimbursement are driving imaging to the outpatient setting;
  4. The market is ripe for consolidationreimbursement that favors the technical versus professional component will support a trend of reading consolidation; significant consolidation has already occurred among equipment manufacturers;
  5. Hospital competitive positioning is vulnerablehospitals have invested heavily in imaging technology but have been less successful in competing on the outpatient side, where the profit potential is greatest.
Chart represents demographic influence on imaging volume by modality. Reprinted with permission: Tibor Group.

The report’s authors also define two potential market scenarios that may emerge over the next 10 years: one reflecting imaging’s change from an industry that rapidly became market-driven; and one that continues its evolution slowly and incrementally. The two scenarios:

  1. Rapid innovation. This implies that fewer radiologists will be needed, thanks to centralized reading and CAD applications. In addition, radiologists will compete with nonradiology physician specialists based on their capabilities;
  2. Traditional incremental change. Due to automation and consolidation, fewer radiologists with a higher proportion of subspecialty focus will be required, hospitals/health systems will outsource radiology rather than rely on contracts with local radiology groups, and radiologists will redefine their roles through greater specialization.

According to the report’s authors, these scenarios warrant a similar set of 10 actions from both hospitals and health systems. These 10 guidelines/recommendations are what every health system should deliberately do, say the authors. They are:

  1. 1. Ensure ongoing investments in imaging technology to support overall organizational strategy, market positioning, and competitive advantage;
  2. 2. Determine health system imaging goals based on clinical focus areas, matching capacity to projected utilization by modality;
  3. 3. Develop a range of conservative, moderate, and aggressive investment scenarios and establish probabilities for each;
  4. 4. Facilitate an environment that supports qualified and credentialed professionals working collaboratively in support of best patient care;
  5. 5. Maximize profit potential for hospital-based imaging by implementing best practice and evidence-based medical image guidelines, developing or expanding interventional capabilities that align with and support development of clinical enterprise, and negotiating with payors for enhanced inpatient reimbursement in exchange for outpatient discount;
  6. 6. Assess the outpatient imaging opportunity by establishing a competitive outpatient model/platform for imaging and recognizing the critical differences in management and amenities between a traditional hospital radiology department and an ambulatory imaging center;
  7. 7. Pursue a new perspective on collaboration with physicians to ensure active participation in outpatient imaging;
  8. 8. Become a highly educated buyer of imaging technology and incorporate purchaser negotiating strategies;
  9. 9. Lead the market in promoting use of standardized and evidence-based imaging protocols by providing physicians with the tools and infrastructure;
  10. 10. Recognize and manage diagnostic imaging as one of several key sources of clinical information.

Study Assesses Best Profile for Polyp Detection with MDCT Colonography

The use of multi-detector row CT (MDCT) to detect small colon polyps is very dependent on collimation, pitch, and tube current, according to a study in the October issue of Radiology.

The study, conducted by a research team from the Departments of Intestinal Imaging, Pathology, Surgery, and Endoscopy and the Cancer Research UK Colorectal Cancer Unit, St Mark’s Hospital, Harrow, England, was done in an attempt to determine the optimal combination of scanning parameters for screening.

The research team, led by Stuart A. Taylor, BSc, MRCP, FRCR, looked at a colectomy specimen containing 117 polyps of different sizes, imaged with an MDCT scanner at collimation of 1.25 mm and 2.5 mm, detector pitch of 3 and 6, and tube currents of 50,100, and 150 mA settings. Within a single specimen, the study’s authors looked at 38 polyps measuring between 2 and 15 mm in diameter. They then examined two-dimensional multi-planar reformatted images and 3D endoluminal surface renderings from the 12 resultant sets of data, analyzing it with Poisson regression and logistic regression to determine the effects of scanning parameters and specimen orientation on polyp detection.

The number of polyps that were detected showed a significant increase when collimation and table feed were decreased. An increase in tube current showed an improvement only in detection of polyps with a diameter of less than 5 mm. The polyps of less than that number were depicted with a collimation of 1.25 mm, a detector pitch of 3, and a tube current setting of 150 mA, while polyps with a diameter of more than 5 mm were depicted with 1.25-mm collimation and with either pitch setting and any of the three tube current settings.

Taylor and his team found that both collimation and pitch had a substantial effect on polyp detection, which was 50% higher at 1.25-mm collimation than at 2.5-mm collimation, and 30% greater at detector pitch of 3 than at pitch of 6. Reducing the tube current to 50 mA did not adversely affect the detection of polyps 5 mm or larger.

The researchers also showed a marked degradation in the detection of small polyps in colonic segments oriented orthogonally to the direction of patient travel, such as the transverse colon. In commentary published in the same issue, James A. Brink, MD, Department of Diagnostic Radiology, Yale University School of Medicine, wrote: “Although polyp detection was somewhat better with a beam pitch of 0.75, the reduction of respiratory artifacts associated with a pitch of 1.5 was thought to outweigh the slight improvement in the detection of polyps in the 2-4 mm range that would have been achieved with a pitch of 0.75.”

The researchers called the study’s findings “important because CT colonography, to be as effective as endoscopic colonoscopy, must depict polyps reliably at the 5 mm threshold.” The authors also stressed that care needs to be taken to evaluate the tube current in each patient, with respect to each person’s unique body habitus.

Genetic Risk Factor Found for Osteoporosis

An Icelandic company has discovered a new genetic risk factor for osteoporosis, according to a study published in the Public Library of Science Biology.

In the study of more than 1,000 Iceland residents who have osteoporosis, which was led by Kari Stefansson, PhD, those with certain types of a gene known as BMP-2 were shown to be three times more likely to develop osteoporosis. This bad version of the gene appears to increase the risk for the bone-thinning disease by limiting the production of the BMP-2 protein, which is an important molecular stimulator. According to Stefansson, this limits a person’s peak bone mass in adulthood, thereby making osteoporosis a major threat later in life, when bone density begins to decline.

The research team, led by Unnur Styrkarsdottir, MD, scanned the genomes of 207 Icelandic families with at least one member who had both low bone-mineral density and bone fractures. Searching for stretches of DNA that the patients might have inherited in common, the research team identified a gene on chromosome 20 called BMP-2, for bone morphogenetic protein-2.

The BMP-2 gene exists in versions that differ slightly in their sequence of DNA units. The researchers found that three of those versions presented a particular risk for osteoporosis, since 30% of their patients had one or another of them.

In the study, the authors suggest that people could eventually test themselves for bad versions of the gene at a young age. If they are shown to have the bad version, they may be able to adjust their lifestyles by adding weight training to their routine, eating foods high in calcium and vitamin D, or taking drugs to prevent onset of the disease.

Stefansson, along with researchers at his company, is working on a one-time test based on the study’s findings that could be available as soon as next year. Approximately 10% of the population is believed to have the bad versions of the BMP-2 gene.

Stefansson also wrote that the link between the BMP-2 variants and osteoporosis had been confirmed in a group of Danish people and is currently being validated in a group of US women.

Medicare Agreement Includes Physician Payment Relief

The latest version of the Medicare prescription drug bill, agreed on by Congressional leaders last month, includes payment relief for physicians and an 18-month moratorium on self-referrals to new specialty hospitals.

If the bill goes through, the 4.5% scheduled physician fee cut in 2004 would be blocked and replaced with a 1.5% update in 2004 and 2005. The bill would also allow for bonus payments to physicians in scarcity areas in 2005, 2006, and 2007. It would also bring the floor of the work geographic payment adjuster in the payment formula to 1.0 in 2004 through 2006, meaning all doctors would be paid 100% of the national average.

The 18-month moratorium would cover the self-referral whole hospital exemption for new specialty hospitals, which would not include existing facilities or those under construction effective the day the House files the bill. In addition, during the moratorium, the Medicare Payment Advisory Commission (MedPAC) would analyze specialty hospital costs and decide whether the payment system should be changed. The Secretary of Health and Human Services would study referral patterns and quality of care.

The Medicare conference committee has been working since July to create one $400 billion package that combines two Medicare reform bills passed by the House and Senate in June in one bill. The deal is subject to final costs and review and sign-off on the details and language. As of press time, the House and Senate were expected to vote on the issue.

MedPAC would be required to review by January 2005 how these changes affect payments and access to oncologists, and by January 2006 for other specialists.

AMA president Donald Palmisano, MD, wrote in a statement that the bill ensures access to physicians and improves physician recruitment and retention in rural and underserved areas.

The GOP currently controls the Senate, albeit by a narrow margin.

Hospital and Radiology Group Agree to Medicare Fraud Settlement

A radiology physicians’ group in western Maryland has agreed, along with its affiliated hospital, to pay a $1.6 million settlement stemming from allegations of fraud against Medicare.

According to the Web site of Atlantic Information Services (, Sacred Heart Hospital in Cumberland, Md, and Tri-State Radiology PC allegedly defrauded Medicare by billing for unnecessary and risky medical procedures and thousands of unnecessary radiology procedures.

According to the article, a whistle-blower alleged that Myung-Sup Kim, MD, a partner in Tri-State, performed angioplasties and stenting of carotid arteries at Sacred Heart without Medicare approval for reimbursement. Sacred Heart reportedly allowed the procedures and billed for them without Medicare approval. In addition, the lawsuit charged that the procedures were medically unnecessary and that the hospital did not inform patients that the procedures were high risk.

NIH Unveils New Research Strategy

The National Institutes of Health will soon be following a radical new strategy that represents a complete revamping of the way the organization funds its research.

The “NIH Roadmap,” a broad initiative recently unveiled by NIH director Elias Zerhouni, MD, promises to take on projects as a group of institutes. Such projects could not be taken on by one institute alone due to lack of resources, expertise, or infrastructure, according to Zerhouni, who recently presented the Roadmap to a group of Washington, DC, reporters. The new initiatives are designed to encourage cutting-edge, risk-taking research that has not been typical of the NIH thus far.

The Roadmap was created with input from more than 300 leaders in academia, industry, and government. The initiatives are projected to cost $130 million in 2004 and $2.1 billion over the next 5 years, according to Zerhouni. The 28 initiatives contained in the plan are organized under three major themes, which will focus on developing new technologies to study molecular cell networks, boost training and cooperation among research teams, and create more cooperation in the study of drugs in clinical trials. These themes, in more detail, are:

“New Pathways to Discovery,” an initiative that aims to produce tools to target diseases and speed up improvements in human health. It will focus on molecular libraries and molecular imaging, bioinformatics, nanomedicine, and structural biology. Through a proposed network of screening centers and a shared public database, universities and hospitals will gain better access to small molecules technology;

“Research Teams of the Future,” which will focus on high-risk research, interdisciplinary research, and public-private partnerships. In order to encourage more collaboration between industry and NIH-funded investigators, the roadmap will seek to establish a central NIH point of contact called the Director’s Liaison for Public-Private Partnerships, an office that will assist members of industry in finding partnership opportunities. As part of this, a new set of NIH Director’s Innovator Awards will be created. The awards are $500,000 per year for 5 years;

“Re-engineering the Clinical Research Enterprise,” an initiative that will attempt to harmonize clinical research regulatory requirements, integrate clinical research networks, develop technologies to improve assessment of clinical outcomes, and offer better training for clinicians.


Edward C. Heere, president and CEO of information technology firm AMSYS Inc, Ridgefield, Conn, has formed a new affiliated business called CoActiv Medical Business Solutions”. This new business, devoted to supporting medical and radiology practices, will provide software, systems, and consulting services with a specific focus on independent imaging centers and hospital imaging departments. Heere will also serve as CoActiv’s president and CEO. The new company will be located in the AMSYS offices…Dunlee, Aurora, Ill, a medical imaging components manufacturer, has appointed Tom Spees to the position of sales manager for OEM Business. In this position, Spees will manage the company’s expanding product line, which includes x-ray and CT tubes, image intensifiers, camera systems, grids, collimators, high-voltage cables, and other accessories. Spees was most recently vice president of sales and marketing for IMCO Technologies. Dunlee is a division of Philips Medical Systems… Marjorie Hauser, founder and president of Data Distributing LLC, Santa Cruz, Calif, is passing the presidency to current vice president Nancy Fisher. Fisher also becomes CEO. She joined Data Distributing in 1996, after studying and working for multinational firms in Italy for 13 years. Fisher has been the vice president and director of sales and marketing for the past 4 years. Hauser, besides remaining chairman of the board, will spend her time focused on her affiliation with WomenRise for Global Peace.

Industry News

Eastman Kodak Co, Rochester, NY, has announced that it will acquire Algotec Systems Ltd, Duluth, Ga, developer of the web-based PACS Kodak is currently marketing. Kodak plans to acquire the privately held company for $42.5 million in cash and expects the transaction to close by year-end. As a result of the acquisition, Algotec will develop Kodak medical PACS products and attendant 3D imaging technologies…GE Healthcare Financial Services, Chicago, has agreed to buy HPSC, Boston, for $72.4 million. HPSC provides equipment and practice acquisition financing to dental and medical practices, and has $10 billion in managed assets. Under the terms of the agreement, HPSC’s sales force will market various GE financial products to practices, including real estate financing, malpractice insurance, personal lines of credit, revolving credit facilities, and retirement plans…Camtronics Medical Systems Ltd, Hartland, Wis, has formed an agreement with Quinton Cardiology Systems Inc. As a result of the agreement, Camtronics and Quinton will offer cardiac patient management solutions that integrate all patient data, from inpatient and outpatient environments, including screening, diagnostics, therapy, and rehabilitation/disease management…Royal Philips Electronics, Amsterdam, the Netherlands, and Epic Systems Corp, Madison, Wis, have signed an agreement to provide enterprise software, medical imaging, and monitoring IT solutions that will integrate patient information enterprise-wide. The alliance will integrate medical equipment with enterprise software across departments, including at the point of care…Eastman Kodak Co (Rochester, NY) has announced worldwide availability of a new family of services, which includes disaster recovery, data migration, and managed storage. The new family, known as Kodak Storage and Archive Services (SAS), will enable US health care providers to comply with HIPAA and assist customers in other countries in protecting patient records as required by local regulations, according to the company. In addition, the new services will also provide customers with the ability to migrate data from legacy storage devices to next-generation storage platforms and reduce capital expenditure through hosted, pay-per-use storage and access to imaging studies and patient records…Richardson Electronics, LaFox, Ill, a global provider of engineered solutions for the display systems market, has announced the availability of 24-hour online technical support for its display systems group customers at . Called TekLink, this new program offers customers access to qualified technical specialists who can support them in a wide array of installation challenges and problem solving.