The VP and general manager discusses the company’s technology development process, its leading service plan, and plans on the horizon

With a list of high-tech leadership roles filling his r?sum?, it was easy for Greg Peet to master the role of president and CEO of ALI Technologies. He held that position from September 1993 to July 2002, when ALI was acquired by McKesson. Peet now serves as McKesson’s VP and general manager of the medical imaging group (Richmond, BC), where he manages all key business operations. Previously, Peet was the president of Enterprise Technologies Corp as well as Norsat International Inc, the latter of which was named the fastest-growing business in Canada. Another honor was his October 2002 Entrepreneur of the Year, Pacific Region, Canada award from Ernst & Young. Recently, Peet talked with Medical Imaging about business at ALI since the acquisition and where the medical imaging group is headed.

 What is McKesson’s view of the future of digital imaging specifically and the industry as a whole?

Digital imaging in the clinical space is among the company’s highest priorities and is the entire focus of this division. We believe that the digitization of radiology will be extended one “-ology” at a time. And this transformation is one of the most significant in healthcare today, in terms of healthcare IT systems. We’re very committed to an image management system that will deal with any kind of medical imaging in the hospital. And I mean that not only in the traditional sense of PACS, but also in terms of the integration of workflow so that there is a solution for the whole operation of the radiology department.

What changes do you see on the clinical horizon?

Building on the previous concept, we see that the market is shifting toward more of an IT solution, where interoperability and integration with the myriad other healthcare IT systems becomes more critical. The industry has grown up being modality- or film-centric. I think it’s going to become more IT-centric because of the complexity of integrating all the other IT systems.

Do you predict an evolution of a department consisting of those who might understand technology but might not understand imaging?

The staff needs to have a total understanding. The industry has an excellent standard, DICOM, which is almost plug-and-play, has delivered a kind of dial tone for digital imaging. But the issue now is managing the images, and it’s becoming very complex because the world has changed. In the 1990s, PACS was an island. We hooked to the modality and hooked to a printer, and that was about it. These days, the connections we have to IT systems are complex, and the standard in that world isn’t as good. HL7 is functional, but we can’t quite call it plug-and-play. So the challenge for systems integration is in workflow and doing it well—that’s the core of our challenge over the next decade.

How have things changed or even improved for ALI Technologies since being acquired by McKesson in July 2002?

McKesson wasn’t involved in the medical-imaging realm prior to the acquisition. So McKesson acquired ALI to become an industry leader in a very important new segment. That means a commitment to buying a whole business rather than a product or technology.

From the ALI point of view, we’ve gone through the necessary postacquisition integration process, which is something that must be done. It’s a challenge for staff, but it’s all behind us. We declared victory and marked it as done. When you get to that point—large company acquires smaller company—customers, industry folks, and competitors ask, “Will the culture survive? Will everyone leave?” During the 18-month period, we finished all the integration and have had the lowest staff turnover in our history. Our customer satisfaction actually went up during that period, not down. And we grew the business at our fastest growth rate ever. Of course, the competitors continue to propagate fear, because it suits them, saying, “All the things you loved about ALI will go away.” But they haven’t. Sure, there’s still a bit of customer fear about the transition, and it takes a long time to retire that. But it’s subsiding, and I regard that as a significant success.

As you mentioned, the ALI acquisition brought the Horizon Medical Imaging product to McKesson, which the company touts as one of the industry’s most comprehensive PACS and workflow solutions. How does it excel beyond other company’s solutions?

What McKesson didn’t do in the acquisition was change any of the product operating processes. The way that ALI designed, built, installed, and serviced the product remains exactly the same. And it’s regarded as a best-of-breed model for the rest of the company to implement. In fact, there are practices within our work group that are being adopted elsewhere in the company—not the opposite.

So why do we believe it’s the best on the market? It isn’t just our Web site and literature; it’s votes by our customers. We have had a very long-term track record of being rated Number 1 in KLAS. For major companies that have a large installed base, I’d say that getting high scores in surveys is a much bigger challenge. And our group has done a phenomenal job.

The real standouts of the product include its functionality. Also, its comprehensive fit, meaning it actually does all of the things that the enterprise customer needs, both on the radiology side and the IT side. In fact, the product is highly selected as the tool of choice by radiologists. PACS to a radiologist is like a scalpel to a surgeon. It’s what they use all day, every day, and they want to use their tool of choice.

Still, the most significant difference is our services. It’s something that’s so compelling but difficult to articulate to customers before installation. The way we install our products is trouble-free and done on a weekend. Also, we support them with online, real-time telephone support that is answered within 5 seconds. After installation, without exception, our customers and their CEOs say, “We’ve never had a system install like this—ever. And the way you service it is the best ever.” CEOs get Christmas cards from radiologists. It amazes me that even today, some of our competitors continue to say, “No, they can’t offer that breadth of service because no one can.” But the truth is, we do—every weekend.

You touched on doing well in customer surveys. In the 2003 Medical Imaging Readers’ Choice Awards, McKesson was voted Number 3 overall—following a Number 24 placement in 2002. How do you account for such a leap in success with our readers?

We should go back to 2001, which was our first time in the survey, and we ranked Number 5 as ALI Technologies. The 2002 ranking of Number 24 was pretty much coincident with the acquisition—we were in the midst of uncertainty about change and disruption. So I don’t believe that the rating was because readers thought our performance declined; I think we didn’t score well because of the uncertainties. Jumping to Number 3 in 2003 is stunning recognition of the fact that we didn’t have an integration challenge; we simply did very good work. We’re thrilled about it.

What is your view of the migration toward outpatient delivery of imaging procedures?

Our view is that outpatient delivery is not new. When we architected our product, we took the view that it was images any time, any where, and we’ve been doing that since 1993. Fortunately for us, the market is going that way, and our product works very well in that environment. We think there’s going to be more rather than less outpatient delivery, and the drive for cost will make it happen.

Do you think that’s how McKesson and ALI develop certain products, with an eye on the future?

I’m biased, of course, because I was responsible for setting the agenda. But the answer is yes. We designed our products and had the constitution to do a couple of things. One was to think more than 90 days in advance; we tend to think 3 to 5 years in advance. We also thought to make some well-researched but risky decisions to do something new and still be where the puck is going versus where the puck is.

If I’m critical of some segments of the industry, it’s because some vendors can become complacent with their platform. They try to tweak and extend it when it’s really too old. It takes a significant investment decision to say, “We’ve taken this engine as far as we could. It’s time to make one that can go further, faster, and better.” Every 5 years or so, we’ve done that—and we’re doing it again right now.

Are any products, technologies, or services missing from the imaging side of McKesson’s portfolio that you’d like to see added?

We think that we have all of the core capability to make solutions for clients. But I think the market’s shifting, so there’s a greater integration role. The next 5 years will bring some very specialized image-processing products to market, and one size will not fit all. We think it would actually be inappropriate and probably a poor strategy for customers to try to do everything in-house. We are integrating specialty visualization for CAD orthopedics, different kinds of 3-D for different applications, and some advanced tools in the nuclear medicine “fusion” area. Our strategy has been to make a product that easily integrates with very specialized applications—and, in some cases, multiple vendors in the same domain—so that we can meet our customers’ needs. The only thing we’re certain of is that it’s going to continue to change, and change rapidly. The breadth and scope of what our customers want from us is going to become even more challenging.