An Imaging Vendor Evolution?

Sept. 15, 2015
Recently I had some interesting conversations about potential changes in the imaging industry that parallel changes taking place in the U.S. healthcare industry.

Recently I had some interesting conversations about potential changes in the imaging industry that parallel changes taking place in the U.S. healthcare industry.  These discussions centered on how vendors might react to changes taking place with healthcare providers.  Specifically, how do vendors adapt to a shrinking number of healthcare providers resulting from consolidation?  And, how do vendors adapt with changing support models based on evolving equipment configurations.

In the past, vendors have structured their sales organizations around either specific “strategic” accounts, or regions.  Sales activities may have been spread broadly across all provider segments, both small and large.

One vendor in particular has noted that given the consolidation in the provider space, it may make more sense to consider targeted sales activities at these large entities, and emphasize sales arrangements that can accommodate all of the provider’s facilities. 

Carried one step further, providers are looking at “strategic” partnerships that may reflect different acquisition alternatives.  For example, one “strategic” partnership I am familiar with is based on a long-term relationship that encompasses the equipment, support, service, etc. rolled into a consistent monthly payment that enables a facility to “level-load” its expenses over a fixed period, and capitalize on replacement options on what may be a timelier basis. 

For the company considering a change in its strategy, this may also encompass more than just equipment and services.  It may also mean some “skin in the game” for the vendor by taking on even some administrative responsibility for operations – in other words, “managed services.” 

In terms of support, there are perhaps two significant factors affecting support models.  First and foremost is the changes that are occurring based on the impact of commercial off the shelf, or COTS hardware.  In the earliest days of imaging devices and Picture Archive and Communications System (PACS) systems, large portions of hardware were custom solutions.  For example, image resolution requirements for displays far outpaced what was available on the consumer side.  Imaging equipment vendors needed to support such equipment directly, and therefore, most support agreements addressed both hardware and software. 

Contrast that with most modern equipment that takes advantage of COTS, as the performance parameters of most computer and display equipment is more than adequate to meet today’s imaging display application needs.  The result is that many vendors have changed to software-only support models, and rely on third-party hardware vendors to provide support, usually under warranty for the first three to five years.  The vendors are then freed up to simply support their software application, usually via telephone support with on-site support if required. 

To offset the hardware changes, vendors are increasingly focused on greater degrees of “services” as part of support contracts.  As previously mentioned, this can extend all the way to actually managing the assets and providing operational management of them.  In the past, there have been similar schemes proposed that extended to providing imaging staff, including technologists and potentially radiologists.  Again, the objective was to provide “one stop shopping” and a continuity of service.

Such arrangements didn’t get very far in the past, but a changing healthcare delivery model might just be the impetus for such services in the future, freeing management to focus more on patient care and reimbursement and putting operational costs on a more even keel.

Many of these practices may be more in line with other Information Technology (IT) products, but they are a radical change for the classic imaging business.  Adapting to an evolving healthcare industry is important to survival.  It is interesting to see the classical imaging companies evolving with the industry.  This cannot be easy, as these support services have classically been money-makers for the vendors.  It will be interesting to see if these changes provide a competitive edge over the laggards.  One caveat – it’s a tight rope to extend too far and become a threat to one’s customer.  This has caused pause from adopting such strategies in the past, but we are now in uncharted waters relative to provider operations.  Only time will tell.  I welcome your thoughts.

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