Its software is a plus for digital imaging

Tom Bassing Staff

9/26/03 Imagine bringing home a new DVD player produced by one manufacturer and a wide-screen television made by another, hooking them up, hitting the power and ... nothing happens.

No consumer would abide such an insult, yet it's analogous to what hospitals deal with when it comes to purchasing digital diagnostic-imaging equipment, which allows a given hospital system to store hundreds of thousands of digital images and its physicians to readily retrieve them through secure Web-based computer terminals.

As it is, hospitals employing one manufacturer's storage system for CT, MRI, X-ray and other diagnostic images are obligated to use that same company's retrieval equipment.

Why? Such manufacturers' technologies are proprietary; they simply won't work with other firms' equipment.

Birmingham-based Emageon Inc.'s belief that there's a better way is driving its successful pursuit of market share and revenue.

While GE Medical Systems Inc. and Siemens Medical Solutions Health Services Corp. are global leaders in digital-imaging storage and retrieval, upstart Emageon is giving its better known rivals a run for their money by employing open-standards-based software that allows various manufacturers' individual components to work together, much as they do with consumer electronics, which are based on universal standards that let disparate manufacturers' equipment work in conjunction with that of their rivals.

That hasn't been the case with digital medical imaging storage and retrieval.

"If you're locked into a proprietary system," says Emageon chief operating officer Milton Silva-Craig, "you can't take advantage of new innovations" developed by competing manufacturers.

By employing open standards, he says, "we feel we've raised the bar for the industry. We envisioned where the market was going and absolutely pushed open standards."

Plug and play

Late last year, the Birmingham-based 10-hospital Baptist Health System entered into an agreement to begin employing Emageon's technology after rejecting rival proposals from GE and Siemens.

While those titans "are very good companies," says Jeff Brewer, Baptist's senior vice president for shared programs and services, Emageon's proposal was superior, offering greater on-site storage capacity - at a significant cost savings.

So far, Baptist has installed the Emageon technology in two of its hospitals - Montclair and Princeton medical centers. A third, in Shelby County, is close to going on line. A fourth - Baptist Walker Medical Center - also will have the Emageon system in the near future.

"We projected a 33 percent return on investment," Brewer says of the $5.2 million deal. Already, he says, Baptist is on target to meet that projection.

 Baptist was put off by the incompatibility between GE's and Siemens' technology.

"Those types of business models are designed to create high margins for those vendors," Brewer says of the two firms' proprietary systems, which, in effect, lock clients into one technology or the other. Emageon's system, he says, is "plug and play," thanks to the company's adherence to open standards, notably DICOM - or Digital Imaging and Communications in Medicine - which was developed by the American College of Radiology and the National Electrical Manufacturers Association and is emerging as the industry standard for electronically transferring diagnostic images.

So pleased is Baptist with Emageon's technology, Brewer says, that "this is a partnership we expect to extend well into the future."

Marketplace buys in

Since launching commercial operations in January 2000, Emageon has gained market share across the country. In the past two years, the firm has entered into user agreements with medical centers in Arizona, California, Illinois, Michigan, Minnesota, Missouri, New Jersey, Pennsylvania and Wisconsin as well as in its home state, where it has worked with Baptist, Brookwood Medical Center, St. Vincent's Hospital and the University of Alabama at Birmingham Hospital.

Emageon's revenue has soared in the three-plus years the firm has been in business. In its first year of commercial operations - in 2000 - Emageon recorded $500,000 in revenue. That grew to $3 million in 2001, shot to $13 million last year and is expected to top $25 million this year, says Silva-Craig, the company's chief operating officer.

At that, says president and CEO Chuck Jett, "we believe we can continue to grow at a significant rate in the United States."

To date, 125 hospitals nationwide have committed to installing Emageon's technology, and that number is on the rise. This year alone, Emageon announced contracts with four additional hospital companies and is nearing agreements with others.

The company's roots date to late 1997, when researchers in UAB's Department of Neurosurgery began developing a Java-based system to provide real-time access to MRI and CT images during surgical procedures and as a cost-effective way to store and retrieve such images.

As a result, Silva-Craig says, "you'll see our market share continue to increase."We have a nice road map of continued innovation."

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