ChangeWave Research: Diagnostic Imaging Tools

ChangeWave Research Report:

Trends in Diagnostic Imaging: Tools and Devices

Private Imaging Clinics Growing Strong; Virtual Colonoscopy, MRI and Digital X-Ray Gaining Market Share

Overview

A wide range of advanceddiagnostic imaging tools and devices are available to doctors,but which ones are gaining market share? And whichtypes of providers are gaining greater controlof the diagnostic imaging marketplace?

These and other issues were the focus of anApril 7-12, 2004survey of Alliance Healthcare members who are knowledgeable about diagnostic imaging tools and/or cancer treatment devices. A total of 101 members participated. Here's what we found:

A.Diagnostic Imaging Tools

  • Best Poised to Gain Market Share. Respondents choseVirtual Colonoscopy (45%), MRI (Magnetic Resonance Imaging; 44%), and Digital X-Ray (43%) as the three diagnostic imaging tools most likely to gain market share over the next year. Note that while Virtual Colonoscopy received a strong response, the survey was completed before the recent release of one clinical study that reported lower than expected accuracy rates for the procedure.
  • Medicare Will Likely Cover Imaging for Alzheimer’s.More than 3-in-5 (61%) respondents believe Medicare will cover diagnostic imaging for Alzheimer’s within the next 2 years. Only 15% believe Medicare will not cover it.

B. “Dedicated” Centers vs. Hospital Centers for Diagnostic Imaging

  • “Dedicated” Centersfor Diagnostic Imaging Experiencing Strong Growth.Diagnostic imaging services previously available only at Hospital Centers are increasingly being offered by independent providers at “Dedicated” Centers. Better than 3-in-5 respondents (62%) believe “Dedicated” Centers for diagnostic imaging are experiencing above average industry growth rates, while only 3% believe theyareexperiencing below average growth.
  • HospitalCenters for Diagnostic ImagingExperiencing Average Growth. In comparison, only 21% of respondents believe Hospital Centers for Diagnostic Imaging are experiencing above average industry growth rates, while 9% believe they are experiencing below average growth.

  • “Dedicated” Centers Increasingly the Preferred Choice Over Hospital Centers. We asked respondentsto give us their views on physician preference, patient preference, and payor preference with regards to “Dedicated” Centersvs. Hospital Centers. A net of +45 of respondents believe “Dedicated” Centersfor diagnostic imaging are increasingly preferred over Hospital CentersamongPatients. “Dedicated” Centers were also seen as increasingly preferred over Hospital Centersby Physicians (net +28) and Payors (net +18).
  • Most Respondents See Outsourcing to “Dedicated” Centers as a Benefit to Hospitals. Over half (56%) of respondents agree that “Dedicated” Centers for diagnostic imaging are proving to be of benefit to hospitals that “carve out” and outsource their diagnostic imaging services. Only 16% of respondents disagree.
  • Mixed Signals for General Electric. The majority (51%) of respondents think General Electric stands to benefit most from the outsourcing of diagnostic imaging services to “Dedicated” Centers. Siemens (29%) and Phillips (15%)came in second and third respectively. On the other hand, 25% of respondents also rated General Electric as the company that stands to lose most in the imaging marketplace.

C. Medical Devices for Cancer Treatments

  • Most Likely to Gain Market Share. Radioactive Implants(i.e., Brachytherapy) (23%) led the list of device-centered cancer treatments rated most likely to gain market share, along with Intensity Modulated Radiation Therapy (IMRT; 22%). Interestingly, a high percentage of doctor respondents (44%)believe Radioactive Implants willgain the most market share.

Bottom Line: Virtual Colonoscopy, MRI and Digital X-Ray top the list of diagnostic imaging tools most likely to gain market share over the next year. We note, however, that the survey was completed before the recent release of one clinical study that reported lower than expected accuracy rates for Virtual Colonoscopy.

The survey results also point to above average industry growth rates for “Dedicated” Centers that offer diagnostic imaging services. And while “Dedicated” Centers clearly appear to be taking market share away from Hospital Centers, the majority of our respondents believe they are proving of benefit to Hospitals that “carve out” and outsource imaging services. Respondents also believe that “Dedicated” Centers are now the preferred choice over Hospital Centers for patients, physicians and payors.

Radioactive Implants (i.e., Brachytherapy) and Intensity Modulated Radiation Therapy(IMRT)appear to be the most promising device-centered cancer treatments, and respondents believe they will gain the most market share over the next year.

The ChangeWave Alliance is a group of 4,500 highly qualified business, technology, and medical professionals in leading companies of select industries—credentialed professionals who spend their everyday lives working on the frontline of technological change. ChangeWave surveys its Alliance members on a range of business and investment research and intelligence topics, collects feedback from them electronically, and converts the information into proprietary quantitative and qualitative reports.

Helping You Profit From A Rapidly Changing World ™

Table of Contents

Summary of Key Findings...... 4

The Findings...... 5

A. Diagnostic Imaging Tools...... 5

B. "Dedicated" Centers vs. Hospital Centers for Diagnostic Imaging...... 12

C. Medical Devices for Cancer Treatments...... 17

ChangeWave Research Methodology...... 20

About ChangeWave Research...... 21

I. Summary of Key Findings

Introduction

A wide range of advanceddiagnostic imaging tools and devices are available to doctors,but which ones are gaining market share? And which types of providers are gaining greater control of the diagnostic imaging marketplace?

These and other issues were the focus of anApril 7-12, 2004survey of Alliance Healthcare members who are knowledgeable about diagnostic imaging tools and/or cancer treatment devices. A total of 101 members participated.

The findings focus on 3 key areas:

A. Diagnostic Imaging Tools

B. "Dedicated" Centers vs. Hospital Centers for Diagnostic Imaging

C. Medical Devices for Cancer Treatments

II. The Findings

A. Diagnostic Imaging Tools

(1) Question Asked: There are many diagnostic imaging tools and procedures available to medical professionals. Which of the following tools and procedures do you think will gain the most market share over the next 12 months?

(Please Choose No More Than Three)

Total
Respondents / Doctors / Healthcare
Workers / Other
Respondents
Virtual Colonoscopy / 45% / 47% / 25% / 50%
MRI (Magnetic Resonance Imaging) / 44% / 53% / 38% / 29%
Digital X-Ray / 43% / 53% / 38% / 25%
PET Scan (Positron Emission Tomography) / 25% / 30% / 31% / 11%
PET-CT Scan (Hybrid PET and CT) / 20% / 21% / 31% / 11%
Ultrasound/Sonogram/Sonar-Based Devices / 20% / 19% / 19% / 21%
CT Scan (Computer Tomography) / 18% / 18% / 25% / 14%
SPECT Scan (Single Positron Emission Tomography) / 11% / 12% / 19% / 4%
Laser Mammography / 7% / 4% / 0% / 18
Traditional Endoscopy (e.g. bronchoscopy, gastroscopy) / 4% / 2% / 6% / 7%
Traditional X-Ray / 0% / 0% / 0% / 0%
Other / 2% / 4% / 0% / 4%

Best Poised to Gain Market Share. Respondents choseVirtual Colonoscopy (45%), MRI (Magnetic Resonance Imaging; 44%), and Digital X-Ray (43%) as the three diagnostic imaging tools most likely to gain market share over the next year. Note that while Virtual Colonoscopy received a strong response, the survey was completed before the recent release of one clinical study that reported lower than expected accuracy rates for the procedure.

(1A) Why?

Sample of Alliance Member Responses:

a. Virtual Colonoscopy (45%)

  • SCR5921 writes, “Virtual Colonoscopy: Could experience rapid growth as the population continues to age. The procedure is easier for patients to tolerate than BE or conventional 'scopes, and has respectable sensitivity. CAUTION: Our group does not yet offer the test, because there's currently no Medicare reimbursement.”
  • KEN1900 writes, “Although I do not think it to be as good as standard colonoscopy, Virtual Colonoscopy will be pushed. It is not generally covered by insurance. It could be done for a few hundred dollars and still make money. There will be a lot of free standing centers trying to make a push for this...”
  • GDA7384 writes, “Great need for non/minimally invasive bowel examination - rising trend in bowel disease. Earlier detection gives best downstream outcomes.”
  • MTA6607 writes, “Less invasive & comfortable.”
  • POR0553 writes, “Virtual Colonoscopy already exceeds the resolution of real colonoscopy and is far less invasive - the patient just gets a CT scan and is done.”
  • PME4735 writes, “As you may know the virtual colonoscopy is the newest technology used by GI specialist. The new scan obviates the need for sedating medications and avoids the very real hazards of colon perforation.”
  • ARD6888 writes, “Easy to administer and less invasive than traditional methods.”

b. MRI (Magnetic Resonance Imaging) (44%)

  • KEN1900 writes, “…the MRI is a fantastic tool, it's being used for everything.”
  • BUC1834 writes, “MRI is best overall (sensitivity) technique-has best reputation in the public's perception.”
  • JPI5528 writes, “MRI continues to become a standard for soft tissue problems and now being implemented in doctors offices to try to receive revenue to offset out of control malpractice liability claims (too bad the Democrats didn't join the Republicans on Medical Liability Reform).”
  • JAM8235 writes, “More detailed exam at one sitting, and noninvasive.”
  • GRA1199 writes, “More innovative uses of old MRI technology - new software.”
  • SCR5921 writes, “MRI: I'm seeing steadily increasing utilization of this modality, and the potential for further growth is outstanding. MR angiography should become much more common in the next 24 months or so, as primary care docs see the potential to screen patients, particularly diabetics, for peripheral vascular disease. Earlier detection greatly improves treatment outcomes. MRA screening could substantially improve the quality of life for millions of Americans.”
  • TDA3174 writes, “Stand-up MRI is gaining much market share.”

c. Digital X-Ray (43%)

  • SR10005 writes, “In my practice, we use digital x ray equipment which is very cost effective with significant savings over traditional x ray methods. I believe the adoption rate will increase greatly in the next few years. It is certainly a way of reducing paper and film while allowing easier/quicker transmission of images to the radiologists for reading.”
  • COB6520 writes, “Digital x-ray because there is no film to store and you can zoom in on any area and it is affordable for smaller multidisciplinary clinics.”
  • KCO6695 writes, “Digital x-rays allow you to manipulate the picture which reduces your chances of missing very subtle things.”
  • STE3218 writes, “Digital X-ray - allows out sourcing and world wide active reading as well as rapid transfer of information among institutions.”
  • JGA9388 writes, “Digital is cheaper and better. We grow aggressively --approx. 40%/yr. All new facilities are now digital and most old facilities have been converted to digital; the readier will be digital in '04. Digital pays off in 12-18 months and eliminates film/chemical costs and associated government scrutinization/harassment. The public also is very impressed with digital --they think it's sexy just like laser. It is also able to capture video on the same file making case presentation efficient and much more compelling. We see a 20% increase in case acceptance after training and Dr. buy-in--a huge revenue increase.”
  • TOO5954 writes, “Faster and no developing chemicals to have to dispose of with many regulations to keep track of for the bureaucrats.”

d. PET Scan (Positron Emission Tomography) (25%)

  • BUC1834 writes, “PET - still below the public's radar, and not yet widely reimbursable by the insurance plans.”
  • TRU7599 writes, “Already in position and already accepted techniques. PET scanning likely to become more widely available.”
  • 8486810 writes, “PET has been kind of an orphan until recent discoveries in cancer imaging and staging.”
  • ROB0038 writes, “For its use in detecting minimal malignancies in the body, PET scanning is coming of age and it is used far less in this country than in Europe.”
  • CRA1451 writes, “PET really useful early for cancer cells too small to be seen on MRI. If something shows up it will be cross checked with MRI. Fixed PET/CT too expensive.”

e. PET-CT Scan (Hybrid PET and CT) (20%)

  • SCR5921 writes, “PET-CT: Already the gold standard for cancer staging and assessment of treatment response, but still far from readily available in smaller hospitals. LOTS of room for growth. Consider mobile providers (units in tractor-trailers).”
  • JEF7065 writes, “The PET-CT is equipment that all facilities want to offer to the physicians on staff since it can combine the advantages of PET and CT in one study. The negatives are that the equipment is expensive and currently the licensing requirements for the technological staff to operate this equipment haven’t been worked out. In most facilities a nuclear medicine technologist operates the PET equipment and a CT technologist operates the CT.”
  • POR0553 writes, “PET-CT gives metabolistic insight into cancer evolution.”

f. Ultrasound/Sonogram/Sonar-Based Devices (20%)

  • NIL5788 writes, “Ultrasound involves no radiation and are non-invasive.”
  • GOO3505 writes, “I believe that at least in the cardiology field, intravascular ultrasound seems to be the way to find the most worrisome lesions.”
  • HHA9729 writes, “Ultrasound helps physicians diagnose illness early saves PPO & HMO's $$$.”

g. CT Scan (Computer Tomography) (18%)

  • ABG4789 writes, “Enhancements in CT scanning will lead to increased diagnostic use in routine screening for lung cancer and in virtual colonoscopy.”
  • MAJ8741 writes, “The huge growth will be in the 16 slice CT market. These machines are so much better. I predict they will be the standard fairly quickly. Our installed the new Toshiba 16 slice in Oct and has seen our CT volume go up by 45%. We have saved 5 lives already solely due to the advanced capabilities of this machine over single slice.”
  • JEF7065 writes, “CT scanners are getting faster offering even more throughput. In many institutions the chest CT has now replaced lung scans to evaluate for pulmonary emboli. There are other areas where CT will replace other tests done in a different modality.”

h. SPECT Scan (Single Positron Emission Tomography) (11%)

  • BUC1834 writes, “SPECT - still below the public's radar, and not yet widely reimbursable by the insurance plans.”
  • COB6520 writes, “SPECT Scans because they are the best for occult fracture.”
  • JEF7065 writes, “SPECT imaging's highest usage pertains to imaging of the heart (approximately 65% of all SPECT scans done). We currently have a 6 month backlog of patients waiting for a cardiac SPECT scan. We've hired additional staff and purchased additional equipment, but we get more orders for this procedure per day than we're able to do per day. People are more health conscious today and more willing to use preventative maintenance to evaluate for problems rather than wait for a major event to take place. We're seeing a lot more patient's in the 40's and 50's being tested.”

(1B)Question Asked: Are there any other diagnostic imaging tools and/or procedures that will gain market share over the next 12 months?

Sample of Alliance Member Responses

  • TDA3174 writes, “Stand-up x-ray may gain share at a surprising rate. It is more accurate than traditional MRI.”
  • PRO8317 writes, “CAD for mammos.”
  • JRJ9829 writes, “Given Imaging's technology looks promising.”
  • ABG4789 writes, “MRI - increased availability of open MRI and upright MRI.”
  • JAM8235 writes, “Multi-slice, multi-detector CT.”
  • DJA1158 writes, “Pacs, MR contrast angiography.”
  • GDA7384 writes, “Possibly laser mammography.”
  • MAM7387 writes, “Retinal imaging studies.”
  • 2464180 writes, “Third generation CT scanners which can obtain images sufficiently quickly to characterize calcific plaques in the coronary arteries quickly and non-invasively which in combination with serum lipid studies helps stratify risk of coronary events.”
  • GOP2712 writes, “Ultrasound procedures, specifically coronary artery studies.”
  • SCR5921 writes, “Vacuum-assisted biopsy systems for breast masses and microcalcifications should experience widespread utilization increases over the next couple years.”
  • SR10005 writes, “Virtual cardiac/vascular imaging I believe will increase as its effectiveness may reduce unneeded catheterizations or catch disease in an earlier stage leading to better prevention of significant cardiac events.”
  • FER6743 writes, “Encephalograms and coronary angiograms.”
  • ROB0038 writes, “In the pathology arena, imaging of diagnostic slides from a third party location (telepathology) will take off. A number of technical issues have been overcome (compression algorithms, image quality, etc.) to make this a reality.”
  • CEN9132 writes, “perhaps, laser mammography.”
  • MAJ8741 writes, “Probably PET/CT hybrids. The diagnostic imaging ballgame is the future of health care.”

(2) Question Asked: Overall, what type of trend do you see in reimbursement rates for diagnostic imaging tools that show increasing efficacy and are helping save money and lives?

Total
Respondents / Doctors / Healthcare
Workers / Other
Respondents
Higher reimbursement rates / 23% / 18% / 38% / 25%
Lower reimbursement rates / 19% / 23% / 19% / 11%
No Change in reimbursement rates / 31% / 39% / 19% / 21%
Don't Know / NA / 28% / 21% / 25% / 43%

Reimbursement Rates. Twenty-three percent (23%) of respondents see higher reimbursement rates for diagnostic imaging tools, while 19% see lower reimbursement rates. Another 31% see believe there will be nochange in reimbursement rates for diagnostic imaging tools.

(3)Question Asked: Medicare is currently conducting a pilot program on scans for the diagnosis of Alzheimer's disease. Do you think Medicare will decide to cover diagnostic imaging for Alzheimer's?

Total
Respondents / Doctors / Healthcare
Workers / Other
Respondents
Yes, Medicare Will Cover Imaging for Alzheimer's within 12 months
/ 6% / 5% / 6% / 7%
Yes, Medicare Will Cover Imaging for Alzheimer's, But It Will Take Longer Than 12 Months / 55% / 61% / 50% / 46%
No, Medicare Will Not Cover Imaging for Alzheimer's
/ 15% / 14% / 13% / 18%
Don't Know
/ 24% / 19% / 31% / 29%

Medicare Will Likely Cover Imaging for Alzheimer’s.More than 3-in-5 (61%) respondents believe Medicare will cover diagnostic imaging for Alzheimer’s within the next 2 years. Only 15% believe Medicare will not cover it.

(4)Question Asked: Have you had experience with Given Imaging's new "swallow the camera" diagnostic system?

Total
Respondents / Doctors / Healthcare
Workers / Other
Respondents
Yes, Have Used the System / 1% / 2% / 0% / 0%
Yes, Referred a Patient to Use the System / 7% / 12% / 0% / 0%
No, But I am Familiar with the Given Imaging System / 50% / 47% / 56% / 50%
No, I am not Familiar with the Given Imaging System / 41% / 37% / 44% / 46%
Other
/ 2% / 2% / 0% / 0%

“Swallow the Camera” – Does that Sound Familiar?Nearly 3-in-5 respondents (58%) are familiar with Given Imaging’s “swallow the camera” diagnostic system. Of those, 7% have referred a patient to use the system, and only 1% has used the system themselves.