In every country, and for every imaging modality, radiologists are feeling the squeeze. Across Europe, rationalisation of health care provision, coupled with concerns about the vulnerable nature of reimbursement levels (particularly at the high-end of the modality value chain), has put the emphasis firmly on what imaging vendors can offer above and beyond the hardware itself.
Bold claims of reduced costs and improved patient outcomes now dominate the websites of the major players. It is perhaps a paradox that, with these opportunities of increased efficiency, providers have to dedicate more time to deciding what solution they want, how they want to use it, and, of course, how they want to finance it. This is certainly not lost on vendors, who now present a startling array of consultancy, training, asset management, and financial packages. Look a little harder amongst the discarded polystyrene of your brand new modality's packaging, and you will find there is ever more choice waiting to be found.
The same core problems, but ever expanding solutions
Buy any piece of electronic equipment today, and not only do you face a wide array of options and accessories, but also the prospect that the rate of current technological innovation will soon render your purchase obsolete. This climate now also applies to the medical imaging industry. Computed Tomography (CT), in particular, is cited by industry leaders as approaching the status of a consumer product. Practices have evidently taken to this trend, being ever keener to offer leading edge technologies. This has been seen in recent years with the rapid introduction and adoption of first 16, then 32, and now 64 slice CT scanners. This rapid pace naturally engenders fear for providers; will the pace of change lead them to make the wrong choice and therefore be left behind as new technologies drive new applications? Key industry players confirm that the prospect of missing out on performing a lucrative procedure is a very real concern at present.
The result is, of course, more solutions. Technology is really driving applications, so vendors are offering reassurance in the form of software packages that enable modalities to be refreshed. Upgradability proves a vital selling point as providers see the opportunity to broaden the scope of procedures performed. This is all very well, but leads radiology practices swiftly to their next problem; keeping their staff in tune with these new developments. Taking CT as an example again, progress within this modality has lead to more complicated procedures that are operated on different principles to those seen only a few years ago. In this area too, taking a closer look in that box reveals, cross-vendor, an entire suite of training and implementation programmes designed to make the experience of purchasing and operating their machines as reassuring a process as possible. The growing number of these programmes is further evidence of their success in a market where providers predominantly favour the perceived security of direct sales channels.
A winning environment for both vendors and providers
From the vendor perspective, the major driver of this solution trend is the increasing threat of price erosion, which is particularly prevalent in the highly competitive markets of Germany, Italy and Spain. This, coupled with the pace of technological change forcing previous models down the value-chain, has brought about a marked decrease in margins. The major players, such as Philips, Siemens, GE and Toshiba in an effort to maintain these margins, must look to differentiate themselves in terms of their solution-based value proposition. There is of course, the aforementioned service aspect, yet this has limitations associated with the decline in prices leading certain vendors to cut their service network in the more hotly contested markets.
This leaves the impetus with improved workflow as a means of justifying the higher prices that key industry participants wish to see paid for their services. Health care authorities are more prepared to pay a higher price initially if they can see attendant cost efficiencies and increased patient throughput going forward. The major players can be seen to really be pushing this at present, with one going so far as to put proven outcomes at the very head of their offering. Indeed, every vendor is keen to claim to be leading this trend, with offerings including complete cross-modality software programmes that allow integration of all equipment and processes in one recognisable interface.
Completing the picture
This links in well with the underlying trend of seeing equipment as being a managed facility; industry estimates see the typical CT package, for example, being 40% options and peripherals. Financial packages and volume deals now represent further enticement. Financial packages - offering equipment on a lease, or allowing payment on a by patient basis - can prove especially attractive to the private sector, where capital funds are often lacking (which leads such providers to prefer systems in the mid to low end, thus further increasing pressures on pricing). The public sector, on the other hand, is best served by volume or cross-modality deals; the latter of course made the more attractive by the aforementioned improvements in connectivity and workflow.
We can therefore see - as one industry leader has confirmed - that the key participants in the medical imaging modalities market are keen to step beyond the restraints implied by the term vendor, and now prefer to be regarded as partners to the providers, intent on lending them a guiding hand through every step of the purchasing process and the product's subsequent life-cycle.
This harmonious vision of perfect integration is of course informed by a very sound instinct for competition. In the words of another vendor, the question now is, "Is my solution, rather than my scanner, better than that of my competitor?"
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