Algotec pursues ASP model in bid for PACS market success

By Erik L. Ridley, AuntMinnie staff writer

May 2, 2000 --

The stiff capital equipment expenditures associated with PACS have long been a formidable market barrier. But some industry watchers believe that hurdle may soon be largely removed, thanks to increasing vendor adoption of application service provider (ASP) distribution models.

With an ASP model, companies typically maintain nearly all of the hardware and software necessary for PACS at their own locations, allowing customers to outsource much of the infrastructure required for digital image management. The proliferation of ASP models is an indication of growing market interest in outsourcing elements of PACS, a niche attracting firms such as Wam!Net Medical, InSite One, and F.Y.I. HealthServe (formerly the teleradiology archiving program of now-defunct PACS vendor Olicon Imaging Systems).

In addition to removing much of the up-front cost of PACS implementation and providing increased protection from system obsolescence, the ASP approach opens the door for expanded use of alternative PACS financing strategies such as fee-per-use.

One firm hoping to take advantage of this opportunity is the Israeli PACS firm Algotec, which announced an ASP model for its ImagiNet line at the Healthcare Information and Management Systems Society (HIMSS) conference in Dallas earlier this month.

By choosing an ASP and fee-per-use strategy, healthcare institutions can shift costs from the capital equipment budget to the operating budget, according to Kobi Margolin, Algotec's vice president of marketing.

"Purchasing a PACS has typically required large capital expenditures that many hospitals could not afford," Margolin said. "With an ASP model, PACS is now affordable to all hospitals and imaging centers, even small sites."

Healthcare institutions using an ASP-driven PACS can store all of their medical images and reports at an Algotec facility, where they are archived on digital linear tape (DLT) archives. Customers can access the archives over the Internet or via an intranet using Java-based client software, Margolin said.

Algotec will install what it calls an infomediary box at the customer's site. This box, which includes a Web server, manages workflow and transfers images from the imaging modality to diagnostic reading stations. In large-scale PACS implementations, and when diagnostic reading is performed on-site, the infomediary box can serve as a short-term archive using redundant arrays of inexpensive disks (RAID), Margolin said. After a few days the infomediary box will send the study to Algotec's archives.

Access to the Algotec archives is obtainable through a wide range of communication options, including cable modem, digital subscriber line (DSL), and T-1 lines. Although high-bandwidth approaches such as cable and DSL are largely confined to metropolitan areas at this point, sites in rural or outlying areas can often use ISDN access, he said.

Plain old telephone system or POTS access is also possible, but is only suitable for low image volume applications due to the lengthy access times, Margolin said.

Results reporting and key images are distributed by the infomediary box through Algotec's Med-e-Mail electronic mail software. Images can also be stored on CD-ROM and distributed to referring physicians using the firm's CD Surf software.

Algotec was founded in 1993 as a joint venture between then-medical imaging firm Elscint and a group of computer scientists and engineers headed by Dr. Menashe Benjamin, who remains president and CEO. Until recently, Algotec made its biggest mark in PACS via OEM relationships.

Algotec's biggest client is Marconi Medical Systems. The company also provides PACS components to Toshiba Medical Systems in Japan; Shimadzu Medical Systems in Europe, Southeast Asia, and Australia; Hitachi Medical Systems in Southeast Asia; Elekta Oncology Systems (worldwide); and to Eclipsys for integrating image management capability into that company's healthcare information systems.

Algotec's largest market success to date has been with its ProVision 3-D workstations, which have been installed at over 500 hospitals worldwide. The firm claims it was the first to receive U.S. Food and Drug Administration clearance for a Java-based Internet offering, a milestone achieved in 1997 with its MediSurf Web-based clinical image and data access engine. Today, MediSurf is in use at more than 120 sites, approximately 80 of which are in North America, Margolin said.

As its technology has grown beyond digital image management components to support full PACS, Algotec has also enhanced its direct sales activity. The firm opened a U.S. sales office in Atlanta in 1999.

Since unveiling its ASP model at the HIMSS show, Algotec has received a number of requests for proposals, and hopes to implement several networks by the summer, Margolin said.

By Erik L. Ridley staff writer
May 2, 2000

(This article is the second in a series of articles on PACS technology. Click on the headline below to view the previous article.)
InSite One aims to trim archiving expense with InDex. April 26, 2000.

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