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Large Vendors for PACS Find New Opportunities to Deliver to All Hospital Departments

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PACSBy Dr. Kamran Zamanian, CEO iData Research

Introduction

Combined, the U.S. PACS market is valued at over $1 billion, consisting of revenue generated from new unit sales, system upgrades and service & maintenance. As the market begins to mature, distributors will see a decline in new unit sales as the installed base reaches full penetration. However, market growth is expected to be sustained by revenue generated through service contracts as healthcare providers require some form of service & maintenance in order to sustain their PACS systems. Previously, the industry had predicted strong growth; however, it has been hindered by the slow recovery following the 2008 financial crisis and the recent focus of healthcare recovery spending on the implementation of EMR systems.

Enterprise level solutions allow for higher adoption in more departments.

Over 90% of PACS market revenue is generated in radiology and cardiology, however many PACS vendors have been working towards developing an enterprise-level solution that will allow them to capture multiple departments via a single system. PACS adoption in the radiology department is significantly higher than that of cardiology or other departments that have imaging needs. Due to the already high adoption rate of radiology PACS, growth in that segment will slow over the next few years compared to other departmental PACS systems. With the rise of enterprise-level solutions, PACS vendors will be able to market their systems to all departments within a facility and move into new market segments. Therefore, as a single PACS vendor can be utilized across all departments of a healthcare provider, smaller niche vendors will lose market share. Healthcare providers seem very receptive to the notion of an enterprise level solution. Ideally, this would give them the flexibility to expand their healthcare IT systems in stages while utilizing the same vendor, which allows them to share existing infrastructure and reduce IT staff training time.

The number of installed PACS systems is expected to increase by over 1,000 from 2011 to 2018.

Rapid adoption is being spurred by increased willingness to spend on PACS systems that were on back order since the economic recession. Adoption rates of PACS systems among the larger facilities are very high as many healthcare providers deem it necessary to have a solution in place that digitalizes their images. When a PACS vendor captures an installed base, it usually ensures a future revenue stream from that facility through system upgrades and service & maintenance. Typically, healthcare providers will not swap vendors, as it is costly and time consuming. The industry has seen that many PACS vendors have made it a priority to capture as much of the remaining installed base as possible by aggressively lowering prices. Thus, average selling prices are expected to begin declining as competition intensifies over the remaining installed base, which will further drive down the profitability of new unit sales.

GE Healthcare continues to be the market leader in the U.S. PACS market, due to its first mover advantage and successes in the large hospital segment.

Although GE Healthcare leads the U.S. PACS market, several other PACS vendors are catching up. It should be noted that many of the large PACS vendors are part of a corporation that carries multiple product lines and gives them access to a greater client base. Therefore, within the PACS market, several main vendors have captured a portion of the market and have significant footholds with regards to the number of healthcare facilities using their PACS system. Although there are several smaller vendors that have developed niches and compete in specific market spaces, they are increasingly finding themselves in direct competition with the larger vendors. As the market matures, this trend will intensify a tug-of-war between the remaining PACS vendors for customers.

Additional Information is Available for Manufactures and Distributors:

The information contained in this article is taken from a detailed and comprehensive report published by iData Research (www.idataresearch.net) entitled “2012 U.S. Markets for PACS” For more information and a full Table of Contents and List of Charts & Figures of the above report, please contact iData Research at: info@idataresearch.net

iData Research is an international market research and consulting firm focused on providing market intelligence for the medical device, dental and pharmaceutical industries.


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