Vendors flirt with partners, customers to fill up ASP dance card

The hype around application service providers seems to be fading, replaced by the need for vendors to test, implement, and sell customers on products offered through ASP-based pricing and delivery. Most imaging and information systems vendors at the RSNA meeting were able to showcase actual ASP offerings and discuss actual installs and pilot sites. But the initial vision of a quickly attained full ASP PACS has given way to realities regarding bandwidth limitations and customer reluctance to relinquish even partial control over their data.

The ASP market is concentrated in two major areas: enterprise distribution and data archiving/redundancy. And the dance has only just begun. Partnerships abound, with large companies pairing off with smaller ones; start-ups banding together to compete against GE, Philips, and Siemens; and mid-sized vendors working both ends against the middle.

GE Medical was the first of the big boys out of the gate with an ASP offering, choosing to take the partnering route. GE's ASP partners include EMC for storage, Cisco for networking, Exodus Communications for hosting, and Emageon for archiving software. GE's goal is to provide all of its clinical products via ASP. The firm boasts four installed customers and expects to have two to three more by year-end. According to Milton Silva-Craig, general manager of clinical e-services, GE would have met its projected goal of 10 installs this year, but it had problems getting the dedicated T1 lines from local telecommunications providers to the client sites. Even so, the firm anticipates 60 ASP customers in radiology by the end of 2001.

Siemens went the acquisition route to beef up its ASP menu quickly. Through its purchase of SMS, the German firm gained 31 years of application hosting expertise in healthcare. Siemens/SMS is looking to distribute information along the enterprise and bring referring physicians into the loop through SMS's Web-based physician dashboard. The firm is also working the storage angle and is beta testing its e-Archive product in partnership with Comdisco at the University of Kentucky. Siemens is initially targeting radiology for the archiving product, according to Kulin Hemani, director of PACS, with plans to move e-Archive into cardiology, oncology, and hospital information systems in the next three to six months and to gain 10 customers by June 2001. Its next ASP product will be a data redundancy service called e-Backup that is expected to provide full-featured PACS capabilities once bandwidth issues are resolved.

Marconi and Agfa also rolled out ASP delivery models at the RSNA show, each offering a secondary archive as the first ASP product. Both announced partnerships with Comdisco to provide storage and archiving. Agfa also has expanded its relationship with InPhact for ASP capabilities that enable the Belgian firm to offer Impax via subscription. The company's ultimate goal is thin-client full-featured PACS, according to David Starr, senior marketing manager for Agfa Impax. Marconi sees its services division working toward outsourcing healthcare information systems as a whole, according to the company.

Yet some of the PACS powerhouses are taking a more cautious approach to the ASP phenomenon. Kodak is piloting enterprise-wide ASP PACS at Cedars-Sinai Medical Center in Los Angeles through a partnership with Intel Online Services. In its initial phase, the program enables authorized referring physicians to access images within the medical center; the next phase will expand image distribution outside the facility. If the pilot is successful, Kodak will also evaluate offsite image storage.

Philips Medical Systems is taking a page from GE's book by exploring partnership options. The Dutch firm has announced an agreement with EMC to provide storage systems and software for its PACS offerings and a comarketing agreement with StorageTek for a transaction-based data archive. Philips also believes that ASPs will best be served by a geographic approach; the company is thus negotiating relationships with InPhact and Western Geophysics and is working with InSite One.

Conspicuously absent from the ASP party was Fuji Medical. The Japanese firm has adopted a wait-and-see attitude, choosing instead to concentrate resources on further developing its Synapse Web-native PACS. The company is emphasizing Synapse's inherent workflow, enterprise-distribution, and RIS integration capabilities rather than financial considerations.

ASP start-ups steal the limelight

The real stars of the ASP show at the RSNA meeting were the start-ups. Although dot-coms have fallen out of favor on Wall Street, these businesses have built their products from the get-go for the Web-and, consequently, the ASP environment. Companies like Emageon, InSite One, and InPhact are thus ready-made for plug-and-play ASP.

These firms also exhibit more confidence about being able to circumvent technological limitations to providing full PACS over the Internet-sooner rather than later. The old guard has begun to appreciate this confidence, validating new technologies and business models by forming partnerships with these companies rather than simply acquiring them or their technologies.

eMed Technologies was the first such firm to move into the radiology ASP market. It offers a service called eMed.net, introduced at the 1999 RSNA meeting, that brings reports and images to referring physicians in a secured Web environment. eMed claims 10 customers and expects to have another 100 by the end of 2001, according to CEO Caren Mason. The company is also developing a storage offering that should be available in summer 2001.

InSite One, the original storage service provider for healthcare, showed version 2.0 of its InDex archiving product. It continues to take a regional approach to the ASP storage market and is looking at expanding into the international market, initially Canada and Europe. A partnership with Philips is expected to give InSite entree into worldwide sales and distribution. InSite is already partnering with RealTimeImage for integrated image streaming technology and MedWeb for clinical Web servers.

Emageon, which has built its business by providing ASP middleware to OEMs, continues to market its enterprise archive solution, offering Web-based distribution of DICOM-compliant images for $5 per study over the legal life of the study. The firm has garnered private equity investments from both Kaiser Permanente and Tenet Healthcare and is looking to take a more high-profile approach to the market.

Stentor and IDX have joined forces to develop a suite of ASP products. The first is an online image storage archive called iVault that is intended for enterprise archiving. iVault holds 7 terabytes of data, or approximately two years' worth. The storage product, shown as a work-in-process at the RSNA meeting, will be sold on a pay-per-use basis and should be available in July 2001. Stentor is leveraging its core iSyntax technology and expanding its enterprise footprint beyond Web-based clinical image distribution to enterprise image and information management.

InPhact is also emerging as an ASP heavyweight, garnering relationships with several PACS players and integrators. The company is playing off its installed teleradiology base and claims some 40 customer sites. It expects to have eight more ASP customers by year-end and to double its business next year. InPhact is pursuing the service provider role rather than the applications, with the goal of becoming the back-office piece and selling its products on an OEM basis. InPhact has also launched ImageSafe, a patent-pending archiving software product that segments patient- and user-specific image data. The firm has one data center and is building a second.

Network provider Wam!Net has begun reaping benefits from the ASP market. The firm showcased its line of networking and storage services at the RSNA meeting and concurrently announced agreements with Stentor to host Stentor's iSite image management system; Cmore to provide off-site archiving; and FileLink to provide on-site storage software. The firm has spent the last two years (since its RSNA debut) refining its storage and networking offerings for the healthcare industry and claims the world's largest private IP network, according to Mark Hunter, Wam!Net's director of marketing.

Dynamic Healthcare Technologies was one of the first healthcare firms to move its entire product line onto the Web under the CoMed product umbrella. At the RSNA meeting, the firm ran all applications in its booth over the Internet on a thin-client model. The actual processing for the demonstrations took place at Dynamic's data center in Florida.

Despite the proliferation of ASPs, some firms are discovering that offering ASP-based products is no more than a marketing tool. Imco, which offers an ASP pricing option, has found that its customers still prefer to do business the old-fashioned way: buying the product rather than the service. Vendors appear to be ahead of the ASP market, according to Mark Schwartz, Imco CEO and president, with many customers still concerned about security and reliability and hesitant to sign on the dotted line.

© 2000 Miller Freeman Inc.
12/13/00, Issue # 118, page 1.