Looking to follow in personal computer makers' footsteps, diagnostic ultrasound companies are tempting hospital buyers with new, modestly priced imaging systems that pack features previously available only on models costing twice as much.
By offering more for less, ultrasound vendors hope to shake the doldrums that have gripped the market ever since the specter of healthcare reform spooked purchasers more than four years ago. By most accounts, ultrasound sales ever since haven't been much better than flat, recently eking out single-digit annual growth after a couple of years of outright decline.
Ultrasound is clinically versatile and provides images instantaneously. Relying on sound waves instead of X-rays to make its pictures, ultrasound scanners have become important assets in a range of departments and clinical settings.
Ultrasound is a standby in obstetrics, where X-rays can't be used, and is increasingly popular in cardiovascular cases, where color-coded images and data on flowing blood are valuable for initial diagnosis and post-operative follow-up.
Now ultrasound makers are looking to cash in on the technology's growing use with moderately priced systems.
A serious interest in mid-range systems, costing $50,000 to $100,000, would mean a dramatic shift in U.S. customers' buying habits, say industry analysts. Outside of budget scanners for limited in-office use, most U.S. buyers historically have demanded the latest, most-advanced scanners amid competition to win physician referrals. As a result, premium machines with price tags upward of $130,000 to more than $300,000 have captured the most interest and market share.
U.S. customers, who bought nearly $700 million in ultrasound equipment last year, may be poised to embrace less costly systems following buying patterns of their overseas colleagues, some industry analysts say.
Economical ultrasound units have been popular in cost-conscious Europe for years, and pressure from the managed-care industry finally has eroded practitioners' resistance to buying anything less than the top-of-the-line, manufacturers say.
A host of companies are trying to make that transition easier. In particular, Advanced Technology Laboratories, Bothell, Wash., and Hewlett-Packard, Palo Alto, Calif., are nudging hospitals to replace their aging ultrasound equipment with robust systems priced below $100,000.
"People are under more pressure in hospitals for what they can buy with budgets that are available," says Cass Diaz, senior vice president at ATL.
In response, this spring ATL introduced a full-function scanner called HDI-1000 that uses software to perform many tasks previously handled by more costly hardware.
Likewise, Hewlett-Packard last year introduced its general purpose ImagePoint system, which relies on only a few printed circuit boards to reduce manufacturing costs.
In favor of the ultrasound makers' push is a growing understanding among users and administrators that the imaging modality can more economically diagnose many conditions than big-ticket scanners.
"Ultrasound is a cost-effective method, and it's a good problem-solving device," says Christopher Merritt, M.D., radiology chairman at Ochsner Clinic, New Orleans.
If the cost of providing an X-ray is defined at 1, then an ultrasound exam would rate at 1.27, according to cost data collected in Merritt's department. But unlike X-rays, ultrasound provides detailed information on soft tissue, more often the province of computed tomography and magnetic resonance imaging scans, which rated 2.98 and 10.26, respectively, on Merritt's cost scale.
As managed-care and capitated payments have become entrenched, Merritt says, diagnostic comparability combined with cost advantages equals technical superiority.
"We're moving from luxury cars to basic transportation and finding we get to our destinations pretty well with either one," Merritt says.
And the simpler, general purpose ultrasound units are poised to drive that message home.
"If ultrasound can offset some studies from CT and MRI, even a small percentage, (it would provide) cost savings that administration would find attractive," says Bill Carrano, Acuson Corp.'s marketing director for general imaging. Acuson, based in Mountain View, Calif., manufactures diagnostic ultrasound systems.
Recent technological improvements mean ultrasound systems are easier to use and offer higher resolution for the money. That translates into better image quality, Carrano says, or a "clearer map with more guideposts" that make for simpler clinical interpretation.
The combination of cost-effectiveness, portability and steadily improving clinical utility make ultrasound's overall rise all but inevitable, several analysts say.
And the mid-range systems, they add, should do particularly well.
Rick Wise, industry analyst at Bear, Stearns & Co., predicts near-term annual sales growth of 15% for the mid-range. In the near future, mid-range sales in the U.S. could account for half of all systems sold, he says.
Despite manufacturers' high hopes for the new machines, some analysts think a domestic move to the mid-range is likely to remain more wishful thinking than reality.
"Mid-range is and has been the market outside the U.S.," says Harvey Klein, a New York-based ultrasound consultant who compiles market data. "My forecasts do not indicate a major shift in market toward mid-range products."
But rapid improvements in musculoskeletal and vascular imaging and the prospect of contrast agents to aid imaging make the companies confident that ultrasound scanners, at all price points, will be bought at the expense of other diagnostic imaging equipment.
"Ultrasound," says Wise at Bear, Stearns, "has always been on the side of the angels."